It is no secret that many states in the Union are in serious financial trouble. There is an impending pension crisis that has resulted from politicians overpromising future government benefits. These promised benefits range in the hundreds of billions of dollars.
The situation is worse for states with a high percentage of government employees, as well as states with higher pension payouts for government employees.
However, what is often left out of the discussion of the state pension crisis is that the group most responsible for this problem is public school teachers.
Public school teachers make up a large number of state employees, as approximately 50% of state and local employees are teachers. (While some teachers are hired by the local school district, they are indirectly state employees because they receive a state-funded pension.)
Add to this the fact that public school teachers are heavily unionized. To this day I still do not understand how we allow government-employee unions. Unions function by demanding more pay and benefits for workers, which they do through collective action (including the strike).
In the private sector, an employer can only give unionized employees a bigger piece of the profit pie. (And yes, private unions have even caused pension problems.) But with public unions, the politicians can always raise taxes to fund the teachers.
However, politicians face a problem when dealing with government employee unions. The politicians want to satisfy the union’s demands (a popular thing to do), but they also do not want to raise taxes (a not-so-popular thing to do).
So what is a politician to do?
Promise future benefits! That’s the solution! Being the swindlers they are, politicians promise future money to public school teachers. They have been doing this for years.
But there is one tiny little problem . . . That money is not there. It never has been there. And it never will be there.
Hence the pension crisis. The state legislators in this regard have been as irresponsible as the U.S. Congress, which has run up a debt of $22 trillion and counting (not to mention the hundreds of trillions of dollars in unfunded liabilities). And now many states are headed for fiscal disaster.
How will the states respond?
The best option is to cut the pensions, as the unions demanded things the government could not give. There is no reason to put this on the taxpayers. Of course, many states will try to do so by raising taxes.
Raising taxes (probably in the form of property taxes) will lead to mass exodus for states with lower taxes. This will mean fewer taxpayers for troubled states. Population decline will also drive down property values (because of decreased demand) and in turn decrease the property tax revenues (since property tax is based on the value of the property). Thus, this method will not solve the problem.
However, many states are run by economic fools, and they will still attempt to raise taxes. In addition to not solving the pension problem, increased taxes will result in foreclosures and financial trouble for people who lose jobs and/or want to leave the states but cannot sell their houses.
The point of all this is that fiscal disaster looms for many states—and the public school teachers and their unions bear much of the blame. You can add this to the list of the crimes committed by America’s public education system.