Friday, January 7, 2011

Buying Votes with Lies

It never ceases to amaze me how successful politicians are with buying votes by promising retirement benefits when there is no money to pay the benefits promised. This is a game any party can play and most do.

If a plan's got the money to back up its promises, it's actuarially sound. If it doesn't, it's a lie, a fraud, a cheat, a promise with a balloon payment down the road. And the person who has to make the payment is not the person getting the benefit.

Most public defined benefit pension plans from social security to the various public employee pensions are not actuarially sound. This means they depend on the comparative political power of those benefiting from them and those paying for them, the plans promises will or will not be met.

That's no way to plan a retirement. I would be insulted to get an offer like that. In fact, I am insulted because politicians try to tell me that the actuarially unsound Social Security program is going to give benefits that it's pretty obviously not going to be able to give.

When this sort of vote buying becomes the equivalent of trying to pay for something with confederate dollars, ie a political no-sale, we're going to have turned an important corner. It's a true shame that most people even on the small government right aren't pushing this meme.