Public Pensions and the Loss of That Old-Time Fiscal Religion
By Daniel J. Smith, Rania Al-Bawwab
This article appeared in the Summer 2020 issue of The Independent Review.
The defined-benefit model in public-pension plans has undermined a moral consensus for balanced budgets at the state and local level and contributed to substantial growth in unfunded pension liabilities. The loss of the old-time fiscal religion has increased the incentive for government actors to make unfunded promises of increased public-employee retirement benefits and weakened the incentive for taxpayers to monitor spending commitments.
Daniel J. Smith is the Director of the Political Economy Research Institute and a Professor of Economics and Finance in the Jones College of Business at Middle Tennessee State University.
Rania Al-Bawwab is a research fellow at the Political Economy Research Institute and a Ph.D. student in the Department of Economics and Finance at Middle Tennessee State University.
EconomyEntitlements and WelfareFederal Budget PolicyFood StampsMedicare, Medicaid, and ObamacareSocial SecurityState and Local Fiscal PolicyTaxes and Budget
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