I haven’t trusted David Crane since he first fed Gov. Schwarzenegger that infamous line…
“Over the last 10 years, pension costs for state workers have gone up more than 2,000 percent, crowding out spending on colleges, parks, health, the environment and other progressive programs.”
That, of course, was written in 2010, so it referred back to 2000, when pensions “costs” were nearly zero. The epitome of the term “cherry-picking.”
And Arnold delivered the line so well.
Most of the Crane comments we have seen lately look like “drive-by” shootings. Like this latest “2 min. read” (Mar 4) on medium dot com.
More sensationalist heat than light.
Note… There are two ways to cure the underfunded status…
1) Reduce pension liabilities.
2) Increase funding.
It appears David Crane here is saying the discount rate should be (much) lower… ergo pension costs will necessarily be (much) higher.
Question… Exactly when should the discount rate be lowered, or when should it have been lowered? If CalPERS lowers the rate immediately as many seem to call for, to 6.2%, or even 5%, or, heaven forbid, Berkshire Hathaway’s 3.8%, the unfunded liabilities would quickly disappear… for those few governments who survived. What doesn’t kill you, makes you stronger?
Should the discount rate have immediately been lowered in 2008, right after the market crash, when government revenues were the lowest in years, and unemployment the highest?
May be, with 20/20 hindsight, in 2005, in preparation for the crash.
Really, raise the discount rate, when the system is already near 100% and rising?