More on The Coming War Over Public-Sector Pensions

When we last checked in on public-sector pensions, things were not going so well. For current and future taxpayers, that is, who are on the hook for big bucks and big obligations. For public employees, things are going pretty swell, as this Cincinnati Enquirer article makes clear.

Retirement incomes for the most experienced government employees top out at 88 percent of their active-duty pay. Unlike most private-sector workers, whose retirement is driven by the strength of the stock market and their 401-k plans, the pensions for government employees are guaranteed.

In addition to higher average retirement incomes, government retirees in Ohio also enjoy government-sponsored health care, can retire as young as 48 for police and firefighters, and have the opportunity to 'retire' and collect a full pension while going back to work, often at full pay for doing the same job. Such 'double-dippers' were paid more than $741 million by the State Teachers Retirement System last year and $240 million by the Public Employees Retirement System, records show.

In Toledo, even the mayor is a double-dipper.

Since starting his current term in January 2006, Toledo Mayor Carty Finkbeiner has drawn his annual salary of $136,000 in addition to a state pension for more than two decades in elected and unelected positions. He is leaving office on Monday.

And because he is already receiving a Public Employees Retirement System pension, Toledo taxpayers have paid $75,221 into an annuity as an additional retirement fund for Finkbeiner.

Having no knowledge of Carty Finkbeiner until reading this article, I take no position on his contribution to the great state of Ohio, whose public-sector pension issues are absolutely representative of everywhere else in the nation. But as a taxpaying resident of the Buckeye State, I do take a position on his double-dipping and the robust payouts to public-sector employees, especially double-dippers (which I know is legal in many instances). Ohio government at all levels has not fully funded its pensions, meaning that either public-sector retirees gets a growing share of my income until I die or the "guaranteed" retirement for public-sector employees gets cut, just like it gets cut in the private sector. The public sector at all levels should be switched to defined-contribution plans immediately (this is happening in the private sector for all sorts of reasons, the historical inability and/or unwillingness of companies to fully fund pensions on an ongoing basis being part of the problem). This is already happening in many parts of the public sector (Ohio's teachers plan, for instance, switched at least partly to such a system a decade ago) and it should go full steam ahead, if only to make it easier to account for future liabilities.

The Enquirer reports further

The pension cost to local governments in Ohio now stands at $4.1 billion a year. If current trends continue, the pension costs will grow by $604 million to $768 million during the next five years, according to a Columbus Dispatch computer analysis. The costs are directly related to the size of government payrolls.

One of the old arguments about lavish (relative to the private sector) retirement benefits for public-sector employees was that they were simply getting deferred compensation, that they might have job security, but they got paid less during their careers, so good retirement benefits were the payoff. This is no longer true, with the average public-sector worker making about $71,000 and the average private-sector drone pulling only $40,000 nationally. Plus great job security, more days off, generally sweeter health-care coverage, etc.

Read the whole Enquirer piece here.

And then get ready to take a stand against giving up even more of your money to pay for lavish retirement benefits for people who already make more than you do.

Buy the new issue of Reason, whose cover story on "Class War: How Public Servants Became Our Masters" is directly on point. Available at newsstands everywhere. And just subscribe already. A year costs less than $20 a year.

Update: In the comments below, Citizen Nothing helpfully sends a link to the Columbus Dispatch's truly enraging summary of public-sector retirement packages in Ohio, which is a representative stand-in for every state in the Union.

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  • ||

    Even Willie Brown understands it is a problem

    If we as a state want to make a New Year's resolution, I suggest taking a good look at the California we have created. From our out-of-sync tax system to our out-of-control civil service, it's time for politicians to begin an honest dialogue about what we've become.

    Take the civil service.

    The system was set up so politicians like me couldn't come in and fire the people (relatives) hired by the guy they beat and replace them with their own friends and relatives.

    Over the years, however, the civil service system has changed from one that protects jobs to one that runs the show.

    The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life.

    But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers.

    Talking about this is politically unpopular and potentially even career suicide for most officeholders. But at some point, someone is going to have to get honest about the fact that 80 percent of the state, county and city budget deficits are due to employee costs.

    Either we do something about it at the ballot box, or a judge will do something about in Bankruptcy Court. And if you think I'm kidding, just look at Vallejo.


    Read more: http://www.sfgate.com/cgi-bin/.....z0bf0jYoMd

    When you have lost Willie Brown?

  • ||

    I vote for bankruptcy court, not because it's preferable, but because it's most likely the only way out. The last guys in the Ponzi scheme always get screwed, and the current public sector employees and taxpayers are "it." What is not sustainable will not be sustained, regardless of the promises made or contracts negotiated. A new, tougher world is coming.

  • ||

    As a former school teacher, (Wisconsin), I have money which was deducted from my pay for my pension. When I turn 55 I can take that as a lump sum. That sounds safer than taking a pension. But, where do I put that lump? I really don't want to try to collect a pension from a fund that may run dry. Hopefully, I can get it out before they go to bankruptcy court.

  • Johnny Longtorso||

    Carty Finkbeiner

    I'm changing my commentor name to "Carty Finkbeiner". Hell, I'm changing my real name to "Carty Finkbeiner". I just like saying "Carty Finkbeiner".

    Carty Finkbeiner
    Carty Finkbeiner
    Carty Finkbeiner
    Carty Finkbeiner

  • ||

    Beatnik Cry Finer
    Ban Kinetic Ferry
    Interface By Rink
    Financier By Trek
    Tyrannic Beef Irk

  • ||

    Sugar, Sugar
    Do you have software that does that, or does your brain just work that way?

  • cbunix23||

    Try the anagram server at:

    http://wordsmith.org/anagram/

  • Gilbert Martin||

    "One of the old arguments about lavish (relative to the private sector) retirement benefits for public-sector employees was that they were simply getting deferred compensation, that they might have job security, but they got paid less during their careers, so good retirement benefits were the payoff."

    Even if that was true, it is still an invalid argument. Job security in a public job translates into being protectied from being held accountable for incomptenece, lazines, bad attitude, etc. - all things that would much more likely get someone fired in the private sector world.

    I have a relative that works for the federal government and I have heard stories about how it virtually impossible to get rid of people who are incompetent or goof offs.

