Public Pensions and the Loss of That Old-Time Fiscal Religion
By Daniel J. Smith, Rania Al-Bawwab
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.
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