Public Sector Pensions Are a National Issue by Joshua Rauh

Paul Krugman and Dean Baker took the Washington Post editorial page to task yesterday for stating that unfunded state and local pension liabilities amounted to $3.8 trillion. They accuse the page of misquoting a study in which the total was cited as only $1 trillion.

The WaPo editorial page did misquote the study, but that doesn’t change the fact that the $1 trillion is a completely mismeasured and fictional number. Unfunded state and local liabilities are around $4 trillion when the liabilities are correctly measured.

Since Professor Krugman’s post links to the study in question, by the Boston College Center for Retirement Research, I am sure he saw that the authors actually discuss these measurement issues at length. The Boston College authors even provide liability estimates under what they agree is a more appropriate methodology, and find that unfunded state and local liabilities are a multiple higher than the uncorrected $1 trillion.

Currently, standard practice measures the funding status of public pensions in the US under the laughable assumption that every dollar in the pension funds will earn compound returns of 7.75% or 8% per year. That’s the basis for the $1 trillion in unfunded liabilities.

But if a state or local government promises a risk-free pension, one that will be paid regardless of how the stock market performs, then that promise is like a government bond and should be measured accordingly. That’s the way pension promises are measured in most public or semi-public plans in countries like Canada and the Netherlands. In the Netherlands, for example, discount rates of 0-4% are used. Even US companies follow this basic principle that a pension is like a bond issued by the sponsor by treating their pension liabilities as corporate bonds for the purposes of their books.

Read more at the Hoover Institute

A Cincinnati IRS Lawyer Speaks: We Are Democrats, But Nonpartisan Democrats

I previously blogged my Pepperdine colleague Rob Anderson’s work showing that 95% of political contributions in the 2012 presidential campaign made by lawyers at the IRS went to Obama rather than to Romney. Rob followed up yesterday with a fascinating post with an email from an IRS attorney in Cincinnati:

Read more at Tax Prof Blog

Profundities

“Why pay money to have your family tree traced; go into politics and your opponents will do it for you.” ~Author unknown~

Angel Flight (Radio Tower Remix) – w/ Lyrics

In case you haven’t seen this….
THIS PLANE BRINGS DEAD SERVICE MEMBERS HOME.
IT RELEASES A FAKE MISSILE AND THE SMOKE, ETC, FORMS AN ANGEL SHAPE.
—SO BEAUTIFUL
This video is about a song called “Angel Flight”… The plane in the video is called Angel because when the plane releases its decoy missiles,
as is shown in several of the pictures, it creates an angel shape in the smoke. Listen to the words of the pilot and the tower, and be sure
you listen to the very end. This is beautiful. God bless our Veterans!

From the Bear’s Corner: The sure cure for Carlos Danger weenie is the Bobbitt method

Twenty years ago Sunday, a frustrated Virginia housewife grabbed a kitchen knife and turned the name Bobbitt into a verb by slicing off her drunken husband’s penis.

While John Wayne Bobbitt lay bleeding on his bed, wife Lorena roared off with the dismembered member and hurled it into a field for the buzzards to find.

Read more here…