    So in many cases, it is getting paid for NOT doing the job as it should have been in the first place.

  • Citizen Nothing||

    Here's a link to the full Ohio public pensions package report in the Columbus Dispatch.

  • Citizen Nothing||

    (I mean, if you're going to cite an article by a Dispatch reporter about a Dispatch investigation, might as well link to the original, right? Not that I have a vested interest or anything.)

  • ||

    Dispatch Web Page:

    This report is the work of Ohio's eight largest newspapers: The Plain Dealer in Cleveland, The Cincinnati Enquirer, The Columbus Dispatch, the Dayton Daily News, The Akron Beacon Journal, The Toledo Blade, The Canton Repository and The Vindicator in Youngstown.

    The newspapers have been working together for several years to report on issues important to Ohioans.

  • Predicted Chad Post||

    Suck it up, greedy bastards. Public servants are far more deserving than any RICH PRIVATE SECTOR PERSON. Pay your fair share, shut up, and live with it.

  • OHIO||

    Toledo's been a problem ever since we lost that war with Michigan.
    What? We won? But we got Toledo and they got the Upper Peninsula? Who the fuck was in charge of negotiating THAT deal?

  • MICHIGAN||

    Shut up or we're giving you Detroit too!

  • ||

    Actually, Michigan won the skirmish and the loser got Toledo.

    Seriously, though, the dispute was over the border between the states. The natural border is the Maumee River, which cuts through Toledo. Michigan wanted the border at the Maumee and Ohio wanted it north of there.

    To keep peace, Congress gave Toledo to Ohio and appeased Michigan by giving it the Upper Peninsula, which had been part of the Wisconsin Territory.

    Obviously, Michigan got the better part of the deal.

    So Toledo, which should be in Michigan, is in Ohio, and Marquette, which should be in Wisconsin, is in Michigan.

  • ||

    At the time, Michigan was getting screwed. Toledo was a wealthy port and an early industrial city, while the Upper Penninsula was just a wilderness with no clear value, until its massive iron deposits were discovered toward in the late 1800s (nearly a century after the MI-OH conflict). As you note, the real loser was Wisconsin, which they deserve for coddling Brett Favre for so long.

  • Johnny Longtorso||

    Public sector workers are more morally deserving of high pay than private sector workers, since they've sacrificed financially by accepting lower paid govt jobs instead of chasing $$ in the private sector.

  • ||

    Yeah, right. Most people who work in the public sector couldn't get a real job in the private sector. Just look at liberals as a whole.

  • ||

    Screw you. Don't do us any favors with our money. What needs to be done is to fire half of all non essential public workers, cut the rest of them's salaries and compensation by 30% and prohibit them collecting retirement until social security age. Then change their retirement plans to 401k plans and ban public sector unions.

  • JB||

    Government employees actually think the government will be able to pay their retirement benefits!

    LOL

  • Johnny Longtorso||

    Government employees actually think the government will be able to pay their retirement benefits!

    They will get paid, even if they have to strip you for organs to sell on the black market.

  • JB||

    They can try.

    When the government is bankrupt, government employees won't just be losers, they will be targets.

  • Fluffy||

    Unfortunately, I think Johnny is right here.

    I think it would be dangerous to underestimate exactly how far the state will be willing to go to meet its "obligations".

    I still hope that the states will just declare bankruptcy and walk away from their retiree obligations, but it's more likely that the Feds will back the states up if there's any danger of that happening, and if they do one way or another all these public sector folks will get their pound of flesh.

  • Gilbert Martin||

    Well that's exactly what a lot of Obama's "stimulus" package was about - bailing out state government from failed Medicare programs, their idiotic profligacy, etc.

  • ||

    "I still hope that the states will just declare bankruptcy"
    I can't find a link right now, but I read that the CA legislature is working on a bill to make government bankruptcies more difficult.
    I presume this is at the behest of John's 'friends in labor' who are probably getting an inkling that things aren't going as hoped.

  • MNG||

    "I still hope that the states will just declare bankruptcy and walk away from their retiree obligations"

    Huh, fluffy, I always took you for a person who thought people should honor obligations and/or contracts...Does that not count for employer-employee?

  • ||

    MNG apparently doesn't know what bankruptcy is. Didn't we have this discussion about GM's bankruptcy a few months ago?

  • MNG||

    Maybe it's a necessary evil for people to renege on their obligations, but what kind of libertarian longs for it?

  • ||

    Actually, the state has a long history of reneging on its obligations. For example, take the bonuses due WWI soldiers. We know what the state did to them. One of Mcarthur and Eisenhower's great moments.

  • ||

    The state doesn't have any money, and tax receipts are not going to come even close to being enough to cover these expenses. So the alternatives are (a) bankruptcy, or (b) shaking down a third party (future taxpayers) to meet the obligations of the state.

  • MNG||

    I'm not sure the states can really go bankrupt, can they? But more to the point I don't buy the analogy because the government can't say they don't have the money to pay their obligations: they can just raise taxes and/or cut spending.

  • Colonel_Angus||

    The public employees can also recognize that the government's "obligations" to them were completely bullshit in the first place and that they never should have counted on them.

  • MNG||

    What an interesting view of contracts: If A contracts with B A can be excused from his obligations because B should have realized A was full of shit.

    May I suggest rather that you're full of shit perhaps?

  • Colonel_Angus||

    Well, in bankruptcy, a lending party such as a credit card often goes away with much less than they were oweed because of that reason.

  • adam||

    Actually, this sounds like the starting point for a fraud claim.

  • ||

    States are sovereign and cannot go bankrupt. They can however repudiate debt. The right to sue a State is entirely at the discretion of the State. It's the doctrine of Sovereign Immunity.

    Cities and counties however are not subject to being able to claim sovereign immunity. That is why there is a special section of the bankruptcy code for them.

    Future voters (taxpayers) may force the states to renege on the public pensions, just like Congress can abolish Social Security tomorrow if it wanted to. The US Supreme Court ruled fifty years ago that no one has a property right to social security. That is why its a tax and not an annuity even though every year the government lies to you when you get your 'insurance' statement of benefits from the Social Security Administration. The public sector workers will in the next 10 years will get their come to Jesus moment as well.

