Chaffetz: No Federal Bailouts for States' $4 Trillion Pension Problem

Press Release

H.Res. 41, introduced today, declares Congress's opposition to federal bailouts of state and local government employee pension plans. In 2012, state and local government employee pension funds reported unfunded liabilities that equal more than $4 trillion. Identical legislation (H.Res. 23 and H.Res 117) was introduced during the 112th Congress and 113th Congresses.

"Unfortunately, too many state and local government pension plans have understated liabilities and overstated asset growth rates," said Chaffetz. "They have employed methodologies that federal law prohibits private sector plans from using. This is a problem states will have to face."

The federal government is already deeply in debt, having borrowed 14 cents of every dollar spent in 2014. As of January 2015, the federal government itself carries $18 trillion of debt, of which $13 trillion is owed to the public and $5.1 trillion is owed to Social Security and other trust funds.

"State and local governments should not look to the federal government to rescue them from the consequences of poor public policy decisions," said Chaffetz. "With more than 16% of the total federal budget already going directly to state and local governments, the federal government can't afford to fix this problem. Bailing out states that have recklessly adopted overly generous pension programs would send the wrong message to states that have made the hard decisions to manage their budgets responsibly."

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