The State of Public Pension Plans
http://thedianerehmshow.org/shows/2011-02-23/state-public-pension-plans
Cash-strapped state governments are seeking ways to shrink enormous budget deficits. Many are targeting public employee retirement plans and collective bargaining rights in efforts to cut expenditures. All of this is playing out in highly charged political environments. Some see it as a battle between public employees and taxpayers. Yesterday Democrats in Indiana left the state rather than vote on Republican-backed legislation to weaken unions. Grass-roots protests that began in Wisconsin have spread to other states. We'll talk about proposals aimed at addressing concerns with public employee retirement systems and the politics behind them.
Guests
Rep. Devin Nunes
Republican U.S. congressman representing California's 21st Congressional District.
Sen. Lena Taylor
Democratic state senator, Wisconsin's 4th Senate District.
Ross Eisenbrey
vice president of the Economic Policy Institute.
Sara Murray
economics reporter, The Wall Street Journal.
Andrew Biggs
resident scholar, American Enterprise Institute.
Comments
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Three trillion estimate was made by a bunch "scholars" who have a very vague ideas on how to calculate pension liabilities. Authors have one publication in a semi-academic journal (reprinted with minor changes as a second publication) and this paper has been quoted several times as if it were multiple reports.
Their methodology has been question several times in professional and academic meetings but this critique has never been publicized in main stream media because it doesn’t sell commercials.
The Gov of WI is just trying to divert attention from the real causes of financial pain. The fact that 2% of this country control the wealth. They are creating a diversion and a fight between people who's incomes are within the same tax brackets.
Your Wisconsin state senator is a complete political hack. Calling people liars and then asking to sit down with them in good faith is pathetic. Wisconsin Democrats can't be civil which is unfortunate in these political times.
250,000 seems like a good start! Funny, hadn't even noticed they were gone.
Apparently the role of government is to hire everyone who can't get a job anywhere else. Without patronage and nepotism what would these stiffs do?
This is another media show that shifts the problem away from corporations and onto governments/workers. The mainstream media, including DR Show, refuses to talk about corporate responsibility - ever. Corporations caused this financial crisis, they shouldn't be exempt from the solution. Here's what the media should report - the government didn't do this, the workers didn't do this - corporations did, and they need to be a part of fair discussion about how to solve it. Readers, try to find a call for corporate responsibility to fix what they broke, on this show or NPR. Do we need a media to investigate the media?
This whole discussion is more to do with the role of government.
Diane, please do a show on the fact that what is happening in WI (and MI and soon NJ) is merely the bellwether to what will happen on a national level soon. Congress has been raiding Social Security and not refunding what they have taken out for decades. We are truly in the calm before the storm.
While I enjoy Diane Rehm's show, the segment today was disgraceful. Allowing the fugitive Senator from Wisconsin to hurl charges about the situation there without being challenged was terrible. The people of Wisconsin elected their governor and representatives in the last election to perform their duty. If this Senator was in the private sector she would have been fired for not showing up for her job. Running away to subvert the workings of a democracy is NOT acceptable. Argue, resist and if the you lose, then work to change the results in the next election.
Shame on you for allowing her to speak when the subject of the program was on rates of return for pensions. You took a serious subject and turned into into a political commercial. No wonder NPR's public funding is at risk.
I'm a retired NJ public employee. Throughout my twenty-eight years of service, I paid into my pension plan but, since the middle 1990s', our Governors didn't pay into the pension fund and borrowed from it provide the politically loved property tax relief. During the boom years (2002 to 2007) while our wealthiest citizens benefitted from big tax cuts and the cost of living in NJ rose and rose, I received an average of 1% salary increase. Why? Because in order to attract new teachers, they had to raise the entry level salaries. Health care costs were rising and the older staff wanted to keep their medical insurance. We contributed to our health insurance costs. Unlike the police and firefighters who are able to retire after twenty years and a pension formula that includes their overtime plus salary, our pension formula did not include overtime pay. And, if we retired with twenty-five years or more before age 55 years and did not defer our pension, we paid a penalty for each year. It's interesting to note that the police and firefighters were exempt from the new changes to the pension formula. They can still retire after 20 years; their salary plus overtime is included; and they retire with a higher dollar amount for each year of employment.
It's disgusting that the Governor is blaming secretaries, social workers, teachers, clerks, environmental workers, park rangers for police and firefighter layoffs. It's not our fault. It's not our fault that seniors didn't get one of their two property tax rebates. If he wants shared sacrifice, how about taxing the wealthiest citizens and using that money to fund the pension plan. How about raising the gas tax which hasn't been raised in twenty to thirty years.
Yes.
Great comments, I had trouble yesterday when my man Mitch told me about how overpaid my wife (a local teacher) is compared to some nebulous concept of "generalized Indiana worker". Yet how many of those workers all have Bachelor's degrees? How many of them, in order to do their job effectively, have to put in 20-30 hours of additional work at home? I have heard Republicans talk about how the Public Sector needs to share the sacrifice of the private but it doesn't seem that the balance sheets of the banks show much sacrifice. I hear the same scare tactics being utilized now that were used when the TARP was forced down the throats of American taxpayers. I hear the chant, "Free market, Free market" from conservatives all the while that the free market continues to not hire and the whole mess started because we had a overly-greedy banking industry that overextended itself and made too many bets. But now it is homeowners fault when they default on a mortgage product that they could hardly understand. But corporate America will exact vengeance by removing 30 year fixed rate mortgages because that will restart the economy and the construction industry?!? Our patriotism stops at the point of our lapel pins if we feel that sacrifice means tax cuts for the wealthiest during two foreign wars, one of which occurred under questionable justifications.
I agree. This is well said. Tax the wealthy and the rest of us are willing to do our share.
If we just cut working class wadges, spending will go down and unemployment will go up. If we raise taxes on the wealthy, they will not spend less. We can create jobs by taxing the wealthy at rates of the Clinton administration. We all know the Bush tax cuts did not work and are not working now.
John Caruso
Since Senators and Representatives are public workers, they will also be reducing their benefits through these laws they are trying to pass. So they will have to reduce their health care benefits, retirement benefits, and "collective bargaining" activities --- if I read this situation correctly. Am I reading it correctly?
Congratualtions to the DR Show and site admin on maintaining current user
ID and psswd for over 2 yrs. Extremely rare.
If it can't pay you today, get it to sign an agreement to pay you the principal plus interest and penalties over time.
If it won't sign, get a judgement.
If it takes so long to pay that you're dead, have it pay your trust.
If you can't do one of these things, you've entered into a contract with someone with whom you never should have entered into a contract with. Suck it up and never do that again.
I don't think you can outlaw collective bargaining.
And, you can't force people to pay for something they don't want. That's why governments are short on cash. They're providing stuff the public doesn't really want. We, don't want to pay to save your dogs and cats from harm. We, don't care about Your dog or cat.
Governments could raise a lot more from those who violate our laws regarding motorized transport, because safe, personal, motor transport is something the public really wants. If they don't pay, take it away from them.
Finally, having an offensive post flag option near every box, Is offensive.
If you are so concerned about being offended, go to church or somewhere you are not likely to see new, different points of view.
The internet is for those of us who may have divergent views and/or, want to see others' divergent views and are not afraid.
Now, who wants to buy stock in J. David Industrial Corp?
So Congressman Nunes likes snappy one-liners as a substitute for sound argument? Try this one: The ten most frightening words in the English language are “I’m from a Republi-Con government, and I’m here to help.” People (especially unions) should be very careful about his promise of help.
Republi-Cons want to blame all our troubles on “evil” unions, while at the same time trying to repeal and/or defund every attempt to reign in the “free market” excesses which actually caused our economic crisis. They want to cut taxes on corporations, allow CEO’s to continue to receive exorbitant pay, bonuses, and “golden parachutes” from compliant and incestuous corporate directors (who are NOT looking out for the shareholders’ interests), and allow such rewards to flow to the very people who have bankrupted those companies and our economy. There’s plenty of money for that!
Meanwhile, they will cut unemployment benefits, cut Medicare and Medicaid, throw people out of work and leave them with no way to live (so much for the “sacredness” of human life, not when it costs money). It’s like the old cry of the Hoover Administration: liquidate everything. The Republi-Cons won’t be happy until they’ve turned our Great Recession into a second Great Depression - and after that, comes the Deluge. May God bless America, because they’re damning it!
I have worked in both the private and puclic sector in my 25 year career. I made more money, had better benefits and received more paid holidays working for the government than I ever experienced in the private sector. What's more, I have never been guaranteed a pension in the provate sector. I am so tired by the incessant whining of public sector employees. Wouldn't it be lovely if every working person received the benefits of those "public" servants.
I have worked in both the private and puclic sector in my 25 year career. I made more money, had better benefits and received more paid holidays working for the government than I ever experienced in the private sector. What's more, I have never been guaranteed a pension in the provate sector. I am so tired by the incessant whining of public sector employees. Wouldn't it be lovely if every working person received the benefits of those "public" servants.
A possible solution for this problem is addressing the information void that currently surrounds the value of pension promises.
The actual value of a pension promise reduced to an hourly rate would likely show that an employee making $20 per hour, would actually be receiving an additional $40 - $60 in pension benefits for every hour worked.
By making the value of pension explicit to employees it would show that many pensions actually compensate workers at an unreasonably high level, allowing for a productive discussion on controlling costs.
hainc on February 23, 2011 @ 10:25 am wrote: "Democrats made uneconomic pension and healthcare benefit promises in return for campaign donations and left others to clean it up."
As usual, you offer us nothing but the standard Republi-Con rhetoric, despite the fact that most of what you write was refuted by the guests on this show (including the reporter from that notable "liberal" rag - the Wall Street Journal).
Where do you think those "strong civil servants protections" came from in the first place? Collective bargaining with unions. Guess what will happen once the unions are destroyed?
As for privatizing pensions (and Social Security too, for that matter) - yeah, just imagine how well that would work out. Have you learned nothing from the past four years?! You want to put pensions, etc., in the hands of the same people who did such a great job destroying our economy!?
(Of course, those same people are just salivating over the prospect. Wanna bet that regardless of how those private funds do, the managers will still receive generous salaries, perks, and bonuses? After all, that's exactly what's happening now in your "sacred" private sector.)
And hey, why stop with the States? America should just declare Bankruptcy. That'll take care of all those greedy Chinese who've bought our debt. And then America's march to "banana republic" status will be complete.
Ah, yes, HAINC, the typically responsible solution for the "conservative". Declare bankruptcy so as to abrogate your responsibility. You have received the services you paid for, trouble is, you haven't finished paying for them. In most states facing pension obligations, both parties obligated the state to installment payments to fund their pensions.
State government has made promises. It is time to live up them.
If the state wants to balance its budget, it might well consider the elimination or reduction of greenbelt tax exemptions. Another big moneymaker is the taxation of agricultural lands on a capability basis. Yet another is tax penalties for companies in the process of moving labor-intensive operations to sweatshop countries and then importing the product back to the U.S. for sale.
Workers need unions to protect them from predatory and irresponsible management, because one of the first places "conservatives" cut governmental spending are regulatory arms of state governments that attempt to enforce labor and other laws that protect working conditions and safety. Most of all, workers need unions that strongly support the against the truly job and market killing effects of globalization. We need unions who are effective at communicating the hazards facing workers from the forces that seek to gradually erode the ability of workers to make an adequate living from 40 hours a week of labor.
What is the problem with transparency in public union negotiations? The taxpayers have a right to sunshine.
What is the problem with union members having the ability to decide every year whether they want to remain union members?
What is the problem with workers having to pay their dues by check as opposed to having them garnished from their wages?
Why can't union certification be done by secret ballot like every other election in a democracy where one is only representing the interests of oneself?
To Rose (February 23, 2011 @ 12:36 pm) :
Post it once, post it twice, post it nine hundred times - your argument is still false.
I've worked in the private sector almost my entire life (and I didn't work in the public sector long enough to qualify for any pension). I feel none of the resentment and jealousy that obviously motivates you. Instead of trying to bring public employees down, why not try bringing employees in the private sector up? All you're doing is cheering "the race to the bottom", a race everyone ends up losing - except for the wealthiest and the most politically connected.
When America is transformed into a feudalistic oligarchy - don't come "whining" to me!
tom jones on February 23, 2011 @ 10:29 am wrote: "Why should government workers have guaranteed benefits and be able to retire after 30 years with medical and defined benefits."
Gee, does that include the "government workers" known as the military? Not according to the Republi-Cons. I'll believe their rhetoric about "shrinking the size of government" when they start slashing the military budget along with all the rest.
In fairness, let me add I was pleasantly surprised when the House rejected that useless, duplicative, jet engine. For once the Tea Party "walked the walk". But note: it was an alliance of Tea Party members and Democrats that killed the thing. Speaker Boehner (to whose district the money would have gone) wanted that piece of "wasteful government spending" to continue. So did most of the rest of the House leadership, including Tea Bagger 'darling' Bachmann.
ET, Your refutation of Rose is lacking, lacking facts and relevance. Please try again.
hainc on February 23, 2011 @ 10:40 am wrote: “Elections have consequences. Wisconsin Democrats should understand that.”
Yeah, the way the Republi-Cons “rolled over and played dead” after the 2006 and 2008 elections? Why was it okay for “the party of No!” to use every trick in the book (including filibusters and secret senatorial “holds”) to block everything the Democrats proposed, but turnabout isn’t fair play?
