This is the kind of news you slip out on a Friday, so it will be in Saturday’s paper and read by few. The powers that be in Albany have agreed that local governments in the rest of the state, whose pension contributions are a fraction of those required of New York City, can choose not to make them, and borrow their required contributions from the pension funds instead. Allegedly they will have to pay back that money with interest later – at 4.5 to 5.5 percent interest rate even though the state legislature has asserted by law that pension assets earn 8 percent per year (which is why they can pass one pension enhancement after another and say no one has to pay for them), even though they don’t. But there is a 99.8 percent chance that a few years from now, when localities in the rest of the state are faced with an even more devastating increase in pension costs as a result of this borrowing, they will insist on a state bailout. A bailout with state taxes collected in part in New York City. Which means that New York City residents will help pay for their pension costs, even as our public services are destroyed by our own.
This is not the first pension related action in recent years that involves the transfer of $billions from people who don’t matter to people who do. Somehow they keep making these deals while barely allowing anyone to know they exist, and yet you and I, and our children if they stay here, are legally obligated to pay for them regardless of the consequences. Even if public services collapse. Even if taxes are raised so high that everyone’s property is simply seized and turned over to the public employee pensioners. Even if taxes are increased so far that people have no money for food, and starve to death. There is no limit to these obligations, which are asserted to be morally binding on people who are not even being told they exist. The politicians cut a deal with the unions and each other, which both benefit from and neither pay for. And in fact no one pays, until younger generations are forced to pay an unlimited amount in the future.
You might have read about drama in Albany, about coups and dysfunction and shutdowns and ideological warfare. These are all sideshows. Consider what passes in the middle of the night with virtually no opposition at all, with all the buddies, or almost all the buddies, in agreement.
Allowing older public employees in the rest of the state, previously required to work until age 62 (in a country where most will get nothing but Social Security at age 67 or later) to retire at 55 with an enhanced pension.
While requiring future public employees to work longer for a diminished pension.
Allowing older New York City teachers to retire at 55 with an enhanced pension without contributing an extra dime.
While requiring future New York City teachers to pay an extra 5 percent of their salaries into the pension funds.
Exempting $20,000 in private sector worker pension income from state and local income taxes at age 59 ½ rather than age 65. Public sector pension income is already exempt up to an unlimited amount an any age; Social Security income is exempt for both groups no matter how high total is, even for Mayor Bloomberg.
Increasing the state income tax on wage income for families earning more than $250,000 per year, which includes the second earning spouse in many families with two incomes. And in the Metropolitan Transportation District, it has already imposed an additional tax on wage income from the first dollar earned to the last. Additional increases, on families earning $100,000 or more or even $50,000 or more are certain. So are additional increases in property and sales taxes.
There are additional proposals circulating in Albany to borrow additional money to spend this year. In fact, off the books the state is borrowing each and every day. The MTA has borrowed half a billion dollars in recent months to pay for its retiree costs even as money for actual transportation is slashed. The borrowing “in anticipation of future revenues” is over and above the $billions borrowed for “capital expenditures” that are little more than ongoing maintenance requirements.
There are proposals in Albany to increase the amount of private pension income exempt from taxes to $100,000. To exclude pension and other retirement income from the what is counted when determining who qualifies for enhanced property tax breaks under STAR, so a couple of retirees with $150,000 in retirement income can pay less than their working neighbors with lower incomes in property taxes because they are “poor.” There are also special pension enhancements proposed for individual workers.
And all this follows decades of similar decisions to steal money from the future to benefit those of the same generation as the state legislators themselves. One after another. All the same. Over and over again. While no one is paying attention. It isn’t enough to say they should have been thrown out. They should be in jail for fraud. And if they are thrown out? Somehow every one of these deals is irrevocable, regardless of the consequences. It is a contract Generation Greed has made with itself.
The deal to enhance the pensions of older NYC teachers was slipped out at the end of a press release about a deal on horse racing (a horse racing deal that two years later has failed.) The lower pensions for future public employees outside New York City, and lower take home pay for future teachers in New York City, was whispered in a day when big announcements were made about Gay Marriage, another proposals that has come to nothing. Many of these deals were never announced at all.
And when the bill comes due, the state legislators and unions show up and protest against someone else in solidarity with the victims. As when the UFT protests cuts to the New York City schools – even though total spending on those schools is going up and up even as those paying for them get poorer and poorer. Because more and more of the money is going to the earlier and earlier retirement the unions got the state legislature to give them.
Frankly, I find any objection by the UFT to any aspect of the decline in the NYC schools to be an act of conscious evil. They have destroyed the future of public education and much else in New York City, for the second time by doing the same thing, , and now their goal is to create enough mis-direction so that people believe “no one is to blame,” or “things just happen,” or services are being cut despite taxes going up because all the money is going to Black people, or something.
Outside New York City, it seems, a far lower level of fiscal devastation is unacceptable. We can impose the kind of tax increases and service cuts there that New York City experienced in the 1970s. Not yet. Let’s put them off by underfunding all those pension enhancements until more members of Generation Greed retire, get their income into untaxed form, and move away. Meanwhile, New York City faces the 1970s for a second time – and might have to pay for the rest of the state too. And state legislators allegedly representing New York City will vote for it, because they actually represent only a limited number of people, most of whom are outside the city. Thirty years from now, their irrevocable deals will still be benefitting the limited number of people they actually represent, most of whom will be dead.
These are just the deals I happen to remember, because they happened to get in the newspaper on a day when I happened to see it. How many other deals for today’s seniors, and other pension deals for unionized public employees, have passed? Or been proposed, and who proposed them? Why are those who sponsor and vote for them ever asked why it is fair to provide more and more benefits for people and generations who are better off and then make things worse for others? Where will it end? Will we end up marching to their houses and burning them down in rage and frustration? And will it be justified? Will the remaining police officers stop preventing crime and terrorism and have one and only job – to beat tax revenues out of people who are living in poverty and receive no public services, so the pensions of the politically rich and the municipal bonds of the financially rich can be paid?
Here are two other deals I remember. Completing a series of deals dating back 50 years, no New York City government workers are required to live in New York City anymore. They can live in places where they can receive better public services at a lower cost in total tax burdens then they are willing to provide themselves. And New York City Transit workers go an enhancement to their health benefits to include insurance in other states, making it easier for them to move to places with even lower taxes and better public services when they retire. What they want, in other words, is to be able to get away from the consequences of what they have done. It won’t be long, perhaps just before all the existing state legislators walk out the door laughing after finishing us off, that they cut a deal to be able to move outside the U.S. while receiving benefits paid for by those left behind.
It is time people are told about these decisions. Or, rather, told about this decision. Because it is one decision, implemented over time, allowing the most selfish parts of Generation Greed to take as much as the can for themselves and leave as little as possible for those coming after. For 15 years I’ve heard from people laughing about my “overstated” claims of future doom. Laughing all the way to the bank. Meanwhile taxes have ratcheted higher, and so have debts, and many public services and benefits have ratcheted lower. With no end is sight. But people have nothing to complain about, says Generation Greed. They didn’t have to take the civil service job at lower pay and benefits than those who came before. They didn’t have to live in this city despite higher taxes and diminished public services. They didn’t have to be born.