Friday, June 29, 2012

Look what damage the two parties did today

A quick accounting trick was worked into the just passed Transportation Bill in the House and Senate that's going to make troubled pension plans look less troubled. In reality, underfunded pensions will still be underfunded. But companies will now be allowed to base future projections using average interest rates over the past 25 years, not just today's cold hard realities.

Remember 25 years ago? I recall having CDs that paid around seven or eight percent, EE U.S. Savings bonds paying at least six percent if not around seven.

According the St. Louis Fed, there were times in 1989 when the prime lending interest rate was over 10 percent.

Using these long-gone interest rates to skew today's pension projections seems more than a tad dishonest. But Democrats and Republicans on Capitol Hill seem to think it's gonna make today's pension troubles go away. Or at least keep them out of sight for a while longer.

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