We begin this week with pension reform, a topic that is not sexy even in Washington, where people get all fevered-up over marginal fluctuations in the gross domestic product. But we are going to sex it up artificially, through the flagrant use of CAPITALS and screamers, which is an old-fashioned journalism word for EXCLAMATION POINTS!!! Also, gratuitous and strained sexual innuendo. Such as: gross domestic product. Heh heh.
The story so far: A bunch of PUBLIC EMPLOYEES have contracts that say they get a bunch of MONEY from the GOVERNMENT! But the GOVERNMENT doesn’t have any more MONEY, obviously, but the employees still have their contracts that can’t be funded, so everyone is ANGRY!
But Fred Hiatt’s column today takes this volatile subject and bathes it in a dose of warm, gentle lubricant. He tells the story of Gina Raimondo, the treasurer of Rhode Island, who has done some reform and made at least one public employee happy about it, happy enough to stop Ms. Raimondo and thank her for cutting $300,000 from her teacher’s pension. Aww! Look, a happy story about politicians and union employees! Yay!
We were worried that our Commenters weren’t going to be animated enough about this issue to justify our introduction. But we worried needlessly. They had points to make! Most read this heartwarming story and went YAY, but . . . The buts were firm. There were a lot of firm buts.
allentown1 says, Yay! But — it might get more complicated to try Raimondo’s method everywhere:
I’ll add my perspective as a former local office holder in PA. The general public has a very low tolerance for public employee strikes and pushed strongly for our School Board to cave in. We usually held reasonably firm, but it wasn’t easy. PA’s teacher pension fund was in great shape, until our legislature decided that they wanted to increase their own pensions, and simultaneously increased teacher pensions, by fiat.
Jubal_Harshaw says, Yay! But — as nice as it is when someone averts one disaster, we’ve got more crises built into our system of local government contracts. Politicians have to think only as far ahead as the next election, so they can promise big:
Elected officials acquiesce to obscene pension demands because they knew full well that the bill for these pensions would come due decades later, once they have moved on to other jobs and hence cannot be held accountable for accepting the legalized bribery of campaign contributions from their union masters.
Part of the solution is to ensure that ALL negotiations between public sector unions and state/local governments be conducted in open meetings.
jheath53 thinks the whole crisis is a scam to invalidate the contracts by deliberately making governments unable to fulfill them:
These pension benefits were negotiated decades ago. They were achieved by the unions and their workers giving up commensurate pay increases in exchange for the deferred compensation of pension benefits. What caused the shortfall of pension resources was the failure of politicians to levy the taxes in order to set aside the money for the promises they made to those workers.
majortrout notes that the new solution means more money goes to Wall Street for safekeeping, and who knows if the money comes back to employees at retirement time:
My major issue is the lack of distance between public money and the people who are asked to invest the money. These include mutual funds companies, stock brokerage companies, and private equity companies, to name a few.
We’ve seen how companies have gone bankrupt, or CEOs have made billions disappear without any prosecution. These are the same companies that pension fund monies are being invested in.
There is not enough transparency and publicity in terms of who actually manages your pension money!
So there you have it, folks: a happy story of politics. With four buts.