In this seventh video, produced in conjunction with New York City’s 92Y On Demand, Joshua Rauh, senior fellow at the Hoover Institution and professor of finance at the Stanford Graduate School of Business, discusses city and state pensions for public employees.
Rauh notes that state and local governments budget for pensions on the basis of their assumptions about how the economy will do in the future. But that can be risky. If those assumptions are wrong, says Rauh, the next generation will end up paying twice – once for the pensions of current public employees and then again for those retiring in the future.
The fix? Rauh says we need to completely change how we think about government budgeting.