WASHINGTON - Warning to Illinois and its state employee pension system, as well as America's Social Security retirement system: You're headed for the same situation as France's:
According to an official report cited in the Financial Times, France's national pension system is going broke, with its deficit expected to grow from 14 billion euros last year to 19 billion in 2017 — a 30% surge. To pay for this, France's COR pension council says unemployment will have to be cut from above 9% to 4.5% and productivity growth raised to 1.8% from about 1%.
It can't happen as long as mega-taxes and vast waves of tax exiles — from France's richest billionaire to actor Gerard Depardieu — continue to flee the country. Sadly, the U.S. is on precisely the same path — with a president hellbent on taxing the rich and, like Hollande, refusing to address runaway entitlements.
France's public debt is near 90% of GDP and its unfunded pension liabilities amount to at least 200% of GDP. But neither tax hikes nor demonizing the rich has done a thing to defuse the entitlement bomb.
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