Even for me, $58 billion sounds like a lot of money…that’s apparently the shortfall in the New Jersey state pension funds, which the state plans on confirming tomorrow. Mary Williams Walsh in The New York Times reports today that:

It turns out that New Jersey will need about $58 billion, in today’s dollars, to provide all the care it has promised its current and future retirees. That’s nearly twice the state budget and nearly twice the amount of its outstanding debt. And because of the step it took in 1994, the state has virtually no money in reserve to cover those costs.

So, how do you pay for that shortfall?

 

New Jersey officials say the state simply cannot afford to create a reserve at this time, given its debt. Instead, they plan to pay each year’s retiree benefits out of revenues and work to control future costs.

 

The portion of the $58 billion that they need to come up with each year will rise sharply because of soaring health costs and a burgeoning population of retirees, according to the New Jersey Treasury. The state will spend about $1.1 billion on this year’s care, and the figure is expected to double in five years.

Meanwhile, the state’s revenues are largely static. That means that unless something changes, New Jersey will have less money each year to pay for vital services like colleges, hospitals and mass transit. Its popular program to preserve green space just fell victim to the need to devote huge amounts to the retirement plans and debt servicing.

 

But, there is another piece of this that isn’t mentioned in the article…

Single-payer health care. If we had a real universal health care plan–meaning, covering everyone and taking out the profit motive in health care–the health care portion of the pension obligations, which is massive in the private and public pension systems, would go away as a burden on state governments. So, as I’ve pointed out before, single-payer is an economic necessity–to remain competitive in the private sector and to prevent a massive crisis for public tills (I’ll put aside for the moment the destruction of progressive taxation as the other huge burden on governments).