The nation's menu of crises caused by governmental malpractice may soon include states coming to Congress as mendicants, seeking relief from the consequences of their choices. Congress should forestall this by passing a bill with a bland title but explosive potential.
Principal author of the Public Employee Pension Transparency Act is Rep. Devin Nunes, a Republican from California, where about 80 cents of every government dollar goes for government employees' pay and benefits. His bill would define the scale of the problem of underfunded state and local government pensions and would notify states not to approach Congress like Oliver Twists, holding out porridge bowls and asking for more.
Corporate pension funds are heavily regulated, including pre-funding requirements. A federal agency, the Pension Benefit Guaranty Corp., copes with insolvent ones. By requiring transparency, the government gave the private sector an incentive to move to defined contributions from defined-benefit plans, which are now primarily luxuries enjoyed by public employees.
Less candor, realism and pre-funding are required of state and municipal governments regarding their pension plans. Nunes's bill would require them to disclose the size of their pension liabilities - and the often-dreamy assumptions behind the calculations. Noncompliant governments would be ineligible for issuing bonds exempt from federal taxation. Furthermore, the bill would stipulate that state and local governments are entirely responsible for their pension obligations and the federal government will provide no bailouts.
After all, this is the same George Will who scolded the American taxpayer for causing the financial crisis in the first place, so his latest paean to tough economic love to screw millions of little people out of their pensions should come as no surprise.
So what would happen if states simply stripped state employees of their pensions? Exactly what would then do then? Work longer at their state jobs? Quit? Everyone seems to be eager to do this, but nobody seems to have a plan for doing so without piling the burden onto Social Security or Medicare.
Of course, maybe that's the plan. Force them onto Social Security and Medicare, then make cuts across the board on those programs so everybody shares the pain.
Oh what, you thought that only government employees were going to be hurt in this crossfire? I'm sure that's what George Will wants you to think.