America's bloated pension system for public employees desperately needs to be reformed — or more and more cities will face bankruptcy, says Stephen Moore, chief economist for The Heritage Foundation.
"[There's] a kind of scam that goes on in California where you can retire with this lump sum, a half a million, a $1 million payment, and then you can go back to work," Moore said Tuesday on "The Steve Malzberg Show" on Newsmax TV.
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"They call it 'retire and rehire' — they rehire the people for the same job, so they're essentially collecting two paychecks at once. And this is something, by the way, that is bankrupting a lot of California cities.
"The unfunded liabilities in California alone are in excess of $1 trillion. That's the amount of money that has to be paid out in these pensions versus the amount of money that's being contributed to the plans."
He said the crisis has reached the boiling point in the middle-class city of Scranton, Pennsylvania.
"They've had to virtually double their property taxes, raise fees, and other kinds of taxes to pay not for police and fire service and schools and roads and bridges, but just to pay for the excessive cost of these pensions," Moore said.
"And what we find nationwide is that the average public employee pension benefit is almost double what a private sector worker gets. So that's something that simply isn't affordable any longer.
"These states and cities have to start moving to what we call defined contribution plans where what's defined is what you contribute to the plan. It's more like a 401K plan like most people in the private sector get. If you don't do that, you're going to have these time bombs in these city budgets."
Moore also commented on President Barack Obama's ongoing opposition to Keystone XL Pipeline project.
"This is a no brainer. It's a project that 75 percent of Americans support," Moore said.
"It's basically about American infrastructure. It's about jobs, it's about American national security and energy security. I can't even comprehend the arguments against this.
"It's even good for the environment because it's much better to transport oil and gas via pipelines than to do it on tankers or to do it on trucks or to do it on rail. So it's good for the environment, it's good for the economy, and the president's against it."
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