State Pensions Aren't Washington's Problem
Congress and the next president should make it clear that federal bailouts of state and local pension funds simply won’t happen.
Ed Bachrach’s prescription for national pension reform (“How to Save Public Pensions, No Federal Bailout Needed,” op-ed, July 18) would be needlessly heavy-handed and inappropriate—requiring the federal government to immerse itself far more deeply than ever in regulating state and local pension plans.
“The proposed Public Employee Pension Transparency Act... would boost bottom-up pension-reform efforts across the country by mandating more stringent financial disclosure and reporting requirements.”
Mr. Bachrach’s premise is that America’s state and local public-pension funds are going broke at the same rate, overseen by equally irresponsible politicians poised to demand costly federal bailouts. “Congress,” he says, “should pass a law allowing states and local governments to reduce promised benefits—something that is now illegal under some states’ statutes or constitutions.”
This ignores the many creative, forward-looking pension reforms already enacted by states as diverse as Republican-led Utah and Democrat-dominated Rhode Island. Unfortunately, Mr. Bachrach is dismissive of the proposed federal Public Employee Pension Transparency Act (Pepta), which would boost bottom-up pension-reform efforts across the country by mandating more stringent financial disclosure and reporting requirements.
Mr. Bachrach’s right on the key point: Congress and the next president should make it clear that federal bailouts of state and local pension funds simply won’t happen. Meanwhile, enact Pepta and require that public-pension funds more honestly account for themselves.
This letter to the editor originally appeared in The Wall Street Journal
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E.J. McMahon is a senior fellow at the Manhattan Institute and president of the Empire Center for Public Policy. Follow him on Twitter here.
This piece originally appeared in The Wall Street Journal