The State Governments are Running Ponzi Schemes

I am reading an article in Fortune called "The Public Pension Bomb". It points out that for "years, states nationwide have shortchanged the retirement programs that cover teachers, police, and other public employees; now the stock market plunge has wiped out billions of dollars from already underfunded plans." It goes on to say, "The growing obligations raise the specter of higher taxes, diminished services, or even another round of costly federal bailouts."

What the state governments are doing - promising future payouts, spending the money paid into their funds, and then funding distributions through a combination of new revenue from ever-increasing populations and employee counts - is exactly the same thing Bernie Madoff did at his fund. The state governments, through their pensions, are running outright Ponzi schemes.

The article points out that in New Jersey, the state pension fund that covers teachers, state employees, police, and firefighters, the pension fund is $34 billion short of what it needs to meet it's obligations - and the fund has since fallen an additional $26 billion for a total shortfall of $60 billion! The U.S. Census Bureau estimates that New Jersey has 3,064,645 households. That means that, on average, each household will have to come up with $19,578+ just to plug the shortfall that is promised to those pension funds to pay for the retirement of public workers instead of saving for their own future.

The obvious conclusion is that taxes are going to have to raise substantially, the states are going to have to bankrupt, and / or the pensions are going to have to be somehow eliminated. However, a simple solution (and likely, in my opinion), is that the wealthy will simply move out of states because people will only suffer so much taxation.