At the federal, state and local levels, unsustainable retirement benefits for government workers are threatening to do serious economic harm.
USA Today reported recently that the federal government "committed more money to the 10 million former [federal] public servants last year than the $690 billion it paid to 54 million Social Security beneficiaries."
In 2010, Washington paid former federal workers -- including civil servants, military personnel and their dependents -- a record $268 billion in health and pension benefits. Even after adjusting for inflation, that was roughly $100 billion more than Washington was paying out in federal retiree benefits just 10 years ago.
All told, federal retirement programs now have a nearly $6 trillion unfunded liability. That's how much the programs are expected to be short on revenue to cover projected costs. That huge deficit is almost as big as the $6.5 trillion that Social Security is short on the revenue it will need to pay projected benefits in coming years.
Things are not all that much better at the state and local levels. The Associated Press reported that the 50 states' combined unfunded pension liabilities and health care liabilities for retired government workers come to more than $1.1 trillion.
So how will government pay for the costly benefits for retired employees? In many cases, it will simply raise taxes to cover those costs -- to the detriment of the economy. Or it will borrow more money -- as if deficits at the federal level in particular were not already far too high.
Alternatively, lawmakers could rein in benefits. For instance, a few states and cities are attempting to raise the retirement age at which government workers can get at least partial benefits. In some cases, that retirement age is as young as 55 or even 50. But cutting benefits or raising the retirement age is politically risky when government workers are represented by powerful unions that target "wayward" lawmakers.
Something has to be done about the cost of government worker benefits, though. Current benefit promises should be honored, but it is past time to rein in benefit plans for future government employees.