The Patriot Post® · Stockton Ponzi Scheme

This week a judge in California allowed the city of Stockton to proceed with bankruptcy proceedings. The cause of this bankruptcy is related to the extreme healthcare and pension benefits that have been extended to current and past employees of the city.

Currently, Bernie Madoff sits in jail for creating a Ponzi scheme where current investors were paid high returns using proceeds obtained from future investors who will trust him with their money with the same promise of high returns. What is the difference between Mr. Madoff and the city of Stockton? A defined pension or healthcare system that promises benefits based on negotiations rather than contributions is no different than the Ponzi scheme contrived by Mr. Madoff. Those that sought these benefits and those that awarded them when there was no financial base to support them are just a guilty of perpetrating a Ponzi scheme and should be held accountable in the same manner as Mr. Madoff.

Defined benefit or pension programs that do not reflect the contributions of the individual either through their personal or employer efforts should be outlawed for the Ponzi schemes they are. Stockton is one of the first in what will be a long line of similar actions taken when the promised benefits and pensions that were defined in some negotiation were not backed up with sufficient funds to meet those obligations.

Those of us in the private sector know that our future benefits and pensions will be based on what we contribute into and save for between now and then and that there will be no government mandated COLA’s or adjustments once we are no longer contributing to their growth. I fear that our current government will find a way to raid what I have saved for to provide for those that haven’t – but then again, it already is.