Union-friendly Illinois is one of the worst states in the country in shortchanging the public employee pension system. Over the years, elected officials have cut the state's contributions, diverted funds to pay other expenses and borrowed money to cover current pension obligations. But no mobs of teachers and police officers descended on the state Capitol to protest, because they didn't grasp the implications.
Now we can all see the damage done. Though public employees have paid their share, the state has failed to keep up its end of the bargain. So in Illinois, as in Wisconsin and many other places, there is a conflict between what they were promised and what the citizenry is prepared to pay.
Government workers and taxpayers are both victims of this scam, which allowed extravagant pledges that don't have to be redeemed until later -- by which time the governors and union officials who devised them are gone, leaving someone else to cash the check.
In the private sector, these shenanigans would never be tolerated. Public pension systems get to assume implausibly high returns on their investments, which gives the impression they can meet their future needs.
The looser rules "allow governments to base their budgets on economic fictions," writes Orin Kramer, who oversees investments for the New Jersey system, in The New York Times. You could even call it fraud.
Republicans in Congress are trying to prevent deception by requiring public pension systems to follow the same basic rules as corporations. Politicians hate the idea for the same reason the rest of us -- government workers included -- should welcome it. As Moody's Investors Service said in endorsing the plan, it would "provide new incentives to state and local governments to take action to ensure public-employee pension plans' long-term viability."
Creating incentives for governments to behave honestly and responsibly? It's a new concept, but it might be worth a try.