As a top aide to President George W. Bush, Andrew Biggs argued for allowing workers to funnel payroll taxes into stocks instead of the Social Security trust fund backed by Treasury bonds. But Biggs has now emerged as a leader in prodding public pension funds to use a new gauge — based on Treasury bonds, not stocks — to evaluate unfunded liabilities.

Biggs denies any change of heart of about the value of stocks as retirement investments. But he argues for a new yardstick to discount, or measure the present value of, unfunded liabilities to ensure pension guarantees are kept.

“If the benefit is risk-less, you need a discount rate that is risk-less,” Biggs said.

The discount rate has become a key issue in determining pension liabilities and whether legislation is needed to handle them.

Based on reports by state and local officials, the 126 largest public pension funds with 85 percent of public pension assets have $700 billion in unfunded debts, according to the Public Fund Survey, a nonprofit research group. That estimate relies on a discount rate of 7 percent to 8 percent, based on the performance of the funds’ stocks and investments.

But Moody’s Investors Service, a credit rating agency, has estimated $2 trillion in such liabilities — a threefold increase — by using a discount rate of 5.5 percent, based on a corporate bond index. A 2006 law mandated a similar standard for private pensions.

Biggs, a former associate director of the National Economic Council and principal deputy commissioner of the Social Security Administration, applauded the Moody’s estimate. But he called for a 3 percent discount rate that would be tied to Treasury bonds. He contends they are a better standard because a federal default is very unlikely, while there is a greater risk of corporate failures.

But the basic math that changes the liability calculations may also add up to deeper changes in pension policies. And public pension managers argue a lower rate would distort liabilities.

Dean Baker, co-director of the Center for Economic and Policy Research, a liberal think tank, says Biggs underestimates the durability of pension funds. “He was arguing individuals could expect higher returns in stock. With public pension funds, he’s saying they have to be cautious and assume a Treasury bond rate of return,” Baker said.

Biggs sees no inconsistency.

“I’m not saying public pensions should or should not invest in stock. The point is, you can’t treat investments and risky assets like stocks as if they are free money,” he said.