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CEI Senior Fellow Matt Patterson: Fiscal Crisis Represents 'Collapse' of Government Leadership

By    |   Thursday, 08 August 2013 04:38 PM

The fiscal crisis that has hit all levels of the U.S. government represents a failure of political leadership, said Matt Patterson, a senior fellow at the Competitive Enterprise Institute.

"The scale of irresponsibility of our politicians in this country is just stunning," he told Newsmax TV in an exclusive interview.

"A lot of times I look at our fiscal crisis and think, this must have been what it was like to live in the pre-World War II era, where people saw this huge threat coming, and no one did anything about it. Just a collapse of leadership is what we've seen on all levels of government."

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Patterson, a labor policy specialist, focused on the municipal financial crisis in his interview.

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The numbers he has seen point to an unfunded pension liability between $2.5 trillion and $4 trillion or even larger for state and local governments.

"What that tells you is that no one knows," Patterson said. "And when you don't even know how much trouble you're in, that's a whole [lot] of trouble."

It's important to realize that "the main driver of these pensions and health benefits that are dragging these cities down is public sector unions," he said.

The unions "have bargained with politicians they have helped elect for decades, and these politicians give them everything they want to the point where it breaks these cities' budgets."

For example, in San Diego, a retired librarian can receive a pension of $234,000 a year, Patterson says. And "in Newport Beach, Fla., a lifeguard can retire at age 51 and make $108,000 in pension and health benefits."

Sen. Orrin Hatch, R-Utah, backs a plan to transfer municipal retirement liabilities to insurance companies. But Patterson doesn't think that's the answer.

"Anyone who can come up with an idea that hasn't been tried, those ideas deserve to be considered," he said. However, "it's kind of like transferring debt from one person to another. You still have the debt."

What is really needed to solve the crisis is political will, Patterson said. He's impressed with how New York City Mayor Michael Bloomberg is handling the issue.

"He has come out recently and said, we have got to solve this problem. New York City's pensions are costing us some $8 billion a year," Patterson stated.

"And he said, look, I'm not saying we're Detroit, but if we don't solve this, we could definitely relapse and decline. That was very brave of him to say. Detroit has lit a fire under Bloomberg, and lit a fire under [Chicago Mayor] Rahm Emanuel. Let's see how far it takes them."

As for Emanuel, he, like any other politician, will try to avoid declaring bankruptcy for the city, Patterson said. And he praised the mayor for refusing to raise property taxes by the 150 percent it would take to keep paying for retirement obligations.

"He should be applauded for that tough stand," Patterson said. "We'll see how long it lasts. These public sector unions can bring a lot of pressure to bear."

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The fiscal crisis that has hit all levels of the U.S. government represents a failure of political leadership, says Matt Patterson, a senior fellow at the Competitive Enterprise Institute.
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2013-38-08
Thursday, 08 August 2013 04:38 PM
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