Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending
How Government Pension Liabilities Create Hidden Debt
State pension funds are underfunded by roughly $1.4 trillion, and that shortfall isn't just a math problem for retirees. In this episode, Lucas and Luna dig into the mechanics of government pension accounting, why discount rates are a powerful fiction, and how states like Illinois have borrowed billions just to keep pension contributions from eating their entire budgets. They walk through the arithmetic: a 7 percent assumed return versus a more realistic 5 percent widens the gap by hundreds of billions. And they explore how pension debt crowds out spending on schools, roads, and public…
The skinny
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