For some state and local governments, the weight of retirement obligations is oppressive. To avoid confessing to a complete disaster, they usually decide to cut benefits available to future employees, because governments can less readily rescind retirement benefits of workers who have already retired.

This reduction in promised retirement income happens often enough that the savviest government workers retire early to lock in benefits before the government employer can slash their retirement income. By dodging the cost-cutters’ bludgeon, these workers can often find employment for a few years to supplement their retirement package and at the same time match their preferred workload and location.

Chronic budget deficits and habitual shirking of retirement benefit contributions by states and municipalities have undermined public employee retirement expectations. States such as Illinois and Arizona are accelerating their own financial demise by agreeing to outlandish retirement plans for their unionized employees. And to prevent rationality from arresting excesses, they adopted constitutional amendments that prevent aligning pension payouts with available funding. The resulting union retirement vortex sucks funds from every other of the state government priorities.

The “usual suspects” for local government chronic deficits include Detroit Mich., Stockton Ca., Harrisburg Pa., Chicago Il., and many more. Cities in financial crisis often struggle with retirement benefit costs and interest payments on money they borrowed to fund retirement payouts or special construction projects (e.g. football stadium narcissism or a municipal incinerator).

Cities can undergo Chapter 9 reorganization (like bankruptcy) where a judge reduces a city’s debt obligations including pension payouts. But, unlike with cities, states cannot “go bankrupt.” They are condemned to muddle through an interminable miasma until they devise a way to harvest enough taxes to pay off debts or until they or receive a gift, perhaps from a rich Uncle Sam. The specter of a Federal bailout is a taxpayer’s nightmare.

Resetting pensions is not a practice limited to government. Trucking is a painful example of pensioners living in a slow motion disaster. The Teamster’s Central States pension fund receives contributions from just 54,698 active workers to pay out benefits to 214,243 retirees. At one time, the fund was regarded as a model pension arrangement paying as much as $3,500 per month to retirees, but erosion in the market share of unionized trucking and the unfavorable age demographics of the truckers made that an impossible pace to maintain.

The prohibition on cutting private sector pensions contained in the Pension Protection Act of 2006 no longer applies after 2014, and retirees of trucking firms such as YRCW have been warned they will face lethal cuts in pension checks (e.g., from $3,500 down to $1,300 per month). The level of $1,300 per month positions the Pension Benefit Guarantee Corporation (PBGC) on the edge of a cliff, since $1,300 is the maximum PBGC payout, and the PBGC will become the payer of last resort should the Teamsters’ pension plan slip into insolvency. When PBGC becomes paymaster, the taxpayers become its piggybank.

The total cost of this mountain of imprudent retirement promises across all industries and governments is about $3 trillion. There is no elegant way to cut that down to size. The workers usually held up their end of the bargain, but the employers overpromised. Unfortunately, there is no meaningful way to claw back misspent pension funds and excessive promises. Reducing total retirement benefits to a workable level going forward calls for restraint in wage negotiations. Unfortunately, government negotiations seem more like a scramble for votes, than for fiscal sanity.

Those who will be shanghaied to pay off the trillions in debt need to show aggressive resistance now. Don’t allow elected officials to pickpocket you, so they can buy new “friends.”