Bloomberg admits that tech center San Francisco is a debt hole because of public pensions.
The news occasionally reports on the giant debt hole that we are sliding into. This is so that, when the entirely predictable collapse occurs, the media spokesmen can pretend to be reliable experts who warned us all along. But, in fact, these stories only surface occasionally and the media never treats them as the collective national emergency that they are.
Thus, the recent Bloomberg story about San Francisco’s debt hole is probably not going to receive the attention it deserves:
The technology industry has transformed San Francisco with a boom other cities can only envy. But it hasn’t eradicated a problem well known to industrial-era towns: the rising cost of pensions.
The city, where the unemployment rate is just 3.2 percent and the typical home sells for more than $1 million, is facing a budget shortfall that will reach $848 million in five years. Increases in pension payments and other payroll costs are driving the gap, according to a five-year financial plan, despite a measure voters approved in 2011 that aimed to cut employee-retirement bills.
San Francisco officials, who will present an updated fiscal blueprint this week, say they can adjust spending to balance their books, as well as gird for cuts the federal government may implement. Yet the predicament, even in a city known for stratospheric wealth, underscores the financial challenge for states and cities around the country that have to make good on promises to police officers, teachers and other civil servants.
“I do think there will be another conversation in the not too distant future about what is affordable for the city and our employees for pensions,” said Controller Ben Rosenfield. “I don’t think where we are is where we need to end up.”
There will always be “another conversation in the not too distant future about what is affordable” while cities, states, and the country slide further into debt holes. Just like Congress will always “balance the budget” by offsetting present spending with future reductions over the coming decade that they know will never be actualized because they will do it again in a year or two, increasing spending more by offsetting it with still more fictional cuts in the future.
San Francisco politicians who dare to seriously propose “austerity” will almost always be defeated by politicians who promise more unsustainable benefits. The debt hole will only get larger.
According to the Chicago Sun-Times,
Chicago is not alone among major cities grappling with under-funded city employee pensions, but is clearly in the worst shape among the nation’s fifteen largest cities, a Wall Street rating agency concluded Wednesday.
Standard & Poor’s surveyed pension obligations in New York, Los Angeles, Chicago, Philadelphia, San Francisco, San Diego, San Jose, San Antonio, Phoenix, Jacksonville, Dallas, Houston, Columbus, Indianapolis and Austin.
Chicago performed the worst across the board — registering the highest annual debt, pension post-employment benefits costs as a percentage of governmental expenditures and the highest debt and pension liability per capita.
Chicago is the worst, but San Francisco has lots of company. Count them above: fifteen cities are listed.
And then there are the states. California, for example, has its own pension problem that it allegedly reformed… but didn’t:
These stories add up to a coming disaster. The media will mention them in small stories, but we won’t see them emphasized in the TV news cycle. That’s one reason we continue to slide into our debt hole.