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
Other Independent Review articles by Daniel J. Smith
Winter 2021/22 Engine of Inequality: The Fed and the Future of Wealth in America
Winter 2017/18 The Man Who Knew: The Life and Times of Alan Greenspan
Spring 2017 Community Revival in the Wake of Disaster: Lessons in Local Entrepreneurship
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