I have a feeling those graphs are more than a little fishy - the bottom one especially. Retirement costs went up ~5X from 2000 to 2010? And they'll go up by the same from 2010 to 2020? I call BS.
1) Many pensions are underfunded. The state has to play "catch up" because they weren't putting enough money in the fund in the past.
2) Pension funds play the stock market. In a recession, the fund needs more money because the market is down.
3) (I'm not sure this is the case for California, but it's definitely the case for the federal gov't) The gov't often guarantees pensions issued by bankrupt companies. The gov't just takes on the extra debt, and often bankrupt companies don't keep up with their pension contributions.
4. The boomers are just now hitting retirement, so the number of people retiring in a given year is increasing (Actually, it'd be interesting if somebody could pull out some hard numbers on this - I've heard this spoken of anecdotally a lot lately).
5. Retirees are drawing on their pensions for longer because they have longer lives.
The label on the 2nd one is off. WSJ states that it is in Billions and then has 5000 on the left hand scale. I'm pretty sure California doesn't have $5 Trillion in Pension costs.
Pretty sloppy fact checking.
That's the total projected pension cost for each year from now until the last currently retired employee dies, which may be 30+ years from now. So it's not debt, per se, since that cost is amortized over the same 30+ years. It's a projection of the total cost over that time period.
Its not BS at all. Many states have problems with this. And if you even get close to state budgets at all which very rarely do citizens do, you will see this problem in more than just a few states and cities and even counties...
I agree that California and other state and local governments have a problem with pensions. What I'm saying is that the graph severely overstates the magnitude of the change in costs over the past and future decades.
