The pension time bomb.

• Author: Cook, Gareth G.
• Position: Unethically high pensions of government employees

To judge by the last election, most Americans can only smile at the thought of an unemployed congressman pounding the pavement in search of work. Others might feel a slight twinge of empathy for the suddenly jobless. But few suspect what every congressman knows: Thanks to an extremely generous pension program, many retiring members can live very well, at taxpayer expense, without lifting a finger.

Consider fallen House Speaker Tom Foley. According to the National Taxpayers Union Foundation, his lifetime pension will start this year at $123,804. Multi-millionaire Dennis DeConcini, retiring under the cloud of the Keating Five S&L scandal, will take in $55,669 this year. And Dan Rostenkowski, longtime chairman of the powerful House Ways and Means Committee, can expect his checks to start at $96,468 per year--and they will continue uninterrupted even if he is convicted of all the corruption charges on which he was indicted last year.

But the real surprise is that these are not examples of congressional perks gone mad. Many federal employees--and some state and local workers--are treated to pensions far more lavish than those of their counterparts in the private sector. So generous are government pensions, in fact, and so poorly are they financed for the future, that, absent serious reforms, the eventual price tag could trigger a financial crash that will make the S&L crisis look like a Big Wheels pile-up at the local playground.

Already, ballooning retirement payments are squeezing the very programs for which the government was established in the first place. Last year, for instance, pension checks for retired federal workers and military personnel ate up $65 billion. That's enough to fund the entire 1994 budget for welfare, education, and the National Endowment for the Humanities. Add to that the total cost, over five years, of the crime bill. And then add everything we spend on foreign aid and highways. You'd still have a ways to go.

It is the future, though, that is truly worrisome. In the good old days, a pension plan meant solemn accountants carefully putting aside and investing money so there will be enough when all the retirement checks start coming due. Put in the language of the green-eyeshade set: Without prudent investments, made with every pay period, public and private plans accumulate substantial "unfunded liabilities." And the government does not come close to investing each year what it needs to, and its unfunded liability--the bill that future taxpayers will get for today's public servants--is frighteningly large.

For federal employees, according to the Employee Benefit Research Institute (EBRI), unfunded liabilities have already hit $870 billion dollars. If you also include military retirees, total unfunded liabilities of the federal retirment system--money that has been promised but is not there--are now $1,497,000,000,000. If the federal government used the same accounting conventions as private businesses, the entire federal debt would jump, overnight, by a full third.

Though it is by far the worst offender, the federal government, unfortunately, does not have a monopoly on pension problems. According to a 1993 study by Wilshire Associates Inc., 28 states suffer from underfunding. More than 10 states are in serious trouble with less than 80 percent funding of their...