Friday, February 19, 2010

How to Balance a State's Budget With a One Page Law

If you watched Glenn Beck’s Show today, his topic was the pensions paid out to retirees throughout America. As he pointed out many of them are receiving over 90% of their full pay when they worked. Since when have retirees been entitled to 90% of their pay? This seems to be a new concept that with benefits you retire at a higher income then when you worked. My God, how did this happen? At this rate you will never solve state budget problems. There is now close to a two trillion dollar gap the states will owe retirees but have no money to pay. This means that all states are now insolvent with no real hope of surviving.
There are two simple ways to solve this problem but they are both painful and I’m not sure if politicians have the guts to do them.
The first would be to declare bankruptcy by the states and local municipalities. You then crack the union contracts and rewrite the pensions and salary requirements to a level they can pay for. That would be considered major surgery and would be a worst case scenario. New Jersey is headed in that direction.
Now, the easiest way to rectify this problem would be to tax all state and local pensions. A tax of 50% of all pensions and a 25% tax on all current state and local employees pay would be mandated. That’s right current government employees would get a pay cut of 25%. This would immediately start paying back the money needed to states for their survival. If a state has no income tax, they would declare a special tax and withhold it at the state level. The balance would be sent to the retiree and employee.
The federal government through the IRS would do the same for federal workers and retirees. That’s right again a 25% pay cut for federal employees.
All of this could be done as a one page law, not like our 2,000 page health care bill and just could possibly save our country.
Thus, by simply at the state level in every state, the legislatures would pass a law taxing and instituting mandatory withholding at the source on all government employees and retirees. We then would have a fighting chance at saving our states and our country.

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