A recent column in the Washington Post by David Crane suggests a “race to the top” for pension reform solutions. Similar to what the Department of Education has done for schools during the Obama administration, Professor Crane, who worked in the Schwarzenegger administration as an economic adviser, suggests a competition for $35 billion in federal funds.
These funds would be awarded based on how states measured in the following categories:
- Honest measurement of liabilities;
- Proper and contemporaneous funding that doesn’t kick costs to future generations; and
- Reforms that reduce liabilities.
Crane describes how a lack of reform effort will just ensure that states continue a downward spiral of raising taxes to pay for unfunded liabilities that will only worsen over time.