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Great lowered expectations



Great lowered expectations

The final bill would in turn be partially funded by the $7 billion in federal tax revenues gained as a result of corporations’ reduced tax-deductible pension contributions. Critics assailed the bill. The Competitive Enterprise Institute (CEI), a free-market think tank, described the changes to the discount rate formulation as an “accounting gimmick known as ‘pension smoothing,’ whereby pension managers spread losses out over several years, while overestimating projected investment returns.”

In a press release, Marc Scribner, CEI transportation policy analyst, said, “Pension smoothing is notoriously unreliable. This accounting trick will likely expose taxpayers to potential pension fund bailouts in the future.” With the funding of both private and public pension plans being tested by the current environment, the accuracy of Scribner’s comments remains to be seen.