  • Colonel_Angus||

    When those two parties of the contract have agreed to a completely fucked up, irresponsible deal that robs an outside party (the taxpayers), to renege is a perfectly desirable outcome.

  • MNG||

    The taxpayers chose the representatives who made the deals. Essentially they just act as the taxpayers agents. In this sensehe taxpayers made the deal. If you don't like the deals your agent makes, pick better agents.

  • Colonel_Angus||

    Lesson learned: public employees, don't expect me to give you a damn thing.

  • MNG||

    Again, I'd love to see you apply this attitude about contracts across the board...You just want to see public employees suffer, logic or principle be damned.

  • Colonel_Angus||

    I do. If a bank makes a loan to someone who they should have known can't pay it back, they don't deserve shit.

  • Colonel_Angus||

    If a ridiculous contract is made, is the money going to just come out of thin air?

  • ||

    Wrong analogy. Bid rigging is what is.

  • MNG||

    They deserve the amount the other party promised.

    You've got a funny idea of the term "deserve."

  • Colonel_Angus||

    Contracts are renegotiated all the time in bankruptcy, if the amount owed is unreasonable. The practical reason is that the amount owed simply doesn't exist, but the result is that all parties are essentially punished for making a retarded deal.

  • TER||

    The banks doing sub-prime loans deserved to be paid back as well. When it comes down to it if someone can't pay they won't. The state cannot raise taxes beyond a certain point (which they are already near) without REDUCING revenue by chasing away taxpayers. They cannot cut spending to meet their obligations because almost all of their spending is going towards meeting their obligations.

  • adam||

    There are special considerations in government contracts, namely the resort to a bottomless pit of money. The law of government contracts, at least procurement contracts, recognizes that and gives the government a bunch of defenses that private parties don't get.

  • prolefeed||

    The taxpayers chose the representatives who made the deals. Essentially they just act as the taxpayers agents.

    Analogy fail. Only a small percentage of the population actually votes in favor of a given incumbent (the vast majority either not voting or voting against the bastard in question.) The politicians might have a case for acting as agents for those who voted for them, but everyone else is getting shaken down without their consent.

  • Johnny Longtorso||

    I still hope that the states will just declare bankruptcy and walk away from their retiree obligations, but it's more likely that the Feds will back the states up if there's any danger of that happening, and if they do one way or another all these public sector folks will get their pound of flesh.

    Hmmmm...... Will a Dem led federal government bail out blue states or let overspending be known as the cause of their bankruptcies, which will hurt the public sector unions that fund Dems.

    I wonder what it will be......

  • ap||

    carty is a national treasure.

    http://en.wikipedia.org/wiki/Carty_Finkbeiner#Controversy

  • BakedPenguin||

    I know someone who has been a prison / jail guard for 17 years. He's desperately waiting out the remaining 8 years he needs to retire at 80% pay.

    He hates the job, hates where he's living, but is staying put just to get that sweet, sweet retirement money.

  • ||

    I still hope that the states will just declare bankruptcy and walk away from their retiree obligations,

    My expectation is that Congress will pass a law specifically protecting pensions from bankruptcy. Like student loans.

  • MNG||

    Did the workers and public employers in question contract for a certain type of benefit? Then the agreement should be honored, no?

  • Johnny Longtorso||

    Govt worker unions elect politicians that will give fat contracts to govt workers that can't be rescinded if the voters disapprove, thus making spending cuts illegal. Nice little scam.

  • MNG||

    Only government workers are allowed to vote? I didn't know that!

  • Johnny Longtorso||

    Govt unions are a special interest group. They elected one of their own to the White House, who gave us a 'stimulus' package designed to save their jobs. The Parasite Class has political power well beyond their mere numbers.

  • MNG||

    That's such bull. I'd bet the majority of people who voted for Obama did not belong to any government union. The fact is that a majority of voters, most of whom do not work for the government, elect representatives who then make contracts with employees for certain benefits in exchange for the employees time. Everyone should live up to what they contract into, right?

  • ||

    On the other hand, the vast majority of the campaign contribution and foot soldiers come from the unions.

    I wish I could vote myself more customers and higher revenues.

  • MNG||

    Yeah, private business never contributes to political elections seeking favors in return.

    And as to your "vast majority of the campaign contribution and foot soldiers come from the unions", do you have any proof for that? I mean, what election are you even talking about here. I doubt seriously that the majority of, say, the contributions to the Obama campaign came from unions.

  • prolefeed||

    Everyone should live up to what they contract into, right?

    I'll say yes, if you will stipulate that not voting, or voting against the incumbent, does not qualify in any way as consenting to a contract.

  • ||

    MNG,
    BK makes certain contractual agreements null and void.

  • Johnny Longtorso||

    I'm curious MNG, should it be allowable to make spending cuts and govt workforce cuts illegal by having govt sign a contract w/ a govt worker's union?

  • MNG||

    If an employer contracts with an employee to provide x benefit in exchange from y from the employee, and the employee, in reliance on this contract, provides y, then the employer should have to provide x benefit to the employee. Whether the employer is a public or private entity or the contract was individual or collective doesn't matter imo.

  • ||

    I agree with mng that a contract is a binding agreement.

    Maybe the debate needs to focus on whether politicians should be able to make long term deals with pulic employee's unions. The negative ramifications of these deals are usually most acute long after the signers are out of office, or in the case of the employees enjoying their lucrative retirements.

    Another point of contention is the fact that these people have a contract at all. If the guy driving a shuttle bus has no contract, why then does the transit driver need one. Please try and tell me the public employee, in this case, is making a financial sacrifice to service the city.

  • ||

    pulic=public

  • ||

    Of course there's the question of whether the contracts were negotiated in good faith:
    "...in California [..] a bipartisan bill that passed virtually without debate unleashed the odious "3 percent at 50" retirement plan..."
    Certainly government contracts have been renegotiated in the past as a result of bad-faith.

  • ||

    Generally yes. But, you shouldn't screw the entire country just to meet the obligations owed to one group. If the contracts said they were entitled to every other first born as a sex slave, would you want that honored to?

