Smoke and Mirrors on Pensions

Watch closely the discussion on our public pensions. They have been targeted for years by the for-profit investment industry. They would love us to all have 401K's instead of our solid, tested-and-true defined benefits plans. Those industries are using the current crisis to push for dissolving public pensions.

In this news story, many public pensions are grouped together so they can write about a "trillion dollar gap." That's silly. The pensions are not funded together. Why report on them like it was a collective debt unless you wanted to make the situation appear more dire than it is?

Two things have caused pensions to be devalued, but I rarely see anyone addressing them.

First, many states can and do borrow money from their state pension, as if it doubled as a "rainy day" fund. In the same way Congress has repeatedly spent the Social Security surpluses, this leaves the remaining funds inadequate to cover known costs.

Second, all of the poisonous and deceptive stock market trading over the past two years found their way into pensions. Much of the bad mortgages and loans were packaged and put out on the market with unrealistic projections. The public pensions, which have an obligation to purchase bonds, futures, etc with the highest yields, unknowingly took on these risks.

Here is the data presented in the study. It is from 2008.