“Pelosi said it best,’You will figure out what it's in it once it's passed.’ ”
- Why, sir, do you insist on repeating that tiresome lie? Everytime you do I explode it. What she actually said, speaking of the deliberate campaign of Republi-Con misinformation, was: ““But we have to pass the bill so that you can find out what is in it, away from the fog of the controversy.”
- http://pelosi.house.gov/news/press-releases/2010/03/releases-March10-con...
She underestimated the duplicity of people like you, who keep misquoting her out-of-context, and deliberately omit the last part of that sentence. Fortunately, that tactic simply proves why people should ignore everything you say.
Oh, and why do corporations oppose every attempt by stockholders to forbid using corporate money for lobbying and political advertising. I’d rather see that money go into my dividends, but as a minority stockholder I haven’t a prayer, so my money is spent any way management pleases. At least in a union the rule is “one person, one vote”. And they do get to vote regularly on union policy and practices.
hainc on February 23, 2011 @ 10:50 am wrote: "Republicans won a landslide in 2010 in Wisconsin. Walker ran on this proposal, it was not a surprise to anyone. Let the government govern!"
Democrats won landslides in 2006 and 2008. Obama ran on his healthcare proposal, it was not a surprise to anyone. Why didn't the Republi-Cons let the Democratic government govern?
Oh, and by the way, I don't believe Walker actually ran on a platform to do what he's doing. (And how come he's exempting the Police, Fire, and State Trooper unions? It couldn't be because they supported him in the election! Nah.)
Regarding the Wisconsin vs rights of public employees to collective barganing: Sorry I missed the 022311 show on this subject. First of all, I consider the right of public and private employees to bargain collectively as basic. This includes teachers and all other public employees. The problem that is current in Wisconsin appears to be developing in Tennessee, based on recent pronouncements by Gov. Bill Haslem. I wish you would have had a Republican Senator on the air at the same time with the Democratic Senator to get a more balanced presentation. Although, I must concede that I am favorable to the opinions expressed by the Democratic Senator. The subject of suppressing the rights of public employees to bargain collectively is openly being discussed in the legislative halls of Tennessee and I belive in other states and should be researched and discussed on your show very soon.
Ironclad on February 23, 2011 @ 11:03 am wrote: “The people of Wisconsin elected their governor and representatives in the last election to perform their duty. . . . Running away to subvert the workings of a democracy is NOT acceptable.”
Yeah, the people have spoken! No parliamentary maneuvers (like preventing a quorum) should be allowed to “subvert the workings of a democracy”. After all, it’s not like a minority of Republi-Cons would ever use parliamentary tactics like the filibuster or secret “holds” to block legislation they don’t like.
Oh, wait, never mind.
(P.S. - And what ever happened to Republi-Con complaints about "muzzling" dissenting opinion - when it was their dissenting opinion, of course.)
Pollyanna on February 23, 2011 @ 11:30 am asked: "Since Senators and Representatives are public workers, they will also be reducing their benefits through these laws they are trying to pass. So they will have to reduce their health care benefits, retirement benefits, and "collective bargaining" activities --- if I read this situation correctly. Am I reading it correctly?"
No. The proposals only affect unionized government employees (and not even all of them, the Police, Fire, and State Troopers are exempted). Members of the legislature are not considered "employees" in the same sense.
Incidentally, they get to vote on their own salaries, benefits, and pensions. How about an amendment to the Constitution requiring direct referendums (both Federal and State) to set the compensation our elected officials receive? We'd see some real savings that way!
The fog was caused by three thousand pages created in a backroom with under the table deals for special interests in Nebraska, Louisiana, California ...
In any case it was railroaded through successfully and now we're all paying from the job destruction it's fostering.
As you point out Democrats have been in control of Congress since 2006 and a recession began soon thereafter. They killed an economic miracle with their spendthrift ways.
J. David Dominelli on
February 23, 2011 @ 12:14 pm wrote: "And, you can't force people to pay for something they don't want. That's why governments are short on cash. They're providing stuff the public doesn't really want."
Nonsense, of course the government can. It's called taxes, and if you don't pay them you go to prison!
Governments are short of cash, among other reasons, because of the Great Recession we're living through (courtesy of the "pure, perfect, sacred, and holy" unregulated free market in toxic mortgages, credit default swaps, and derivatives). People are out of work, people's investments have lost value. There's a basic economic and legal principle: you can't get blood from a stone. Even at a low tax rate, 10% of zero income is still zero!
(And with economic and legal ignorance like yours, I sure as hell ain't investing in your company!)
P.S. - I'd rather see my tax dollars go to save dogs and cats than pay Boehner's salary. How do I arrange that? It's called elections.