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Source: Armstrong Economics
70% of American Cities in Debt – Pension Crisis will Cause Taxes to RISE
February 23, 2024 | By Martin Armstrong
A study by Truth in Accounting (TIA) revealed that 70% of America's largest cities fell into a deficit in fiscal year 2022. Out of the 75 cities studied, 53 simply did not have the funds to pay their bills. The study found that the total debt among the 75 cities had reached $288 billion, and despite the $307.4 billion of assets shared among them, the cities held $595.3 billion in unfunded pension plans.
US law requires cities to maintain a balanced budget, yet no one is holding the representative accountable. Mind you, this data was collected BEFORE the migrant crisis toppled city budgets. Cities have been over reporting their revenue and incorporating borrowed funds into their total revenue calculations. These cities push off bills until the beginning of the next fiscal year to alter calculations.
Pensions and health care were the major issues burdening American cities long before Washington required taxpayers to bankroll the 7+ million new illegal residents. As the report notes: "The most common accounting trick cities use to understate government costs is not including true compensation costs. Cities provide employees with salaries and employee benefits, such as healthcare, life insurance, and pensions. While pension and other post-employment costs, such as health care, will not be paid until the employees retire, they still represent current compensation costs earned and incurred throughout their tenure."
I have been warned for many years that the government pension plans operate like a Ponzi scheme and have been waiting to implode. Government employees have the defined-benefit (DB) while we get the defined-contribution (DC) plans. Most state and local government employees, actually 87% of those working full time, participate in a defined benefit (DB) pension plan. They contribute NOTHING but are guaranteed a pension on top of what they earned, plus free healthcare for life. Under these promises, these employees have never been required to save for the future and will demand that the public be taxed on anything and everything to keep to this Ponzi scheme on life support.
UNDER NO CIRCUMSTANCE should you allow your pension fund to be managed by any government-related entity. They cannot pay government employees so they have sought to suck in everybody else to cover up their losses. Before 2032, there will be more people on retirement from government than actual employed workers. The government must continue to raise our taxes because they are incapable of creating reform.
The reason I highlight the migrant crisis is that we are now shelling out billions of dollars every month to support a new influx of people who have also never contributed to the system. They are providing them with "free" shelter, food, debit cards, and more. Then, they decided to prevent these very people from obtaining working permits to ensure the select few with good intentions cannot ween off government/taxpayers.
Look at history to see how this situation plays out—warning: the pension crisis will not end nicely. When the government could no longer afford to pay the army, it began sacking Roman cities that opposed their general. They turned inward and cannibalized their own cities, weakening the entire empire, thereby allowing the barbarians to come through the gates. We have followed the very same mistakes as Rome. This is just how empires always end. We are no different.
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Related news update for 25 February 2024:
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