The little town of Pritchard knew that if nothing was done about their pension plan shortfalls, they would run out of money. The managers even predicted it would happen in 2009. When in fact nothing substantial was done, the money ran out, and the pension stopped sending checks!
Tragic and traumatic as that is, without some sort of plan ... some sort of agreement or understanding, that is the fate bound to occur with all state or government pension plans. Multiply little Pritchard by the size of Illinois or California, and the scale of the potential disaster becomes apparent. Imagine the shock when retired workers, who are used to rich retirement checks equal to two thirds, or even ninety percent of their highest pay, suddenly find empty mailboxes.
This possible outcome should be especially worrisome since large states like these are already billions in debt they can't pay back, the federal government is in only slightly better financial shape, and there is no bankruptcy mechanism that would allow an orderly unwinding of these structural problems. Further, the temptation for the federal government to solve this problem through more debt or even money printing is strong, but also certain to lead to even worse financial mayhem.
The only real solution is for public employee unions to realize the untenable and intractable problem needs to be solved before disaster strikes, and to participate, with the responsible public entity, in finding a solution. Problem is, that solution is going to require their members to agree to receive much, much less than they were expecting, and that will be an agreement that may not be possible to reach, absent a complete runout of money as has just happened in Pritchard.
The time it act is here. Let's see what can be done before it is too late.