A lot of things have happened during the past few weeks which have challenged Libertarians and often put us on the defensive including the comments by Rand Paul and the BP Oil Spill. I won't comment on either of these issues, as they are not relevant to a race for Ohio Treasurer of State. However, I'd be happy to share my thoughts if you contact me personally.
Today, a good friend asked me "How bad are the pension funds in Ohio? Is it as bad as California?" I answered "It all depends on who you believe". He persisted, and stated that he wanted my answer. "It's bad," I said.
The one thing I've learned from my formal education is that anything can be justified as if it were fact. You will be able to find "evidence" that the pension funds are in decent shape. You will also be able to find "evidence" that they are bankrupt. Finding the truth takes a lot time and curiosity, something that few people have anymore. While I don't have a lot of time, my curiosity makes up for that. I read and listen to every possible angle before making an informed decision. And I only make an informed decision after I have looked at the data. Numbers do not lie.
After reading annual reports, crunching numbers and sifting through the propaganda (on both sides), I have come to the conclusion that public pension funds will eventually prompt another federal bailout (not an action I endorse by the way). Several states (California, Illinois) simply cannot survive. Other states (Ohio) are not far behind. I am convinced that the federal government is either waiting until a majority of states are in the same position, or will do something behind the scenes that goes unnoticed to many.
Why are our public pension funds in such poor shape? It is the easiest thing for a politician to promise and for a union to demand. Raising salaries can be unpopular with voters, but how many voters know the details of the pensions of public employees? Furthermore, it is very easy to kick the costs down the road to another generation of taxpayers or employees.
Some propaganda is already starting to come out regarding what a successful year public pension funds had from an investment return standpoint. While this is great news, the fundamental problem is not going away. (First of all, mathematically speaking, if you lost 25% of your assets one year, and made a 25% return on investment the following year, you are still negative for the period. This is what I am expecting to see out of many of the state reports. This is a period of two years where states were counting on 8% in each year.) We have promised too much, to too many. A system of working for 35 years and retiring for 35 years is not sustainable.
What can I do about it if elected to Treasurer of State. First, I can bring this issue to the attention of the public. As CFO of the state, it would be my duty to point out the true nature of our fiscal crisis to the taxpayer. You would see me highlighting this issue every day in the press, because that is my job. Second, I can work with the legislature to propose solutions. What solutions would be acceptable from a Libertarian standpoint? Anything that does not involve more of your tax dollars would be my answer. We can increase the retirement age, reduce the maximum payments, reduce the cost of living adjustments, increase employee contributions or a combination of the above. Ideally, we should move new employees to a defined contribution plan and phase out the defined benefit model over the next few decades.
Every fiscal problem our state and nation face is solvable. It is the politics that makes these issues impossible to solve. Therefore, we must change the types of people we elect to office and our view of government (even if it makes us a bit uncomfortable at first having citizens who are "less seasoned" on your TV programs). Anything less will lead this state off of a cliff within the next few years. The only difference between the traditional Democratic and Republican candidates is how fast we get to the edge of the cliff. Personally, I'd rather turn the car around.