The New York Times has an article today, Public Pension Plans Face Billions In Shortages: “Barclays Global Investments has calculated that if America’s state pension plans were required to use the same methods as corporations, the total value of the benefits they have promised would grow 22 percent, to $2.5 trillion. Only $1.7 trillion has been set aside to pay those benefits.”

And that doubtless understates the real liability and says nothing of municipalities, which have been even more irresponsible with benefits. Typical deal these days for municipal employees is retirement at age 50 on full salary with free medical. A friend mentioned his friend, a recently retired engineer working for the city - essentially a glorified draftsman designing sewers and things - retired at age 52 on $115K with full, free medical coverage. But the truly evil deal is the DROP, or deferred-retirement option plan. In this case, the 50-year old employee continues to work and receives his normal salary. His pension is paid into an account which accrues a guaranteed, high rate of return. This fund is paid to him on top of his regular pension when he actually retires. An example from Houston shows that “Under one scenario, a lifelong city employee retiring with a salary of $92,000 could get $420,000 a year in pension benefits.” As far as I am concerned, this is yet another case of plain theft. However, the taxpayer is on the hook and it will be very hard to get rid of this new privileged class.