WASHINGTON, June 20 — New accounting standards will require state and local governments to acknowledge the full cost of health benefits promised to retirees, putting immense pressure on public employers to reduce their liabilities by scaling back benefits or shifting more of the cost to retirees, government officials and accountants say.Supporters say the rules will help state and local officials, investors and taxpayers understand the magnitude of these commitments to current and future retirees.
I have to admit, I’m of two minds about this. On the one hand, it’s important–even critical–that accounting practices be put in place that count all the costs and don’t allow the kind of hide-the-sausage tricks that have led to $$Billions$$ being stolen from investors and the public treasury.
On the other hand, I note that while the IRS and the SEC have been extremely slow to develop rules that would disallow corporations from hiding behind these accounting scams, they have been quick to support efforts to call traditional Democratic constituencies to account (pardon the pun but it’s one of the fringe benefits/dangers–Select One–of reading this blog). Now we have a set of rules that endangers the retirement programs of public employees.
Most public employers finance retiree health benefits on a pay-as-you-go basis, as bills come due. Experts on employee benefits said the new standards would encourage state and local officials to set aside money in trust funds for the purpose of providing health benefits to retirees.The cost of such contributions would be a new, immediate expense for state and local governments, many of which are already struggling with severe financial problems.
Labor unions and health plan administrators said the standards could jeopardize health benefits for millions of retired public employees. Moreover, they said, the standards will cause a fiscal shock to state and local government agencies and could harm their bond ratings.
“We are concerned that a lot of our retirees will end up losing their health benefits,” said Frederick H. Nesbitt, executive director of the National Conference on Public Employee Retirement Systems.
And they very well might–the radcons will have no compunctions about using this information to attack not just public employee benefits but the whole notion of public employees period, citing retirement and health benefit costs to justify turning yet more govt agencies over to the not-so-tender mercies of private companies who will eliminate those benefits as ‘unacceptable costs’ and then go right ahead and charge 10X what those benefits cost for their ‘services’ because, after all, this is America and they’re entitled to make a profit.
I’m not saying they cooked this up for just that reason–I think the GASB is doing what it thinks is right, and probably is right. But I am saying this is a potential bonanza for privatizers and that they won’t hesitate to exploit it for their own purposes.
Seems like in BushCo America you can’t even Do the Right Thing without being afraid of how the radcons will twist it to get what they want.