A reader asks why, in yesterday’s post about Gavin Newsom’s eight budgets, I characterized supplemental pension contributions as another example of Newsom’s favoritism towards public sector unions. Some years ago, Lieutenant Governor Eleni Kounalakis asked me the same question. After all, she said, by giving pension funds more money to invest, taxpayers would save interest on the state’s unfunded pension debts.
I told her she was correct that giving more money to the pension funds would save interest. But the interest being saved is attributable to pension debts that were fraudulently created by pension fund boards. That fraudulent creation takes place through the use of inflated investment return assumptions, as I explain here. Those debts never should have been created in the first place.
