February 6, 2018 5:40 PM
Public pension shortfalls result from too little money being paid into the pension funds. Or so government employee unions and their political allies would have you believe, when they ask taxpayers to pony up more to pay for pension benefits. Yet left out of this picture is the growth of those benefits.
January 16, 2018 3:07 PM
Addressing the underfunding of public pensions is difficult enough on its own. Reformers routinely face opposition from government employee unions and their political allies. But that’s not all. In 12 states, even when the political will exists and the public may seem willing to support reform, a formidable legal roadblock stands in the way—a legal...
January 11, 2018 4:50 PM
The real measure of future taxation is the projected level of government spending. That simple truth makes filling the funding gaps of public employee pension funds crucial for states’ and municipalities fiscal health—as well as for the well-being of taxpayers who rely on the public services their taxes are supposed to pay for. Every tax dollar...
December 18, 2017 9:49 AM
How do you make a bailout not look like a bailout? Call it a loan.
The recently introduced Butch Lewis Act (S. 2147) would put taxpayers on the hook for billions of dollars in unfunded pension liabilities under the guise of loans from the U.S. Treasury.
The Act would...
October 11, 2017 4:12 PM
Politicians often like to kick the can down the road when it comes to debt. Few things illustrate that better than the large pension deficits many state and local governments around the country are now facing. That’s not surprising, given the temptation to pass the bill on to future office holders.
Yet, the pain isn’t all in the future. As a new study from Stanford University’s Institute for Economic Policy Research shows, increasing pension payments are straining California cities’ finances in the here and now. Steven Greenhut of the California Policy Center describes the extent of the problem:
[T]here’s a huge, current problem even for the bulk of...
September 14, 2017 12:05 PM
Yesterday, Missouri State Treasurer Eric Schmitt announced that the state’s public employee pension plan was underfunded by $5 billion. That is an eye-popping amount, but the story is a sadly familiar one:
The treasurer placed blame on the retirement issue on past administrations for what he said were unreasonably high expectations of investment earnings. Schmitt said returns have been below predictions for 16 of the past 17 years.
According to data from the Missouri State Employees’ Retirement System, investment returns have averaged close to 7 percent over the past 20 years. Returns have been lower in recent years, averaging close to 4.5 percent over the past 10 years and less than one percent over the...
December 12, 2016 8:13 AM
This week on RealClear Radio Hour, Marc Edwards and Dan Liljenquist recount politically induced disasters from the perversion of science to the pension crisis.
My first guest is Marc Edwards, Professor of Environmental and Water Resources Engineering at Virginia Tech. Marc discusses institutional scientific misconduct in academic and government-funded science and details how the U.S. Environmental Protection Agency and Centers for Disease Control and Prevention created and covered up both the D.C. and Flint, Michigan, lead and drinking water crises. He describes how upper management cultivates a culture of corruption to promote their policy agency agenda, risking loss of public trust in science.
October 19, 2016 12:53 PM
State public pension plans are underfunded by nearly $5.6 trillion nationwide, according to a new American Legislative Exchange Council (ALEC) study. Naturally, the level of pension funding and the size of liabilities vary widely across states. Given that, the new ALEC report provides useful comparisons based on three criteria:
- Funded ratio;
- Total unfunded liabilities; and
- Per capital unfunded liabilities.
In terms of funding ration, Wisconsin scores the best, at 63.4 percent funding, the only state with a ratio above 50 percent. Connecticut scores worst, at 22.8 percent.
Vermont has the nation’s smallest total pension obligation sum, at $8.7 billion; California the greatest, at $956 billion.
Of course, Vermont is a small state...
May 16, 2016 6:06 PM
Air traffic control is in dire need of reform and modernization, and there is a great plan in the House FAA bill to do just that. But a handful of conservative activists have launched a campaign to roil reform. Last week, I published two posts debunking false claims made by critics. While the vast majority of free market advocates familiar with the issue support the air traffic control corporatization plan contained in the House’s AIRR Act, a small group of anti-union conservative advocates opposes these reforms, citing concerns over labor unions.
The reform plan would transfer the...
April 12, 2016 3:48 PM
For years, the Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures private sector defined benefit (DB) pension plans, has been severely underfunded below what it needs to cover its payout obligations to retirees, especially for multiemployer pensions. Closing this funding gap is urgent. Yet despite greater attention to the problem by lawmakers, the media, and the public, the problem persists.
A major reason for that is the perverse incentives built into the very workings of the PBGC. And it’s even worse for its multiemployer pension program.
First, PBGC premiums are set by Congress—a sure way to politicize the process and end up with premiums that don’t reflect actual funding risks.
Second is the “last man standing” rule, under which all...