-- Connecting the dots between our economy, government and business --
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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Prof. Moore seems unaware of the difference in public sector and private sector pension fund liability calculations. Private sector funds use a liability discount rate based on a firm’s risk; in the public sector discount rates are based on the expected rate of return on the investment portfolio. If the public sector used the private sector convention, plan liabilities would be substantially higher and even more costly than they already are.