Several weeks ago I wrote about potential solutions to deal with underfunded pensions, and singled out Alicia Munnel, former member of the Council for Economic Advisors for her horrible suggestion:
"The only real option is to wait for the market and the economy to recover."
Today's NY Times tells of a similar plan being put into motion for New York:
"Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.
And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.As word of the plan spread, some denounced it as a shell game and a blatant effort by state leaders to avoid making difficult decisions, like cutting government spending or reducing pension benefits.
“It’s a classic Albany example of kicking the can down the road,” said Harry Wilson, the Republican candidate for comptroller, who holds an M.B.A. from Harvard."
and then, emphasis mine:
"Under the plan, the state and municipalities would borrow the money to reduce their pension contributions for the next three years, in exchange for higher payments over the following decade. They would begin repaying what they borrowed, with interest, in 2013.
But Mr. Paterson and other state officials hope the stock market will have rebounded to such a degree by that time that the state’s overall pension contribution burden will have been reduced."
HOPE the stock market will have rebounded. Oy vey.
Sitting silently, staring in awe at what I just read.... Pursing my lips... Furrowing my eyebrows...Steam coming out my ears... Shaking my head in disappointment... ending this post - is any more comment really necessary?