The problem isn’t old people. The problem is an aging infrastructure.


Graphic: Bloomberg Markets.

Last week I commented on the proposition that retirees living too long was putting serious pressures on the state pension systems and the entire economy of Illinois and the nation.

We retired public employees are what are being labeled a negative demographic change.

There are too many of us living too long, say the bean counters – although a recent study suggests the average American life span may be declining.

It turns out that the retirement check my fellow retirees and I receive helps the economy. Each dollar paid out in benefits supports $2.36 in economic activity, according to the National Institute on Retirement.

In other words, we spend the money we get and that’s a good thing.

There are things that get old that are a drain on the economy.

According to Bloomberg Markets:

The average age of all fixed assets stood at 22.8 years in 2015, the oldest in records going back to 1925, according to U.S. Bureau of Economic Analysis figures. It’s been rising because companies and governments — state, local and federal — have been reluctant or unable to spend money to swap out the old for the new.

Illinois is the perfect example. Our taxing system – a flat income tax that taxes the income of the most wealthy at exactly the same rate as a working stiff – cannot begin to pay the state’s bills and support modernizing an aging infrastructure. And that was before Governor Rauner’s budget fiasco.

That’s bad news for the economy and for Americans’ living standards. It means workers are toiling away at less-efficient factories and using computers that are not as powerful as they could be. Doctors are working at hospitals that are crumbling with wear. And commuters are having to put up with more frequent train delays and breakdowns.

It won’t come as a surprise to anyone who’s had to maneuver their car around a gaping pothole that the average age of government fixed assets was a record 24 years, according to the BEA data released Sept. 7 and updated annually. Within that category, highways and streets at 28.4 years in 2015 were also the oldest since 1925.

It seems that those who want to blame retirees and public pensions have it all wrong.

We help the economy.

It is an aging infrastructure and a refusal to raise the revenue to fix it that is a problem.


5 Replies to “The problem isn’t old people. The problem is an aging infrastructure.”

  1. Causes of pension shortfall:
    1. Refusal to raise revenue.
    2. Decades of pension “holidays” (pension theft) caused because of refusal to raise revenue.
    3. Budget shortfalls not because of pensions, but because of previous refusals to raise revenue, which now must be paid back.
    4. Items #2, #3, and all other reasons are all results of item #1, refusal to raise revenue.

  2. No mention that retirement income is exempt from state income tax in Illinois? I’d wager you could fix a bridge or two with that money…or pay for social services…or increase funding to higher ed…or pay pension debt…

    There is flat. Then there is regressive.

    1. A flat income tax is regressive, Nelson. I have no problem with a tax on all retirement income, not just public pensions, but I am always amused that in a state that taxes billionaires at the same income tax rate as McDonald’s workers, there is always someone like you who wants start the conversation with increasing the taxes on people over 65.

      1. Actually, a flat dollar amount would be regressive. A flat % is just, well, flat. A progressive tax would treat all income equally but at increasing rates.

        My issue is that McDonald’s manager working 60 hrs/wk pays state income tax and the retiree with equal retirement income pays zero. Or the 55 year old IT guy with a $60,000 salary pays state income tax but the 55 year old retired police officer with a $60,000 pension pays nothing. Treat them the same, then go progressive all you want. I’m curious to what the appetite would be for progressive (read: higher) rates if everyone had to pay?

      2. Rather then get into a debate over what’s flat and what’s regressive, let me say that there is no appetite among the Frank Gallaghers (watch the great TV show, Shameless) of Springfield or Chicago’s Gold Coast for a progressive income tax in Illinois. By the way, the plan offered by the Center for Budget and Tax Accountability reduces the rates for most and only increases the rates for some at the top. As a supporter of a fair progressive tax system in Illinois I support you (if I read you correctly) in advocating for graduated progressive income tax and have no problem with all retirement income – not just public employee pensions – being a part of that graduated system. In fact, I have been advocating it for years.

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