Eleven front organisations for different levels of government signed onto a fact sheet seeking to allay fears about municipal bonds, state bankruptcies, and public pensions. As regards their facts on State and Local Pensions, they weren’t entirely truthful and I think I know why.
Their we-have-a-lot-of-money Fact: “There is currently $2.7 trillion already set aside in pension trusts for current and future retirees.”
The Truth: We don’t know. Until the Transparency Act passes there is no way of knowing how many public plans are even out there and what their real assets and liabilities are. Even if, by some coincidence, there happened to be $2.7 trillion set aside what if we need $6 trillion to pay off all the promises?
Their we-are-already-doing-something Fact: “More state and local governments enacted significant mondifications to improve the long-term sustainability of their retirement plans in 2010 than in any other year in recent history.”
The Truth: Outside of attacking COLAs, no government I know of has made any move on current accrued benefits, preferring to centre any ‘reforms’ on new hires who would theoretically be due to receive benefits decades after the plans they would be entering would have gone bust.
Their it’s-not-so-costly Fact: “The portion of state and local government spending dedicated to retirement system contributions is about three per cent.”
The Truth: Though, based on check registry data, in Union County, NJ it comes to 5% since 2004 it must be considered that many plans have been going through decades of severely understated contribution requirements (at least we have in NJ) and the real costs for current and past accruals could easily double (or in New Jersey’s case quintuple) what has been going in.
Their trickle-down Fact: “Public employees live in every city and county in the nation…..The over $175 billion in annual benefit distributions from pension trusts are a critical source of economic stimulus to comunites throughout the nation”.
The Truth: By that logic it is the rich sharing some of their excess wealth rather than workers earning their living that drive the economy.
As to the reason for this propaganda campaign to maintain the status quo you have to look at what governments spend on. If they were suddenly forced to pay for their promises it could take money away from other areas, like maybe membership dues in lobbying organisations.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.