How Severe is U.S. pension debt?

Steve Greenhut reports:

As the economy boomed, few people worried much about the debt that local and state governments were amassing to pay for increasingly generous pension and health-care benefits for public employees. Now that budgets are tight thanks to a down economy, the issue is big news — made even bigger by the outrageous pay and benefit plans received by officials of the small, working class city of Bell, Calif., where the now-ex-city manager stands to receive a pension valued at $30 million. That news story, uncovered by the Los Angeles Times, put some faces on overall public-employee-pension scandal.

Even bigger news is the size of the pension debt — estimated in California alone at $500 billion, according to a recent Stanford study. The nationwide debt is more than $3 trillion. The state of New Jersey settled this month with the Securities and Exchange Commission. As the Newark Star-Ledger explained: “For years, New Jersey had been cooking its books and neglecting to tell investors it was grossly underfunding pension plans.” Although California and New Jersey have taken the pension-abuse situation to the extreme, it remains a nationwide problem.

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