    If the choice is radical cuts in government services, bankruptcy, or cutting these pensions, the pensions will have to be cut, obligation or no. The public service employees are not the only ones government owes an obligation to. I would think that as a liberal you of all people would realize that. Honestly, is it your's and the liberal position that our children should be deprived of economic opportunity or the poor and needy of tomorrow should be deprived of needed services all so some retired fire chief or school principal can keep their six figure retirement? If it is, there is no such thing as a liberal position anymore.

  • ||

    I seem to remember you arguing a few months ago, during the GM bankruptcy controversy, that contracts between GM and its secured creditors should be set aside so that the UAW could extract its pound of flesh from GM's dwindling cash reserves first. Showing (as if there were any doubt!) that you're just a shill for Democrats and their favored interest groups.

  • MNG||

    My opinion was that all bargainers should be held to their obligations. It's not that the GM employee benefits contracted for should come before the secured creditors, it's that they should all be equal. Party A and B's agreement that their obligations to one another are "special" should not be binding on Party C who has got promises from Party A as well.

  • ||

    Then it goes without saying that you're opposed to the Obama administration's loan modifications programs? No more loan contract re-negotiations. Throw the non-paying bums out on the street.

  • MNG||

    I'm not in favor of them.

    If lenders want government favors I don't mind the government telling them that a condition is to do something like that. But no, I'm not in support of a law that would change the conditions of those contracts.

    So, are you for them?

  • ||

    GM employees got paid for their labor. They are owed nothing. The investors are the ones who put up the cash, they deserve to have been taken care of first, followed by the trade creditors.

  • adam||

    I don't know of any contract that government employees sign in return for retirement benefits. There's no such contract for federal employees at least. Maybe some states have contracts like that. For federal employees, you're automatically put into the FERS system if you're a new employee and you have a percentage deducted from each paycheck. Your benefits are defined in law and in a guidebook published by OPM. It's pretty much understood that those benefits can change at any time based on a change in the law. If federal employee retirements were cut, I don't know what basis they would sue on. Maybe some kind of implicit promise and reliance theory, but that's pretty weak. Maybe they could claim that value of the payroll deductions paid, but that's far less than the value of current benefits. I don't see any traditional contract based claim though.

  • MNG||

    I'm not sure the "average public sector employee" and the "average private sector employee" should make the same amount, for the same reason I'm not troubled by the fact that the "average Wal-Mart employee" and the "average Goldman Sachs" employee probably don't make the same amount.

  • Johnny Longtorso||

    Cool, so no liberal can ever object to "overpaid" CEOs making too high a multiple of the salaries of random worker bees?

  • MNG||

    I dunno, I said all this racket from McCain last year about "curbing excessive CEO pay" was nonsense at the time, and I still think so.

  • ||

    McCain is nonsense.

  • MNG||

    Eh, I kind of like McCain, he was just trying to win votes in a stupid way there...

  • ||

    Since apparently judge value by whether said employee votes Democrat or not, I am not surprised.

  • ||

    Since apparently judge value by whether said employee votes Democrat or not, I am not surprised.

  • Abdul||

    This is no longer true, with the average public-sector worker making about $71,000 and the average private-sector drone pulling only $40,000 nationally

    This link doesn't appear to be comparing apples to apples. For example, government attorneys make far less than private sector attorneys.

  • ||

    Indeed, there aren't many government fast food chains and Walmarts.

  • ||

    You clearly have no idea what you're talking about. Fed govt attorneys do pretty damn well for themselves. The vast majority of private sector attorneys (outside of biglaw firms) aren't getting rich by any stretch of the imagination.

  • Fluffy||

    And federal attorneys have absolutely no obligation to build a book of business.

    Private sector attorneys who make more than federal attorneys are doing so on the basis of their ability as salesmen, a role that federal attorneys have no need or occasion to play.

  • MNG||

    Which is just another reason why it's probably silly to compare the "average pay" of one to the other, eh?

  • ||

    What about government McDonald's workers?

  • ||

    Ohio, which is a representative stand-in for every state in the Union.

    God help us if that is ever the case!

  • ||

    Maybe it's a necessary evil for people to renege on their obligations, but what kind of libertarian longs for it?

    As usual, you enter the chain of events midway, and triumphantly reach an irrelevant conclusion; what kind of libertarian longs for a contract in which the principals agree to terms obligating third parties to pay for them? What kind of libertarian longs for contracts doomed to inevitable failure, because they were agreed to with the explicit understanding that the ultimate costs would not be borne by the parties who negotiated them?

  • Johnny Longtorso||

    P Brooks and I have signed a contract stating that MNG will give us $10K each. A deal's a deal, and we _do_ outnumber MNG. A check will be fine.

  • Gilbert Martin||

    Ha!

    That's a good one.

  • MNG||

    Actually, it's a bit retarded. See, it's ME that says that Party A and B's agreement that their obligations to one another are more important than the obligations between Party A and Party C should not be determinative of whether A is held to honor his obligation to C.

    But when Marshall Gill likes the logic in your post, watch out!

  • Gilbert Martin||

    Indeed.

    That sort of thing is just one of many versions of the game that politicians have always engaged in - promising handouts of the taxpayer's money to some targeted constitutency group to buy their vote and/or increase their dependency on government in order to build up their political power base predicated on a welfare plantation.

    It's no different in principle than dreaming up entitlement programs.

  • ||

    Beautifully and eloquently put.

  • ||

    If contracts are everywhere and always sacred, then MaunderingNannyGoat should be opposed to government sponsored armtwisting to write down mortgage principal amounts for underwater homeowners deadbeats. And he should be outraged by people walking away from their contractual obligations to repay loans to which they freely agreed.

  • Johnny Longtorso||

    Or a contract to pay below a new and higher minimum wage - are those immutable?

  • Johnny Longtorso||

    We shouldn't be bound by contracts elected govt employees sign with civil servant govt employees. That's a contract the govt signs w/ itself, and, as the only party, it can ditch it whenever it wants.

  • MNG||

    That's absurd. People working for the government are not the government. They are engaged in a contractual relationship with the government, exchanging their time and effort for compensation.

  • Johnny Longtorso||

    Any organization is a legal or philosophical fiction - any agreement is agreed to by people. Government employees signing agreements w/ government employees is govt signing an agreement w/ itself.

