Archive for July 13th, 2012

Moody’s Sees Bloomberg’s “Laughable” And Raises…

Being State Treasurer and trying to hold the Colorado Public Employees’ Retirement Association (PERA) to account can be a frustrating experience, as Walker Stapleton shared with Sean Hannity on Fox News Channel in June:

“I asked for some basic financial information about the defined benefit plan, where people were promised a rate of return, a massively inflated rate of return of 8%, Sean, that everybody from Warren Buffett to Michael Bloomberg have said is ridiculous and insane and preposterous. And they keep this rate of return promise, on purpose, to pervasively underfund the plan, and create a liability on the backs of our kids and their kids, and future generations of Americans.”

Now, it’s not just Mayor Bloomberg, it’s Moody’s.

Moody’s Investors Service has asked for comment on a proposed adjustment to its valuation of the public pension liability in the United States. One of those changes would lower both the discount rate and the expected rate of return to a standard of 5.5%.

This would have the effect of tripling the estimated unfunded liability, from $766 billion to $2.2 trillion.


With a T.

PERA has more than 97,000 current benefit recipients receiving an average monthly benefit of nearly $3,000. It runs a sensitivity analysis on its liability, varying the rate of return and the discount rate from 9.5% (no adjectives need apply) to a merely overstated 6.5%. At 6.5%, it is barely 50% funded, and Colorado’s unfunded liability is just a shade under $37 billion.

A reasonable estimation back to 5.5% puts the unfunded liability at $45 billion, and the funded rate near death-spiral territory at 43.8%. I’m sure that when PERA releases its 2012 annual financial report in about a year, they’ll have done those calculations themselves. Here’s the recently released 2011 version.

Stapleton, a PERA board member, sued last year to get access to PERA records. That effort was rebuffed in Denver District Court in April.

“This is a battle for transparency that is going on all across our country,” Stapleton said on Hannity’s show. “It’s critical that we win this battle, because it’s critical for state budgets going forward.”

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Romney’s New Ad Disappointing

One of the reasons I had – and still have – considerably more hope for the Romney campaign than I ever really did for the McCain campaign is that Romney has shown an ability to counter-punch, especially in the early, sparring rounds.  But the Romney response to Obama’s discredited claims about outsourcing fall falt.

Let’s stipulate that a Democrat getting Four Pinnochios from the Washington Post on an ad is as close to metaphysical certainty that the ad is untrue as it’s possible to get in this lifetime.  That still doesn’t make Romney’s response effective.

I’m unsure why featuring noted non-Presidential nominee Hillary Clinton doing the same thing that Mitt’s doing – telling Obama to cut it out – is supposed to help.  To me, it just illustrates the tactic’s futility.   It’s a little like Bob Dole futilely imploring George H.W. Bush to, “stop lying about my record.”

People expect their politicians to lie.  People don’t expect their Presidents to lie, which is why Obama’s ad, explicitly saying that “What a President believes matters,” is so much more effective, even though the criticism would work better on him.

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