YET ANOTHER PLACE WHERE POLITICIANS HAVE CHOSEN FUTURE DISASTER IN EXCHANGE FOR PRESENT-DAY POLITICAL ADVANTAGE: The Pension Problem Is Worse Than You Think.

It’s not just stagnating cities in states like California or Illinois that are running into pension troubles. The pension vise is now tightening around Houston too, an oil-rich metropolis that has been enjoying rapid job growth for years. . . .

Houston’s experience is a cautionary tale. The city counted on oil money and didn’t manage its finances well when times were good, and, like many cities, built its pension promises on overly optimistic projections for future growth. Pensions are in trouble in states and municipalities all over the country because while politicians have strong incentives to over-promise in the short-term, they have little incentive to plan for future slowdowns. And if Houston can’t create sustainable pension systems, despite its impressive economic fundamentals, what hope is there for Chicago?

The WSJ story also highlights the many divisions and conflicts that will flare up in the coming years as a pension reckoning approaches. Houston residents are “reluctant to support any tax increases” even as the pension woes “have contributed to reductions in hiring of police officers and spending on pothole repairs, which have become issues in the mayoral race.” This type of tradeoff is part of what we call the blue civil war. Various interests (in particular, the people who produce public services and the people who consume them) will be pitted against each other as the unsustainability of the blue model of governance, present in both Republican and Democratic states, becomes more and more clear.

Politicians don’t care if it’s unsustainable, so long as they get theirs before it collapses. This is a problem.