“The public dispute over accounting standards is a signal to taxpayers, retirees and political reformers that fundamental flaws remain in how pensions measure their finances,โ€ย writes Steve Malanga in the WSJ.ย At issue, as he correctly points out, is the delusion that government pensions โ€œon average estimate they will earn 7.6% a year on their portfolios.โ€ Using a more realistic riskless rate (as if that exists!) increases the unfunded liability from about $1 trillion to $3 trillion. Itโ€™s all funny money. Iโ€™ve looked at the numbers in Newport, RI and itโ€™s ugly. The stock market will not come to its rescue. And politicians donโ€™t want to raise taxes and risk losing the next election and employees donโ€™t want to contribute more from their paychecks. Pensions will not survive as they are today. The most natural ย path of destruction will be a gutting of services (police/firemen etc) which will no doubt increase risks for everyone.