This is the Cato Daily Podcast for Wednesday, December 26, 2007.

I'm Caleb Brown. State workers have generously funded pension systems.

Elected officials reap the political rewards. When the bills come due, state taxpayers will pay the price.

The new report from the Pew Center on the States indicates that the price tag for

the next 30 years of these pension and health care systems is $2.7 trillion.

Chris Edwards, the director of tax policy studies at the Cato Institute, offers his thoughts.

State and local workers in the United States get very generous pension plans and retirement

health care coverage from the state and local governments that employ them.

There are about 16 million state and local workers

in the United States, and these folks get very generous retirement plans.

The Pew study out recently looked at the generosity of these state retirement plans and found that

they're extremely unfunded.

There are hundreds of billions of dollars of promised future benefits for state and local workers that have not

been funded, no money has been set aside to pay those future benefits.

It's easy to understand from the short-term political perspective, the calculus that

individual politicians do, if they are not legally obligated to actually put that money aside,

that it actually behooves politicians to spend that money on short-term needs rather than to set aside

for a long-term liability that they may be out of office by the time those bills actually come do, right?

That's right.

Private sector pension plans are under heavy legal requirements to fund those future benefits.

There are the requirements for public sector

pensions and retirement benefits are a lot less stringent.

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