Having limited information available can obscure problems, but when concerns arise, a lack of good data can have the opposite effect; people assume the worst.

Image Representative Devin Nunes has co-sponsored a bill that would tighten rules on reporting state and city pension fund liabilities. Credit... Brendan Hoffman/Getty Images

Estimates of unfunded pension liabilities can be breathtaking. Two economists, Robert Novy-Marx of the University of Rochester and Joshua Rauh of Northwestern, put the figures at $3 trillion for state governments and almost $600 billion for municipalities. Those figures are far greater than official government figures, and are highly dependent on interest rate levels, which can and do fluctuate. They may be too high, but there is no way to be sure of that.

Some people say the 1974 passage of the Employee Retirement Income Security Act, known as Erisa, led to the demise of private pension plans because companies for the first time really had to honor pension promises. But the trend did not pick up steam until the accountants forced disclosure of real numbers. Most state constitutions have long barred cutting public pension benefits that have been earned, but that fact alone did not force change.

This week, three Republican members of Congress, led by Representative Devin Nunes of California, a senior member of the Ways and Means Committee, proposed legislation to force states and cities to report pension fund liabilities on the same basis, and to force them to disclose market values of assets. The bill would not even allow smoothing, so the state of pension funding will seem volatile as markets rise and fall. Such volatility could be reduced by putting more pension money into bonds than stocks, but doing so would force governments to admit they were likely to earn less on investments, and thus need to put even more money into pension plans.

The congressmen would not like to have it said they are forcing anything. The bill gives local governments a choice: they can report the way the members want them to report, or they can give up the ability to issue tax-exempt bonds. That is, of course, no choice at all.

Introducing a bill is not the same as passing one, but this may be an idea whose time has come. There is rising concern over the state of local government finances, and governments may be forced to make better disclosures if they simply want to issue new bonds.