    Should future SS, Medicare, etc 'mandates' be put in US debt projections, as they are as immutable as T Bills, since the Treasury has agreed to pay the SS admin?

  • MNG||

    That is really insane. By this logic when you sign a contract with the company you work with that's just the company signing a contract with itself.

  • ||

    Cities and counties can declare bankruptcy, states can't. I think it's the Comptroller in California that's been looking into every possible solution, including reverting back to territorial status. The States are screwed, they can't inflate and they can't go bankrupt.

    The resolution of this debt problem will be nasty, I expect it to be a near (hopefully not actual) civil war between the "public" employees and the taxpayers. Where the taxpayers win, there will be major changes in laws. Where the "public" employees win, the taxpayers will leave, and the winners will discover that the state still can't pay them their benefits.

  • ||

    @LarryD: "The resolution of this debt problem will be nasty, I expect it to be a near (hopefully not actual) civil war between the "public" employees and the taxpayers."

    I am OK with some "actual" war if it involves tar, feathers, and horsewhippings of a few thousand particularly deserving scoundrels. Pour encourager les autres, don't you know.

  • ||

    Did the Govt. and its employees enter into a contract? Why yes they did - with our money.

    To all who defend the public employee pensions, I want to tell you about the sweet deal I got on a new Mercedes - I signed a contract with the dealer, and we decided you would pay.

    Pony up leeches.

  • MNG||

    Look, even in Libertopia there will be government employees. These will be people that will bargain their time for a certain compensation. Once they have given their time and completed their part of the contract the other side should be held to theirs. What, are you libertarians asking for special treatment for the government as contractor compared to private contracters? See, your hate for government employees and unions has pushed you into incoherency...

  • Johnny Longtorso||

    If govt can make private deals between two private entities (paying below a raised minimum wage, etc) illegal, MNG, don't you think it has the equal power to make its previously signed deals w/ govt employees illegal and null?

  • MNG||

    There can be conditions set for contracting-for example that minors can't contract. But once contracts are signed within those conditions they should be honored.

    It's you that wants the government to have some special treatment that a private actor does not here, you Statist!

  • Johnny Longtorso||

    See below

  • MNG||

    See above

  • Fluffy||

    One risk that any person who enters into a contract takes is that the other party can not or will not fulfill their obligations.

    If these folks had contracted with private employers for pension benefits, they would have run the risk that the company would become insolvent before all of those benefits could be realized.

    Contracting with a state reduces the likelihood that this will happen, but does not eliminate it.

    I think that anyone who enters into a contract where compensation is deferred for up to 80 years is running a huge risk. They are regarding as eternal something that is by its nature contingent and ephemeral. And when you make those kinds of bets, sometimes you lose.

  • prolefeed||

    Look, even in Libertopia there will be government employees.

    I seriously doubt the word "Libertopia" means what you think it means, from that LOL statement above.

  • Johnny Longtorso||

    My prediction: a judge will overturn Prop 13 and mandate massive tax hikes. Libs will rejoyce that the hated first sign of the Carter vs. Reagan realignment will have been overthrown, since the whole 'vote' thing was only a means to an end for them anyway.

  • ||

    A constitutional amendment cannot by definition be unconstitutional. That said as long as a state constitution does not violate the US constitution it can include whatever it wants.

    Besides come November there is no chance in hell the Feds will bail out California as long as it does not seriously reform it's budgets and spending.

  • ||

    Actually, according to the CA state courts, an amendment which limits an essential freedom cannot be installed by referendum. That's how they tried challenging the gay marriage ban in court.

    It would be a real stretch to strike down Prop 13 by such an argument, but it may be enough of a camel toe under the tent for a craven liberal judge to justify the conclusion he already wants to reach.

  • MNG||

    How many people here think the government should renege on the benefits it promised members of the military? I mean, the deals are made with taxpayer money. Military voters are a significant bloc of voters, a powerful interest group. Blah, blah, blah.

  • Johnny Longtorso||

    How many people here think the government should renege on the benefits it promised members of the military?

    It should or it has the legal right to? Two different questions.

  • Johnny Longtorso||

    Let me repeat my question to MNG here:

    If govt can make private deals between two private entities (paying below a raised minimum wage, etc) illegal, MNG, don't you think it has the equal power to make its previously signed deals w/ govt employees illegal and null?

    Otherwise, it would appear that govt has more power over private contracts it isn't a party to than it has over its own employees.

  • MNG||

    Ah, but why should the government renege on its promise to, say, police officers but not members of the military?

  • Johnny Longtorso||

    Again, can or should? I think they CAN reject both or either.

  • MNG||

    So, are you for changing the terms of benefits for government employees, including the military?

  • Johnny Longtorso||

    I'm saying the govt CAN change the benefit terms of either, which is the question here; it has the legal right to. Whether it should is a different argument and I'm not going to get sidetracked by mere rhetoric.

  • MNG||

    John-boy, your right wing slip is showing!

  • Johnny Longtorso||

    No, I'm merely limiting my comment to the question in the thread instead of getting distracted by unspecificed, hypothetical alterations to promises to the military. The govt has the legal right to not keep those promises - that's the only thing relevant to this thread.

  • MNG||

    Should they have the legal right not to keep those promises?

    And should private entities have the same right?

  • Johnny Longtorso||

    How many times to I have to type "they have the legal right to" before you realize I answered your question about whether I think they have the legal right to? How much more clear can I be?

    Private contracts are binding. Govt contracts forbid future voters from making decisions concerning govt spending, thus nullifying their votes. A contract signed w/ SEIU does not trump my right to vote for lower taxes and reduced spending.

  • MGN||

    I'm going to keep asking you the same question until you give the answer you're supposed to.

  • ||

    It's called too bad. Private sector workers are not guaranteed anything come hell or high water and since they, and they alone, pay all of the taxes which pay your salary and benefits that is just the way it is going to be.

    The concept is the repudiation of an 'odious' debt. The New Communist Congress and the Obama Administration will be both the pinnacle and the start of the end of the parasite state.

  • Johnny Longtorso||

    There can be conditions set for contracting-for example that minors can't contract. But once contracts are signed within those conditions they should be honored.

    So a contract for minimum wage is still good, even if the min wage is raised?

