Once again, a letter to the editor surfaces about pension plan administration improprieties. This writer does not quite understand the alarm set by Ron Dotts of Bellefonte. Dotts is concerned that the Pennsylvania Treasurer is borrowing money to invest for the purpose of paying for pension admin costs. More specifically, any profit that accrues from the investments will be used for these pension costs. Dotts refers to this as debt leverage which is also comprehended knowing that if the market heads south it will foil the strategy.
Perhaps that is the concern of the letter writer….the possibility that the investments will not enjoy any gains? Or maybe Dotts just conceptually disagrees with the notion of borrowing money to pay for an unhealthy pension program.
I view it as a step in the right direction to help an ailing program that is vital to the well being of retirees. I am probably missing something here and would like to know more about concerns the venerable letter writer.
For more years than I care to admit(How modest of you to admit the years are creeping up on you. I would much rather listen to the advice of a conservative senior and thank you!), I’ve started each morning with a cup of coffee and the morning paper.
A CDT headline in Monday’s local news section spoke of Pennsylvania Treasurer Rob McCord’s support for borrowing money solely to invest, using the investment gains to help pay for pension costs.
It’s common for sophisticated investors who are comfortable with risk-taking to use debt leverage to increase gains, knowing that if the market goes bad it will magnify the losses.
But this strategy should never take place in government, and to hear our state treasurer suggest it should scare us all to our bones.
This wacky idea is emblematic of our crisis in Harrisburg. It’s a failure to face and fix our problems for the long term.
We have huge financial problems that require structural change, not gimmicks(to borrow the tired bromide….no more band aids). If we want big government we have to pay more for it and/or reduce the cost of operating it. Regardless, it will be a process, not a one-time solution. And it won’t be easy.
Our elected officials have a tough job and never more so than now. Each day that goes by without financial solutions will run up the cost of fixing the problem.
It will require courage, wisdom, leadership and bipartisanship to begin resolving our financial crisis through decisions that will clearly be unpopular.
I urge our legislators to get to work and face these issues now.