The Next Retirement Time Bomb - New York Times

The Next Retirement Time Bomb - New York Times:

What this piece fails to explain is the interplay between Medicare and the public employee health care obligations. Should we assume that the obligations are reduced when a person is Medicare eligible?

When this problem and all the others concerning failing pensions, escalating health care costs, the demographic whammy of a declining birth rate (who's going to pay the future?) bill and the Baby Boomer retirement bubble are taken together show a real crisis ahead and our Congress has no realistic plan to solve it.

The 2008 elections may/should swing on this issue and Congresspeople should be put to the test in their own states on it when they campaign for election.

"Off the government balance sheets - out of sight and out of mind - those obligations have been ballooning as health care costs have spiraled and as the baby-boom generation has approached retirement. And now the accounting rulemaker for the public sector, the Governmental Accounting Standards Board, says it is time for every government to do what Duluth has done: to come to grips with the total value of its promises, and to report it to their taxpayers and bondholders.

The board has issued a new accounting rule that will take effect in less than two years. It has not yet drawn much attention outside specialists' circles, but it threatens to propel radical cutbacks for government retirees and to open the way for powerful economic and social repercussions. Some experts are warning of tax increases, or of an eventual decline in the quality of public services. States, cities and agencies that do not move quickly enough may see their credit ratings fall. In the worst instances, a city might even be forced into bankruptcy if it could not deliver on its promises to retirees.

'It's not going to be pretty, and it's not the fault of the workers,' said Mayor Bergson, himself a former police officer from Duluth's sister city of Superior, Wis. 'The people here who've retired did earn their benefits.'

The new accounting rule is to be phased in over three years, with all 50 states and hundreds of large cities and counties required to comply first. Those governments are beginning to do the necessary research to determine the current costs and the future obligations of their longstanding promises to help pay for retirees' health care. Local health plans vary widely and have to be analyzed one by one. No one is sure what the total will be, only that it will be big."