Public Pensions

From: Lee Saunders [mailto:LSaunders@afscme.org]
Sent: Tuesday, October 23, 2012 1:08 PM
To: AFSCME Leadership
Subject: Public Pensions

As you know, the right wing spin machine is continuing its relentless assault on the public pension system.  On Saturday, The Washington Post ran an op-ed from two of the most notorious pension alarmists, Professors Joshua Rauh and Robert Novy-Marx. For the past three years, Rauh and Novy-Marx have sought attention for themselves by grossly distorting the liabilities of public pension systems.  Instead, of analyzing the condition of pension funds based on the true accrued liability, these academics choose a methodology that inflates pension costs far beyond their true costs.  Unfortunately, many members of the mainstream media, and far too many editorial page writers, repeat these flawed claims.

Noted economist Dean Baker authored a particularly effective response to the Rauh propaganda.  I wanted to share both Rauh’s claim and Dean Baker’s response with you to facilitate your understanding of the highly technical issues involved and to assist your efforts at responding to critics in your own state.

The Rauh and Novy-Marx claims:  

http://www.washingtonpost.com/opinions/the-looming-shortfall-in-public-pension-costs/2012/10/19/5b394cdc-0ced-11e2-bd1a-b868e65d57eb_story.html

The Baker response:

http://www.businessinsider.com/the-washington-post-tries-to-scare-you-on-public-sector-pensions-2012-10

I hope you find this information useful.  If you need any assistance, please feel to contact Steven Kreisberg at skreisberg@afscme.org or (202)429-1237.

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Lee A. Saunders

President

AFSCME

(202) 429-1100

(202) 429-1102 (fax)

lsaunders@afscme.org