The city of Chicago has long been regarded as an economic engine of the Midwest. It is home to some of the country’s largest industries and more than 30 of the nation’s Fortune 500 companies. Chicago is accessible by road, rail and water, and is located in a state that boasts an abundance of natural resources.
But decades of fiscal mismanagement by government agencies in Chicago have put the metropolis at a crossroads.
All told, Chicago residents are officially on the hook for $63.2 billion in government pensions, health insurance and other debt. This staggering figure totals more than $23,000 per Chicago resident, or more than $61,000 per household.
Even these figures grossly understate the severity of the problem.
That’s because the official pension liabilities are underestimated. Pension funds have long assumed unrealistically high investment returns, which make the funds look healthier than they actually are. Moody’s Investors Service now
calculates unfunded pension liabilities using more appropriate discount rates.
Under new Moody’s methodology, Chicago’s unfunded pension liabilities are at least $23 billion higher than what’s officially reported. Today, the systems have only 31 cents for every dollar they should have to make necessary pension payouts in the future.
Chicago’s credit rating is now only four notches away from junk-bond status.
Ignoring the Moody’s pension calculation not only understates the severity of Chicago’s debt crisis, but also the true burden that Chicago taxpayers may be forced to shoulder.
Chicago taxpayers face $86.9 billion in debt and unfunded liabilities under new Moody’s methodology. That’s $32,000 per Chicago resident and more than $84,000 for every Chicago household.
We are paying for the mistakes of the Baby boomer generation.
Well to be honest it's not like our generation is doing much to change it, judging by voting.
Well if they don't want to/cannot pay for what they agreed to, perhaps then they shouldn't have agreed to it?
quote:Certainly. I don't think the pension administrators are at fault here... It's those that made undeliverable promises with Other People's Money and the greedy folks that demanded the perks.
To be fair to the pensions, in many cases they are the victims and not the cause. Pensions go unfunded because its one of the few things they can legally defund from annual budgets that nobody notices during the current election cycle.
Any large corporation would collapse if it promised its employees a 6% match on their 401ks, then didn't actually put anything in the pot. 30 years later they'll be like "oh shit, we owe a lot of money to these pensioners!"
To be fair to the pensions, in many cases they are the victims and not the cause. Pensions go unfunded because its one of the few things they can legally defund from annual budgets that nobody notices during the current election cycle