The Washington Post used a front page story to scare readers about public sector pensions, implying that they faced an enormous unfunded liability. It refers to "states facing, by one estimate, a combined $3 trillion in unfunded pension liabilities."The top 1% owns the media, so they can get their propaganda out and repeat it and repeat it using the "big lie" technique that works very effectively to convince people of a falsehood. Meanwhile, the bottom 90% has no mechanism to get out a message to defend their interests.
It is unlikely that readers are able to assess the meaning of this $3 trillion figure in any meaningful way. It is worth noting first that it assumes that the stock market will provide a return that is approximately half of its historic average over the next three decades. If the economy and profits grow as projected, it would be necessary for stock prices to fall so much that they would have to be negative before the end of the 30-year period over which pensions are typically evaluated.
If we take the more typical figure of $1 trillion and compare it to future GDP, it is equal to approximately 0.2 percent of projected GDP over the 30 year planning period. By comparison, the wars in Iraq and Afghanistan have added approximately 1.6 percentage points of GDP to the military budget. This means that the unfunded liability of state and local pensions is approximately one eighth as large as the costs of these wars. This sort of context might have been helpful to readers.
In reporting the size of Rhode Island's pensions it would have been helpful to remind readers that many of these workers do not collect Social Security. That means their pensions are often their entire retirement income.
Tuesday, September 6, 2011
How the Political Right Attacks Workers
Here is another post by Dean Baker in his Beat the Press blog that demonstrates how the political right uses "facts" to attack workers by giving the false impression that their pensions are an immense burden: