NCPERS Responds to "Can States Afford Rising Public Pension Debt"
- By: admin
- On: 08/04/2020 10:56:17
- In: Pension Defense
- Comments: 0
Andrew Biggs is cherry-picking his facts once again. In his latest column (“Can States Afford Rising Public Pension Debt,” July 28, 2020), he glosses over the fact that NCPERS acknowledges that pension liabilities as a share of gross domestic product have indeed been trending upward.
Andrew Biggs is cherry-picking his facts once again. In his latest column (“Can States Afford Rising Public Pension Debt,” July 28, 2020), he glosses over the fact that NCPERS acknowledges that pension liabilities as a share of gross domestic product have indeed been trending upward. There is no argument over this point. Biggs is a strong enough mathematician to know that when numerous state and local governments renege on their legally required payments to public pensions, there is nowhere for liabilities to go but up.
He ignores our prescription, which is to stop fixating only on one side of the balance sheet. Let's apply some serious thought to how we can better align revenues to actual growth in GDP, which historically has been and remains strong enough to fulfill promises made to the public employees who teach our children, keep us safe, administer justice, and do other critical work.
As our study demonstrates, minimal adjustments in revenue available for public pensions, on the order of 0.012 percent of GDP, would be sufficient to stabilize underfunded pension systems. This is in line with findings by researchers from the Federal Reserve Board of Governors, the Bank of England, and the Brookings Institution. In fact, they have pointed out that there is no advantage in stabilizing pension debt now versus 10 years from now. Yet Biggs continues to paint a picture that the sky is falling.
Intentionally or unintentionally, Biggs ignores the fact that 30-year pension liabilities need to be considered in the context of 30-year GDP and revenues. He fails to acknowledge the real problem. State and local revenue structures are out of sync with the economy. Without fixing this problem, budget pressures would continue unabated, even if there were no public pensions.
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