Taxpayers on the hook for $3 trillion in pensions

I think that number is a little sensationalist. What's the net present value of the obligations? My simplified calculation makes these assumptions:<p><pre><code> 1. Discount rate of 0.04. 2. Uniform payments of the entire $2 trillion over the next twenty years. </code></pre> Under those assumptions the present value is only about $1.4 trillion over twenty years, or about $70 billion per year. A substantial sum, to be sure, but not compared to a number of other things we do. A higher discount rate around 6% decreases the yearly cost about 20%.

I think there's a very real chance the younger generation says, "Look, you guys voted goodies for yourself and then didn't fund the programs. We're not paying" - and work to have these programs nixed. I wouldn't count on any pensions or benefits as part of my retirement strategy.

The federal government is going to have to get involved here at some point. When states go broke due to these exploding pension costs, the yound productive people will just move to one of the few remaining states that doesn't have this burden.

See: <a href="http://nasra.org/resources/RauhResponse.pdf" rel="nofollow">http://nasra.org/resources/RauhResponse.pdf</a> for a contrary analysis.