"That's how capitalism works (under ideal conditions). Everyone tries to make the best possible deal for themselves, not just politicians."
Well, the common tying nature between capitalism and what I we're describing there is human nature. Which, I would say, has strong under-currents of greed. The difference between the thing we're discussing and capitalism/free-market is that in the latter, greed can't manifest it's ugly head with absolute state power. It's tempered by being required to provide to the rest of society a valuable good/service, that they request.

"The second may or may not actually be a problem depending on the terms at which the city borrows the money. Regardless, that's also not related to pensions specifically, since the city can borrow money at stupid terms from anyone, not just the pension fund."
Well, I'm not sure about borrowing as such. But I was referring to politicians/finance committees using up the capital in pension funds, and then having to pay pensioners their pension yearly from new tax-money that comes in. So in essence, they destroy the buffer and end up just siphoning new funds into pensions that start maturing.

"Over the years since then, private corporations have lowered the salaries they pay (usually by not keeping up with inflation as opposed to actual pay cuts, though that happens, too) most of their workers, so public sector jobs have become much more competitive."
That may be the case, I haven't looked at the raw data to refute that. But I'd add that perhaps the corporations lowered the salaries because of a slouching/badly performing market. In which case it's the rest of society that is subsidizing the now-cushy jobs of the public sector. On top of having to deal with their (possibly) under-paid jobs in the private sector.

"I have a few problems with many of the implicit assumptions in this statement; specifically that there is an agreed upon way to value a pension, that there is an agreed upon way to value the value of the risk-mitigation of a pension plan, that there is little variation in the ratio of the total compensation public workers earn to a market rate salary across all government workers, that all government workers are yapping incessantly about being paid less than market rate when using total compensation instead of just salary (combined with the previous assumption: as opposed to just the ones that are currently underpaid), and that only the workers are benefiting (or that they benefit much more than the city) from such a deal."

I agree with you to an extent on this point. We are making a lot of assumptions in this discussion, and we're clumping together disparate values to attempt a comparison. I'm probably not the person to debate with on the finer details because I will interpret most of these things from my anarcho-capitalist viewpoint of the state. So to me, generalizing things to what they actually are is much more meaningful than endlessly comparing apples and oranges within the complicated framework of the state.

"On a side note, it's disappointing to see people want to drag the public sector workers down to a their (possibly only just perceived) lower level instead of wanting to drag themselves up to the public sector workers' level."
There are probably multiple things at play here regarding peoples' opinion of public sector workers. To me, at least, I see them as leeches of the state. They represent a class of individuals that are permanently dependent on leeching the benefits given to them by the state. They will fight tooth and nail for the benefits that they get from the state, to the detriment of society by preventing a possibly different form of governance from emerging. Now, don't get me wrong, these are probably good people that don't deserve to have their livelihood yanked from underneath them. But I am forced to acknowledge the fact that change is very very difficult because we have so many people reliant on (what I would view) very unnecessary benefits.