Reports of the public pension crisis are greatly exaggerated. A little digging and you discover that while there are some states and cities that truly do face a pension crisis, for the most part it is simply not that big of a deal. Even those states which do face a problem with their under-funded pensions do so because of several factors:
- Revenue is down thanks to this recession we’re in;
- the anti-tax crusaders have made it very difficult to raise revenue for all sorts of things including – but certainly not limited to – pension funds;
- mismanagement of pension funds by fund managers, some of whom were outright duped by Wall St. investors, some of whom might have been doing the duping themselves.
The last reason is that some of these pensions really are too good to be true, but this is comparatively rare. In these cases, reform is certainly called for. Yet the anti-public-sector narrative always runs with this reason alone, using anecdotal evidence of worst-case scenarios to prove a much larger, and very misleading point. This is because they want to fan the flames of the ‘new’ class war between the public and private sectors, pitting the middle class against itself. This ‘pension crisis’ narrative was one that I bought for a while myself, much to my chagrin. It’s the old “government is out of money” fallacy used to cut off funding to any number of vital services, from education to healthcare to pensions. Interestingly enough, those pushing this fallacy never want to consider actually raising revenue to tackle the ‘out of money’ problem. Only cuts will do.
