It’s really quite simple. Politicians making promises they can’t pay for and the recipients of those promises not caring. In this case the promises are made to public employee unions and supported by the general public.
The same basic strategy applies at all levels of government from the top down. Instead of “let them eat cake,” we expect to have our cake and eat it too. No questions asked.
There are many reasons why state and local government promises are worse than many represent – most estimates only look at retirement income, not retiree medical; most estimates allow the government entities to use historical investment returns on equities in their calculations (instead of the safe rate appropriate for guaranteed benefits), and too many states, like Illinois, have guarantees built into their state constitutions – where it is not even clear that the constitution can be amended. For example, some legal protections preclude prospective adjustments to the accrual rates (you would think we were in Europe).
This is far, far worse (in terms of commitments and insufficient funding) than suggested above.
The problem of underfunded pensions has been around for years so that people become oblivious to it. The public employee unions figure taxes will be raised to cover their costs. If benefits are raised along the way, then they conclude it’s all good for them.
What happens somewhere down the road? We will see. Maybe not we, but eventually, some generations will see.