May I call your attention to the latest NY Times articles here and here. And let me repeat what I said yesterday: these pensions will not be paid!
Twenty years from now, when the burden of debt and senior citizen benefits is leading to public service and benefit cuts, soaring taxes, and a crashing standard of living, and seniors of my generation, and those after, realize that they will have to work until physically unable and then face poverty rather than having the cruise-ship lifestyle of those who came before, then public employees who retired in their 40s and 50s will be as unpopular as the tobacco companies are today. Back room deals will be cut, and budgets passed with little review, but to their detriment, not their benefit. With no one else benefiting from this largess, they will be a big target for desperate times.
Pensions cannot be cut, says the New York State Constitution? Yes, but they can be taxed. Does anyone remember when the federal marginal income tax rate was 70 percent? It could be again for “unearned” pension income, once civil servants are the only ones with pensions. In the 1970s, when debts and pensions nearly wrecked the city, New York City alone had the problem. Now it’s nationwide, though much worse than average here. The federal government could also pass a law denying Social Security to those with public sector pensions, or charging them more for Medicare. Retiree health benefits can also be cut off for those in the higher pension tiers, presumably with the agreement of angry public employees on the wrong end of the many multi-tier deals. These desperate measures could only occur in an environment in which retired public employees are demonized across the political spectrum.
This environment will almost certainly come eventually. Because New York States public employee unions (and politicians, who benefit from many of the same deals personally) are sure to continue enriching public employee pensions until the point is reached when they seem to be outrageously unfair, and their burden becomes intolerable. And, whenever they can, those same politicians will defer the burden of paying for those pension and retiree health benefits to another day.
It’s like the story of the poor fisherman and his wife, who live in a hovel. The fisherman catches a flounder who turns out to be an enchanted price, and sets him free. The wife demands richer and richer rewards in exchange, beginning with a nicer hut, eventually including demands to be queen and then pope, all of which are met at an increasing cost. Never satisfied, she finally demands to be God, and with that last demand everything is taken away and they are returned to their hovel.
When public employee pensions are offset, taxed or otherwise taken away, will that be fair? Let’s put it this way. When working on the all the deals listed in the Times, and the many more that did not pass, did the unions and the legislators agonize about whether the pension sweeteners would be fair to taxpayers, service recipients, and future public employees, or did they just grab all they could get away with? Twenty years from now, retired public employees can expect the same. Unless something changes. Drastically.