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Paul Krugman pooh-poohs The Great Pension Scare

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New York Times columnist Paul Krugman, a winner of the Nobel Memorial Prize in Economic Sciences, faults the Washington Post for falsely claiming that we have $3.8 trillion in unfunded state and local pension liabilities in this country.

The real figure, says Krugman, is $1 trillion.

And then he NOTES:

[I]n reality, state and local governments are making only about 80 percent of the required contributions, so there’s a shortfall of 3 percent of payroll. Total state and local payroll, in turn, is about $70 billion per month, or $850 billion per year. So, nationwide, governments are underfunding their pensions by around 3 percent of $850 billion, or around $25 billion a year.

A $25 billion shortfall in a $16 trillion economy. We’re doomed!

…[T]his is just not a major national issue.

So, why is it being hyped? Do I even need to ask?

 

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1 Comment

  1. Steverino

    Illinois legislators rarely admit that the pension system was underfunded yet years of abuse put this state in a very precarious financial condition. Now they’re seeking solutions that would reduce constitutionally guaranteed benefits to compensate for their failure. But on the bright side Governor Quinn signed into law new rules for tethering dogs. I guess this is a good thing for retirees with pets.

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