THE PUBLIC PENSION CRISIS may be worse than we think:

Regular readers of this blog know that a pension meteor is headed for state and local governments, and that deceptive accounting practices obscure the likely scope of the destruction. The biggest source of confusion has to do with rates of return: Most pension funds assume that their assets will grow at rates of seven to eight percent per year indefinitely, a virtual impossibility in this age of low interest rates and sluggish growth.

A recent Governing magazine report highlights another way liabilities can be mismeasured. Many taxpayers live in jurisdictions that are on the hook for pensions from many different government agencies, including city governments, county governments, and school districts. So while the per capita pension debt for the City of Denver is just $709 per capita, for example, the “overlapping” obligations on its taxpayers are actually nearly eight times that high. . . .

Estimating the true cost of unfunded pension obligations is a messy business. Numbers publicly touted by politicians, unions and the actuaries they employ tend to downplay the $3.4 trillion problem and the existential threat it poses to blue model governance nationwide.

A sustainable fix to America’s public pensions will likely require intensive reforms to state and local governance, including the replacement of defined-benefit plans with 401(k)s and robust checks on the lobbying and political power of public sector unions. But the first step toward implementing these changes is for public administrators to come clean with taxpayers about the extent of the mess they are in. Until public sector pension funds are governed by the same rigorous accounting rules that apply in the private sector, it’s likely that instead of gradual reforms, states and localities will continue to govern by crisis, propping up the current system with every last cent and then declaring bankruptcy or asking for bailouts when it all comes tumbling down.

Just one of several calamities our unprecedentedly awful political class has saddled us with.