A Misalignment of Interests: The Politics of Pension Funding

Published: October 12, 2017

The unfunded obligations of pensions systems sponsored by state and local governments continue to grow as a result of unrealistic assumptions about investment returns in pension funds. States that say they’re running balanced budgets are concealing growing debt that crowds out much needed services and imposes higher taxes on current and future taxpayers.

Be sure to read “Hidden Debt, Hidden Deficits: 2017 Edition,”  in which Joshua D. Rauh details the issues surrounding the pension system and the role of governments in increasing liabilities and deficits by means of their pension system.

Discussion Questions

1. How can we discourage state politicians from underfunding pensions funds appropriately and making risky investments?
2. Is there a way to ensure that state politicians use tax money responsibly to meet pension commitments?
3. Why would state politicians make risky investments if they know that they could lose more money?