The 200+ Billion Dollar Ripoff

My latest column is up at the Augusta Free Press. Here's the text with links.

The $200+ Billion Ripoff
By Bruce Kesler

Congressional and media attention is focused on whether our representatives can accept a free meal from lobbyists, against the fear and occasional lapses of undue influence on legislation that can affect millions of dollars of specific spending earmarks or government contracts. Porkbusters argue for trimming tens of billions of dollars of Congressional waste (some beauty being in the eye of the beholder).

Meanwhile, a bigger ripoff has been virtually swept under the table or, I could say, into the pockets of public employee unions, and even other beneficiaries of essential government services or largesse are under pressure as a result.

We are on our way to almost 95% of the $246-billion multi-state tobacco settlement in 1998 being spent by state governments for purposes other than preventing and treating the ill effects of tobacco. The Center for Disease Control’s best practices call for $1.6 to $4.2 billion of the approximately $10-billion per year from the settlement to be spent on comprehensive tobacco programs. According to the Campaign for Tobacco Free Kids in fiscal year 2006 the states have only assigned $551 million for tobacco prevention and treatments.

States and local governments are facing unfunded pension liabilities of $1-trillion and more, causing what S&P says as “U.S. States’ budgets are strained due to rising unfounded pension liabilities...at a time when costs are also escalating in other areas, such as education and Medicaid.” A report from the Federal Reserve Bank of Chicago calls it “the 800 pound gorilla in the room,” with funding needs running “from five to ten times current outlays” for another like amount of retiree health care liabilities.

San Diego city’s public employees pension scandal is seen as the forefront of exposing similar troubles across the nation. Almost 80% of the city’s budget is consumed by personnel costs, there is a multi-billion dollar deficit in funding public employee retiree pension and health contracts, and all manner of other essential government services are going begging. Today’s San Diego Union-Tribune features how San Diego’s “Tobacco Payout isn’t combating smoking: S.D. uses settlement for everything but.”

The city has received roughly $66.5 million in tobacco-settlement revenue since 2000, and a spokesman for Sanders [San Diego mayor], who took office in December, said the city doesn’t appear to have spent "one red cent" on anything related to smoking prevention or health.

California has only spent in the latest fiscal year 48% of even the low end of the CDC recommended minimum from the tobacco settlement, New York 45%, Virginia 33%, compared to the rare and exceptionally high over 100% in Mississippi. Only 4 states even meet the CDC minimum. (Visit the site at the above link for reports on every state.)

The mis-spending of the tobacco settlement funds are only one glaring tip of the iceberg of how public employee retiree pension and healthcare programs, more generous than almost anything else in industry’s remaining relatively few such programs – that are bankrupting many, such as airlines and auto makers – are breaking the back of our fiscal responsibility and future. The transfer of government funds from the truly needy, however one wants to define that, to government workers is a disgrace that must be faced and corrected.

Bruce Kesler is a regular contributor to AugustaFree Press and to www.democracy-Project.com blog