Should the nation’s children be liable for the shortsightedness of their parents?

How should Americans respond
if the economic and political leadership
of the greatest nation in the history of the world
betrayed their children?

Any system produces winners and losers.

If the gap between them gets too great,
the losers will organize themselves politically
and seek to recast the existing system within nations, and between them.

Henry Kissinger

…U.S. states face a total shortfall of at least $1 trillion in their funds for employees' pensions and retirement benefits, and their financial problems are quickly mounting…

Illinois is in the worst shape, with only 54 percent of its pension obligations funded…

Because the analysis did not encompass the final six months of calendar year 2008 -- most states' fiscal year's end during the summer -- it does not include the market downturn that devastated many funds' investment portfolios.

"The funding gap will likely increase when the more than 25 percent loss states took in calendar year 2008 is factored in," the report said.

…"Over the last 10 years, many states have shortchanged pension plans in good times and bad," said [Pew Center on the States]Susan Urahn, the center's managing director, who called the beginning of the century a "decade of irresponsibility."

States did not save for the future and manage costs well, said Urahn…

Still, the dwindling value of the funds'…has forced states to deposit more money into their accounts.

…Describing state pension funds as operating similarly to credit card holders who make minimal monthly payments on their debt but continue to charge, Urahn said the funds were making their problems worse by not preparing for impending retirements.

"The growing bill coming due to states could have significant consequences for taxpayers -- higher taxes, less money for public services and lower state bond ratings," she said.

A pension fund is considered healthy if it has a funding level equal to at least 80 percent of its liability…

The rate of decline has been rapid, the center said. In fiscal 2000 half of the 50 states had fully funded their pension systems but by fiscal 2008 only four -- Florida, New York, Washington and Wisconsin -- could boast being able to cover their costs…

Lisa Lambert
Reuters