State pension funds (in case you’re still wondering)
Dean Baker, an economist and Co-Director of the Center for Economic and Policy Research, in Washington, D.C., has this to say about state employee pension funds. “The shortfalls facing most state and local pension funds have been seriously misrepresented in public debates. The major cause of these shortfalls has not been inadequate contributions by state governments, but rather the plunge in the stock market following the collapse of the housing bubble. Given the low PE ratios in the stock market, pension fund assumptions on the future rate of return on their assets are consistent with most projections of economic growth and past experience. Furthermore, when expressed relative to the size of their economies, most states are facing shortfalls that appear easily manageable.” Here.
“Center for Economic and Policy Research”
Any conservative view to cite in opposition to that coming from this liberal think tank?
Not being snarky, it’s just that economics is a soft science that particularly lends itself to distortion (unconscious or partisan) and almost always requires presentation of alternate viewpoints if you sincerely desire to investigate an issue such as this. See, for example:
http://www.manhattan-institute.org/html/miarticle.htm?id=6907
P. Flanagan
Your link suggests that the problem in New York is exceptional. Baker’s point is: “Furthermore, when expressed relative to the size of their economies, most states are facing shortfalls that appear easily manageable.”
How many reports does it take to get at the issue if every “liberal analysis” can be knocked out by an opposing “conservative one?” Isn’t it more complicated than that?
Have you become a relativist?
This is great news for retiring public employees if true.
Contrary view on the current situation of public pensions:
http://www.nationalaffairs.com/publications/page/dodging-the-pension-disaster-preview
As the Dionne article pointed out in the new Comonweal, and as I continue to insist, and as shown over and over in the posts here, partisanship is the issue!
This NY Times article reports that a number of states, apparently not as sanguine as the CEPR, are considering (or have already switched to) 401K plans for their public employees.
http://www.nytimes.com/2011/03/01/business/01pension.html?pagewanted=2&_r=1&ref=todayspaper
401K plans that replace defined benefit plans are great scams! I know; I’ve introduced them more than once in my past work history. They immediately take employers out of the responsibility chain and dump all investment decisions on employees, irrespective of their investing savvy. Once the 401K contribution is made, the boyos wipe their hands, have a martini, and move on to obsessing over their stock options. How many people have had their 401k balances devastated in whole or in part in the past 25 years? I know that I lost 60% of the value of my last one.
People forget that 401k plans were originally introduced as top-up plans for senior executives who had maxed out on their allowable pension plan limits and needed additional financial succor so that they could move ahead of the worker bees and accumulate even more retirement benefits. They were NOT designed to be the basic fund to ensure a livable income post-retirement. Time has shown that they are not capable of doing that, either.
I think the lesson here is that if you make the denominator large enough, you can always minimize the extent of the problem. For example, relative to all the tea in China, the deficit is actually quite small. Great, but so what? To blithely assume that the resources of the ENTIRE ECONOMY of a state can be called upon to fund every shortfall in every account is fiscally irresponsible in the extreme. Though I imagine it is the dream of every statist.
What denominator are you talking about? What’s this got to do with the tea in China. Who is blithely assuming that the entire economy of a state can be called upon….” As with many things you post Mark Proska, I ask, do you know what you’re talking about?
MS–Sorry, thought it was clearer, I was responding to this:
“Furthermore, when expressed relative to the size of their economies, most states are facing shortfalls that appear easily manageable.”
To respond to your question, I think I know what I’m talking about, but I’ve been wrong before.