  • MNG||

    Yes. The government enforces contracts and can set general rules that all contracting parties, including the government as contractor, must follow. This is hardly something that was ushered into being with the New Deal of something, restrictions on contracting go back to things like the Statute of Frauds or refusals to enforce contracts with minors or incompetents.

    But once contracts are made under the existing rules for contracts they should be honored.

  • Fluffy||

    I replied to this partially above, but let me say this:

    One thing you have to deal with when dealing with sovereign borrowers is that there's no way, ultimately, to compel them to pay you and no security you can demand.

    The graveyards are full of financiers who lent money to states and didn't get paid, because the state couldn't pay or just didn't feel like it.

    When you contract with a state for compensation to be paid in the future, you are running a number of risks. The state could cease to exist as a political entity. [Those Ottoman pensions didn't work out too great.] The state can escape its nominal obligations to you by corrupting its currency. Or the state's taxpayers can simply decide that they don't want to pay. [Mississippi bailed on canal and railroad bonds from the 19th century that I think the Morgan guys are STILL trying to get paid for.]

    Next time, get cash on the barrel, employee unions.

    And please note, MNG, that if a state like California bails on its retirees, it will probably simultaneously bail on its bondholders. Who will also simply be losing a bet that they made, and who will also get no sympathy from me.

  • MNG||

    I'll have sympathy for both ("bondholders" are people too, and promises to them should be honored). Both deserve to have the promises that were made to them be fulfilled.

    Look, you can make the same kind of statements about any contract with anyone fluffy. You could contract with me and events could change to where the contract is seen as impracticable, or I could die with no estate, etc. But surely the general rule should not as a result of these risks be that those who can meet their obligations should be allowed not to.

  • Fluffy||

    I think the issue, MNG, is that you have to define "can".

    A monarchy that experiences a change of dynasty may decide that it "can't" meet the obligations of the previous dynast.

    If Washington DC is destroyed by a nuclear device, a la "War Day", it may end up that the federal government "can't" meet its Treasury bond obligations.

    And if the citizens of California refuse to directly vote for and/or support legislators who will vote for the taxes needed to support the retiree obligations, to me that is a "can't". It looks like a "won't", but it's really a "can't". Because you "can't" force voters to vote for something they don't want, or to support legislators who will vote for things they don't want.

  • MNG||

    Well yeah, I was talking normatively.

    And you were'nt talking above about empirical reality, you said you hoped they would renege on their obligations.

    I think that would be a strange position for a libertarian to take generally...

  • Fluffy||

    I think that anyone who finds that their dealings have left them with debts or obligations that cannot be managed should consider bankruptcy, yes.

    And if you want to talk normatively:

    If we had a theoretical debtor who was faced with the choice of feeding his children or satisfying the terms of a contract he signed with a scam artist [say one of those "talk to the dead" mentalist scammers] I would say, normatively, he should declare bankruptcy, fuck over the scammer, and feed his kids.

    In the case of the state of California, I would rather see the state fuck over the tapeworms, the state employees, than their host[s], the taxpayers. Is that a normative judgment? Yup. But in pretty much any case where one's obligations have become insuperable, and where the future costs of declaring bankruptcy are exceeded by the future costs of struggling to maintain debt service, a debtor should strongly consider bankruptcy.

  • Johnny Longtorso||

    But once contracts are made under the existing rules for contracts they should be honored.

    Under our current law, does a contractual obligation trump a raise in the minimum wage? You just said it shouldn't, right?

  • MNG||

    The minimum wage is like the contracting with minors or the "contracts in land must be in writing" type of provisions, it sets the parameters of contracting.

    Contracts that fall within the set parameters should be honored.

  • Johnny Longtorso||

    What if the minimum wage goes up? Are previously existing contracts for the old, lower wage still valid?

  • MNG||

    See below

  • ||

    What bugs me is how unbelievably generous these state pensions are.

    A Federal Civil servant under the OLD retirement system - a system that has not added any new personnel in 25 years - had to put in 30 years and be at least 55 years old to retire...on half-pay. You could get up to 80%, but it took 42 years to do it.

    And ALL of that went away 25 years ago. If you were hired after 1984, you get an IRA with partial matching of contributions. And a very small pension.

    These state employees are getting retirement benefits that make anything EVER offered at the Federal level look paltry.

  • ||

    I work for a very fiscally responsible, AAA credit rated County Government. While surrounding counties had 40-60-100 MILLION dollar deficits, we actually finished with a surplus of $100,000. I make nowhere near $70,000, but I must admit, somewhat guiltily that the job security, days off, and benefits are better than anything I would have found in the private sector. I've always been one of those that sneer at government workers, and to some extent it's warranted. But, I can tell you, most of the people I work with are good, competent people held up to the very high standards our county government sets for us. We haven't had raises in two years and, to a person, we're okay with that. We're just happy to have jobs. Government workers can be as assiduous and talented as private sector folks if they have government officials equally so. The one fear we do have is exactly what this article mentions - the pensions are simply too sweet and, for some, too expensive to still be there when it's "my" time to retire. I don't expect half of what I'm currently told I'll receive upon retirement because I don't expect this particular local government to pass those costs onto its taxpayers. In a strange way I’m proud and happy that they won’t, even at the personal hit I might take. But, at the federal level, who do you think is paying for those $70,000 and $160,000 pensions? We are. And we will! The federal government has never feared passing on its bills to its people. Oh, and for the record, there are hardly ANY jobs done anywhere in government worthy of $70,000 salaries.

  • MNG||

    You know, the retiree has ALREADY put in their part of the bargain under the set terms. So the real minimum wage analogy would be better put like this: A signs to work for B for 20 years, payable all at once at the end of the 20 years, for the minimum wage at the time, which then does not change for 20 years. The minimum wage goes up the next day. B is then asked to pay in the for all the past work in the at the new minimum wage rate.

    Yeah, I'd be against that.

  • Johnny Longtorso||

    If the govt can unilaterally alter a contract between me and you for the min wage at the time, then the govt can unilaterally alter a contract w/ its own employees. This isn't an "analogy". The circumstances don't have to be similar.

    The govt can't have rights concerning contracts between A and B to CHANGE THE DEAL that it doesn't have between itself and SEIU.

