The Great Pension Scare: OK, this is quite amazing: Dean Baker catches the WaPo editorial page claiming that we have $3.8 trillion in unfunded state and local pension liabilities. Say it in your best Dr. Evil voice: THREE POINT EIGHT TRILLION DOLLARS. Except the study the WaPo cites very carefully says that it’s $3.8 trillion in total liabilities, not unfunded; unfunded liabilities are only $1 trillion.
I’ll be curious to see how the paper’s correction policy works here. ...
According to the survey,... state and local governments are ... underfunding their pensions by around ... around $25 billion a year.
A $25 billion shortfall in a $16 trillion economy. We’re doomed!
OK, there are some questions about the accounting, mainly coming down to whether pension funds are assuming too high a rate of return on their investments. But even if the shortfall is several times as big as the initial estimate, which seems unlikely, this is just not a major national issue.
So, why is it being hyped? Do I even need to ask?