Liability

We just learned from the GAO that taxpayers will be on the hook for $108 billion in unpaid student loans. That's a gross under-estimate of the overall liability that the shrinking pool of people who pay income taxes (you know, the ones who never seem to pay their "fair share") will have to cover. The editors of The Wall Street Journal comment:

The Education Department claims the national student loan default rate is 11.3%, yet only half of all debt is in repayment. Borrowers can seek forbearance or deferment if they are unemployed, return to school or claim financial difficulties. Or they can enroll in income-based repayment plans that let them discharge the debt after making payments equal to 10% of their discretionary income for 20 years. Those who work in “public service”—government or a nonprofit—can wipe out their debt in 10 years without a tax penalty.

Unless the Trump administration modifies the millennial vote-buying scheme hatched by the Democrats, "forgiveness" programs will create a liability that makes the $108 billion look like chump change.

But student loan forgiveness for college graduates in programs like gender studies—programs that have done little to prepare those students for jobs that might allow them to pay back their debt—is not our most pressing worry. If the current student loan program is bad, public pensions are horrendous.

For decades, the Democrats have played nicey-nice with public sector unions, providing rich pension plans that would be impossible to properly fund even in the best of circumstances. The reason, of course, is that the the Dems need union votes, and rich pensions are the driver for that eventuality. Existing public sector pensions are grossly underfunded, their financial status is dishonestly reported, and their ability to make future payouts is very bleak. The Orange County Register reports on the situation in California:

... Official estimates peg combined unfunded pension and retiree health care obligations at more than $200 billion, although some, such as the Stanford Institute for Economic Policy Research, charge that the state’s actuarial assumptions are overly optimistic and understate actual costs by as much as $1 trillion.

Here's the thing. This is not just California's problem, or Illinois, or Connecticut ,or New York, or any other of the many blue states (and a few red ones) that are in serious pension funding trouble.

The very same taxpayers in states that have solvent pension programs will be asked to bail out states who have been grossly irresponsible with their public pensions. After all, who wants to see grandma eating dog food, right?

Many of those same taxpayers do not work for government and have set aside their own money to fund a Keogh or IRA or even a 401-K, recognizing that pension payouts were largely based on their contributions and responsible actions. Now, those same taxpayers will be asked to bail out the states that have acted irresponsibly and the politicians who enabled them.