Many states are experiencing serious problems trying to deal with deficits driven in part by huge pension obligations. Retired government workers have become a burden that is no longer serviceable.
What I suggest is a means tested pension system with debenture bonds subordinate to the other obligations of the state due when those obligations are met on a steady basis. It will be real money, just now now and not until the state's financial situation comes under control.
Here's how it would work:
All pensions would be capped at no more than $40,000 per year to be paid at once. This would be an indexed amount. The balance due would be issued as non interest bearing debentures. The debentures could be cashed out to a factoring agency like J D Wentworth if there were buyers. The debentures could be used to buy things and services from willing sellers. There could be a secondary market.
Once the day came that the state became solvent again, the bearer bonds, the subordinated debentures could be presented for a cash payout.
This would have the net effect of balancing the budget quickly and it would create additional pressure to balance the state budgets.
All in all a good thing. Of course it will never work. It makes too much sense.
1 comment:
the unions along with their their pension systems should be tossed into the Gehenna , It is Their 'system' that puts states in debt.
Post a Comment