When Poachers Become Gameskeepers. Part I

It is a very interesting phenomenon to watch how the former opposition parties act when they suddenly find that their electoral rhetoric has got them into power.

The first tidbit is the recent move by three prominent House Republicans to introduce a bill which would deny states and localities the ability to sell tax-exempt bonds unless they report their pension-fund liabilities to the Treasury Department.

Now I would be the first to say that the pension-fund liabilities of the states and localities are quite large and represent an over sized burden on their finances. This would be true even if they were allowed to continue accounting for their liabilities under current laws, and would become overwhelming if the laws were changed to reflect accounting in the private sector.

And these current laws? They allow plans to assume they can earn high investment returns without any risk. According to official reports in 2008 the states as a whole had an estimated $452 billion gap in their funding. If they had to report under private sector pension law which values liabilities according to likelihood of payment rather than expected return on pension assets this gap would increase to $3 trillion.

The federal government regulates corporate pension funds and we have a federal agency, the Pension Benefit Guaranty Corp, which is supposed to bail them out. Sounds like over-regulation and government interference to my "Tea-Party/Republican" ears.

In this bill Devin Nunes (R) of California, and the bill's co-sponsors, Paul Ryan(R) of Wisconsin, expected to chair the House Budget Committee, and Darrell Issa (R), likely chair of the Committee on Oversight and Government Reform want to have Federal Government interfere in states' finances!

In a time when the Republican/TeaPartiers are clamouring for less interference from Washington and demanding independence and the "right to fail" these three scions of the Republican structure appear to have no difficulty trampling over states' rights which I am sure was part of their election platform!

For the record, I am not a strong supporter of states' rights. We fought a Civil War over them and although many Americans like to think they are sacrosanct to their ideal of local control I believe it creates a patchwork of laws and regulations which promotes competition within the US rather than providing for a unified front in the national interest. I also believe that the current accounting standards are ridiculous for the public pension funds, and questionable for the private funds.

But that is an aside.