I’m a little surprised by the minor firestorm my modest collection of widely accepted statistics about state pension funds has ignited. Certainly, many states do have severe pension liability problems and I’ve never denied that.
That said, several of Veronique de Rugy’s contentions are flatly wrong. First, I don’t argue that “all is peachy in the state pension world.” In fact, in my Weekly Standard article I specifically argue that states should work to cut current pension benefits and say that several state pension funds face huge, perhaps unplayable liabilities.
This doesn’t mean that states like California that allow office workers to retire at full salary at age 50, encourage “double dipping” (letting employees collect more than one state pension, as happens in Florida) or calculate pensions in ways that guarantee employees retirement incomes higher than their working salaries should continue doing so.
Second, I haven’t changed my position on the fiscal peril that states face. As my article, which leads with an example of a system likely to go broke before 2020, clearly acknowledges, more than half a dozen state pension funds and countless local pension systems will likely run out of cash within the next few years absent major, job-killing tax increases. This will probably result in some municipal bankruptcies. But these problems are not universal.
Most states do face reasonably serious budget problems that are driven to a large extent by employee compensation costs. Pensions are part of those costs and deserve some attention. In many cases, however, it’s easier and better to look at other benefits — health care, wages, and collective-bargaining monopolies — than it is to focus the amount of attention that’s being paid to pensions.