Pensions & Politics

In The 74 Max Marchitello and I take a look at pension politics and the red state/blue state problem:

…The truth is that pension reform is a must, for states and for teachers. The debate isn’t just about whether teachers should have 401(k)s or today’s pensions — there are a variety of reforms between those poles that would work better for teachers and also address the fiscal challenges of today’s approach. But just as education has managed to politicize its way into creating Democratic and Republican models of teaching kids to read, pension reform is becoming a hot political mess…

…For Republican lawmakers, that means doing more than just curbing benefits. For example, it’s counterproductive to solve yesterday’s pension problems on the backs of tomorrow’s teachers by further cutting benefits. In many states, actual benefit costs are not even all that high and the idea of “gold plated” teacher pensions is mostly a myth. Policymakers should focus on limiting future debt costs, not cutting benefits for teachers.

Democrats, for their part, must summon the political courage to deal with this problem at all. They must do more than ask the state to pony up more funding to pay for pension liabilities. Addressing debts will help improve the solvency in the short term, but it won’t do anything to stop the teacher pension system from continuing to dig a massive financial hole.

Entire article right here.

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