  • MNG||

    The government can change the general rules of contracting, but it is not to change the terms of specific contracts. For example, when the government changes the minimum wage the government as employer has to start paying that minimum wage too.

    So are you saying you want the government to say that generally parties that find obligations to be more expensive than they thought should be able to renege? Because I've got a lot of contracts I'd like to apply that too...

  • Johnny Longtorso||

    So all govt rules concerning contracts have to apply equally to all contracts? No sub-minimum wage for teenagers, no rules that only impact one class of worker but not another (there goes any number of laws that impact for profit and nonprofit entities differently), etc?

    Besides, govt employees engage in interstate commerce w/ their income, thus making that under of govt's absolute control.

  • MNG||

    Er, the sub-minimum wage IS a general rule that applies to all contracts. Of course for the rule to apply the criteria that makes up the rule must be there.

    See, the government can say "you can't pay a 15 year old less than 3 dollars an hour and can't contract with them to work more than 30 hours a week." But once it makes that law any contractors that meet the criteria, e.g., that are contracting with a 15 year old, must follow it. This includes the government as a contractor.

    Now what would be wrong would be for the government to say "that contract that Johnny and 15 year old Sara made to work for 2.75 an hour, now that's 3 an hour." They can make general rules but not just single out the terms of some particular contract.

    And that's what you're talking about, these governments saying "the terms of the agreements we made with employees a while back, we don't have to abide by those, that shit is way expensive..."

  • MNG||

    Unless you are saying you think they should make a general law to that effect.

    But I don't think you are. You think they should declare that just they, the government, are off the hook for THEIR agreement, but everyone else must still go by any contract they've made.

    You Statist!

  • Fluffy||

    The government already says this. It's called bankruptcy law.

    You basically just don't think that the same thinking that applies to bankruptcy law should apply to state obligations, because to you if the state really, really wanted to, it could come up with the money by abusing its citizens. And I simply disagree.

  • MNG||

    See, the government doesn't "unilaterally alter a contract between me and you" it alters all contracts, the general rules of contracting. If it just said "the terms of the contract between MNG and Johnny are now changed" that would be wrong. Similarly if they just said "the terms of the contract between us and our employees have now been changed" that would be wrong. This is what you are saying the government should do here.

  • Johnny Longtorso||

    Yes, it has that legal right. No govt law impacts everyone equally.

  • MNG||

    Indeed, but it must still make general laws about classes of people based on non-personal criteria.

    I mean, would it be right for the government to change the terms only of a contract between me and you? Not for people in the same circumstance but the specific contract between me and you? I'd say no. But that's what you're defending. And amazingly you are defending their contracts as the specific one!

  • ||

    The one thing you idiots on the gov. side fail to understand is that a contract between TWO parties is fine, but when a third party is doing the paying it gets a little sticky. The courts will have to decide if the taxpayers of any state must honor contracts that jeopordize the welfare of the state. In Detroit the union salries and pension benefits almost equal the entire income of the city! The union head said that they would not take a pay or benefit cut. I vote bankruptcy!

  • MNG||

    Look, you were involved in the decision making process that hired your agent who made this deal.

  • ||

    I wasn't even born when most of these contracts were negotiated.

  • MNG||

    If I contract with you to ship commodity X for price Y, and then commodity X is made illegal, then that contract is toast.

    But what if I contract with you on the same terms and you just decide that the deal you made was really too expensive. And I've already shipped the goods and you accepted them and used them. Should you get to renege?

    This is what some of you are saying the government should be allowed to do.

  • Johnny Longtorso||

    This is what some of you are saying the government should be allowed to do.

    If it can make my contract illegal, it can make its own contract illegal. You demand rights for it over me that you'd protect govt employees from, making me a second class citizen as compared to them.

  • MNG||

    See above @ 3:44 Johnny.

  • MNG||

    whoops, 3:49

  • largebill||

    Nick,

    People are stirring a lot of anger over public employee pensions. The government is too big and has too many employees (heck, some agencies could go away altogether). However, I'd urge you not to blindly trust the numbers. A fair deal of the anger is due to BS statistics where we are not comparing apple to apples, but instead comparing apples to one side of a grape fruit. When they calculate averages for private sector it includes all the minimum wage workers and millions of other entry level jobs. My wife is a government worker and they don't have their own McDonalds. They get their burgers from the civilian McDonalds in other words by not having the bottom salaries averaged in they are artificially inflated.

  • Johnny Longtorso||

    MNG,

    So all govt rules concerning contracts have to apply equally to all contracts? No sub-minimum wage for teenagers, no rules that only impact one class of worker but not another (there goes any number of laws that impact for profit and nonprofit entities differently), etc?

    Besides, govt employees engage in interstate commerce w/ their income, thus making that under of govt's absolute control.

  • Johnny Longtorso||

    MNG, true or false, you'd have govt contracts trump my rights as a voter to vote for reduced spending.

  • MNG||

    True or false, contracting parties should be held to their contracts.

    I doubt you're going to be able to say false without your libertarian principles exploding into flames. Now, if that statement is correct you're going to have to explain to me how the government as employer has not made contracts with their employees to give them these benefits....

  • Johnny Longtorso||

    Because a govt contract is 2 other citizens (govt employee A and govt employee B) mandating future govt spending w/o giving the voters any means of changing that spending. If elected legislators cannot pass an unrepealable law, then neither can Andy Stern's minions.

  • Johnny Longtorso||

    moved below in protest of threaded comment tyranny.

  • MNG||

    Well, the same could be said if you were a stockholder in a company that had made promises. Now most stockholders think that was a bad idea for the corporation to have made that promise: should the corporation be able to renege? Does it matter that the stockholders later vote to renege? I don't think so.

    When the government as contractor makes a contract with someone (it doesn't have to be a traditional government employee, think Haliburton if it makes you feel better), they should have to live up to the terms. If later taxpayers feel that the agents they chose to make the contracts did a bad job, tough. Hire better ones next time that will make better deals.

  • Fluffy||

    Actually, yes it would matter.

    If the shareholders of a corporation want to elect a Board of Directors and order that board to enter bankruptcy, they can do so.

    They will probably lose out financially if they do so, because the corporation's creditors can pursue the corporation's assets in the bankruptcy.

