The Paterson vs. DiNapoli Pension “Disagreement”

Those who follow the news might have read of a report by the State Comptroller, Thomas DiNapoli, that the state pension plans have lost lots of money over the past year. In 2011 (after the current members of the state legislature have been re-elected) local governments will have to pay more into the pension plans as a result. And as a consequence, residents of those localities would face soaring taxes, deteriorating public services, or a combination of the two. In response Comptroller DiNapoli proposes that such localities be allowed to defer the additional required pension contributions, in effect borrowing from the pension funds at eight percent interest per year, and thus shift the cost to future taxpayers, perhaps those around after current taxpayers have cashed in and moved out or died off. More off the books debt to add to the massive on the books debt. Governor David Paterson responded that what the state really needs to do is reduce pension benefits for future public employees which, if as a result of lower total compensation those employees are less motivated and qualified, would reduce public services for future state residents.

In the press, this was presented as a conflict between the two, but to me Paterson, DiNapoli, and all politicians of their generation, regardless of party, have more in common than they have differences. Neither Paterson nor DiNapoli is willing to call out those who received the past benefits associated with our current predicament. And note the word in common to both proposals with regard to sacrifices: future. For Generation Greed, that is what (and who) has been sacrificed over and over again.

Some time in the past, what is now the present was the future. And at the time DiNapoli, as a member of the State Assembly, and Paterson, as a member of the State Senate, were pleased to vote to sell out that future to gain up front benefits for those who mattered politically. Tax breaks. More spending on other things. And one pension enhancement after another for past and current public employees, regardless of cost, regardless of consequence, with all those consequences deferred. It is those past and present public employees, and past taxpayers, who grabbed all they could, put too little in, took too much out, and lied about the future consequences for everyone else. It is those people, people of DiNapoli and Paterson’s generation, who provided support and treated them as heroes as a result. And it is those people who Paterson and DiNapoli agree shouldn’t pay anything more, or give anything back. Not one cent.

DiNapoli and Paterson have changed their outlook now that they have positions of responsibility in a future that has since arrived. And they’ve taken on the mantle of reformed sinners. I appreciate some of the truths they’ve spoken in the past year. But I’d appreciate their mea culpas more if they stopped adding more culpas. They continue to take more and more out of a future that will be worse, and worse to pander to the entitlement of the same people as before.

They would say there are no alternatives. If you’ve read my prior posts, you know that there are, but they alternatives that these men, and everyone else in Albany, refuse to consider. They might say that the problem is unavoidably bad investment returns. But we know there was a financial bubble that has since popped, and at the peak of that bubble those with power, in the public and private sector, grabbed $trillions and shifted to cost to future generations. Even now stocks and bonds are hardly cheap, and depending on who is doing the measuring, the long run inflation-adjusted return on both is three or four percent, no eight percent.

Future public employees do not have pension benefits that are unfair, relative to the less well off workers who will be taxed to pay the bills. Current and past public employees do. Future taxpayers aren’t the ones who paid too little. Past taxpayers are. If those taxpayers are retired, they are now exempted from state income taxes on their first $20,000 of retirement income and all their Social Security income. If they are ex-public employees, the sort of people who put and kept DiNapoli and Paterson in office, all their income is tax-exempt. They are taxed far less than working people who are far worse off.

And frankly, how is it that the rest of New York State has a problem with paying sky-high taxes for diminishing public services? After all, New York City has been in that position since the 1960s. As I wrote earlier, according to the Mayor’s budget New York City taxpayers have been forced to pay 23.6% of teachers’ payroll into the teacher pension fund, not 8.73% as in the rest of the state. For most workers the New York City contribution rate is 13.5%, and for sanitation workers it is 28.7%, not 8.5% as in the rest of the state. For police officers New York City pays in 51.2% of wages into the pension fund, and for firefighters 62.9%, not 15.7% as in the rest of the state. For New York City Transit workers, the employer (ie. farepayer) pension costs equaled 22.8% of wages this year, according to the latest MTA budget documents. So the rest of the state will pay more? We’ve already been paying more.

Meanwhile, almost everywhere else in the country public employees pay more of the cost of their own pensions than New York City’s public employees do. The state could change that at the stroke of a pen, particularly since those public employee unions argued that all the pension enhancements the legislature enacted on their behalf over the past 12 years would cost nothing. NOTHING!

Hey Paterson and DiNapoli, you could propose to tax retirement income, to have today’s public employees make the additional pension contributions, and if that is too much, to have them gain more pay in their next contracts in exchange for having past public employees pay for more of their retiree health care. You could make Generation Greed give something back, instead of once again selling out the future of the state and those who will in it. The “conflict” is a shadowplay. What matters, as usual, is the unsaid rather than the said.

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