    But you can't do that to a sovereign debtor. That's why in some instances it's riskier to deal with a sovereign debtor than a private one. Those are the breaks.

  • Johnny Longtorso||

    MNG, if the only laws on the books were ones that impacted everyone equally (your "change every contract, not just one" argument), 99% of the legal code would be unconstitutional.

    I'd trade that for govt contracts being immutable, since we wouldn't have hired the parasites in the first place.

  • adam||

    MNG, could you please post a link to an example of one of these contracts between the government and a government employee(s)? Thanks.

  • MNG||

    Adam
    I don't work for the government, but any government job that had a pension must have spelt that out contractually somewhere I should think.

  • adam||

    I have had a (federal) government job and I've never signed such a contract. The only places I know that have the pension rules laid out are Title 5 USC, some OPM regs, and some OPM handbooks. I have hard time considering those contracts in a legal sense.

  • adam||

    Actually this brings to mind a metro ad that I see all the time- It's says something like: "Laws can change, so can your retirement. Protect your pension." It's sponsored by the NTEU or some other union like that.

  • ||

    One definition of insanity is doing the same thing over and over again and expecting a different result.

  • zoltan||

    Ugh, cite your sources, academic monkey.

  • Johnny Longtorso||

    Indeed, but it must still make general laws about classes of people based on non-personal criteria.

    "If you work for the govt" isn't a 'personal' criteria, unless all criteria are personal in that they impact some persons but not others.

  • Johnny Longtorso||

    Because a govt contract is 2 other citizens (govt employee A and govt employee B) mandating future govt spending w/o giving the voters any means of changing that spending. If elected legislators cannot pass an unrepealable law, then neither can Andy Stern's minions.

  • Gilbert Martin||

    A government entity that can't pay egregiously generous pensions, due to a taxpayer's revolt that refusues to pay taxes to fund them is no different in principle than a private corporation that goes out of business because of mismanagement resulting in the company not having enough revenue and profits to fund the employee's pensions.

    There is nothing "special" about government workers or government work that warrants those people NOT being subjected to exactly the same level of risk of having their benefits wiped out or reduced in bankrupty as exists for the people working in the private sector.

    Government contracts are no more "sacred" in that regard than contracts between any other parties.

  • Johnny Longtorso||

    MNG, can I sign a contract to indenture myself? If I can't, can two govt employees sign a contract that mandates an indenturement level of taxation to pay?

  • Johnny Longtorso||

    Govt employees get paychecks from the govt, they're ALREADY being treated differently than I am. "You get this if you work for the govt" is the subject of the entire civil service section of the legal code. That horse is already out of the barn.

  • Gilbert Martin||

    civil service laws can be modified or repealed just as entitlement programs can be modified and repealed.

  • Johnny Longtorso||

    But that would break an unbreakable promise to govt workers......

  • creech||

    Unfortunately, the "government" is not some third party. It is "we" the people who elected these people to negotiate for us. Thank you "Greatest Generation" and "Boomers" for putting all the following generations into hock. I'm amazed, however, that the biggest support for "more of the same" comes from those getting screwed the most.

    The way out? Inflation. Dow 36,000 makes a lot of these pension plans fully/over funded. Problem goes away.
    Give the pensioners their promised amount. If a month's pension no longer buys one lunch, well you voted for the economic ignoramuses who made it all possible.

  • Johnny Longtorso||

    Is it legal for govt to inflate its way out of pension obligations? If I promise you a dollar, then unilaterally redefine the dollar to be meaningless, have I really kept my promise?

  • Gilbert Martin||

    It can't really do that without wiping out everybody else along with it.

    Kind of like using an atom bomb to kill one perpetrator.

  • adam||

    Federal pensions are indexed to inflation

  • The Wine Commonsewer (TWC)||

    I think this will blow apart like a hand grenade. You think socialist security isn't sustainable? You can't pay cops and firefighters nearly full salary for not working for the last 35 years of their lives.

    Just for illustration, we know a retired teacher who earns almost 100 grand a year in pension. It isn't physically possible to continue with this.

  • Who's Sean Hannity||

    Oh how hilarious, if we were talking about different contracts, say student loan borrowers, the majority here would be singing a different scandalous tune.

  • Gilbert Martin||

    I would imagine that the majority here would point out that the ultimate contract - the Constitution - never authorizied the federal government to get into the business of financing students education expenses to begin with.

  • Johnny Longtorso||

    That's not a contract w/ federal employees, so we're free to ignore it.

  • Who's Sean Hannity||

    Yes, I've noticed that's how it works here.

  • Who's Sean Hannity||

    and you would be wrong

  • Gilbert Martin||

    You wouldn't know.

  • The Wine Commonsewer (TWC)||

    as near as I can tell the government enforces student loan contracts with a vengeance. You cannot BK a student loan and they will hound you to the ends of the earth to collect.

  • ||

    One definition of insanity is doing the same thing over and over again and expecting a different result.

    LALALALALALALALALALALALALALALALAL!!!1

  • Stockdale Ed||

    Cities, counties,and states,should not be allowed to enter into any labor contract without voter approval. More so for the federal government. And we really need to take a hard look at what our legislators are draging in.I say draging because nobody could carry all the stuff they've piled on for their retirement. Senators and congressmen are raking in obscene special goodies. Lifetime pd. medical.Six figure retirement with cost of living adjustments.etc.
    The only way to change anything is to start at the top.Our government is corrupt.And you will always have out of control corruption with lifetime politicians. Mommy and daddy buy the education, mommy and daddies money buys the election. We get stuck with a law maker who is clueless to the goings on in the real world.Never had a real job, but they're going to tell us how they can run our lives better than we can.And since they know what we really need,they're going to spent our money to get it for us.And to top things off, they don't tell us what (it)really is. The only clue is the 40 million dollar school lunch program turned into a 2.5 billion dollar program,with 40 million going to the schools where some of the money will be spent on cafeteria improvements.The other 2 billion 460 million dollars in the bill? Well thats the bribe money lawmakers paid each other to pass the 40 million dollar bill in the first place.
    So can you see the need for term limits here. Say senate 2 terms (12yrs)
    Congress 6 terms (12 yrs) If they are really good they can run for the other house when their term limits are reached.

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