Public workers have become the new demons ruining America, with their greedy pay and pension benefits. As this video from Brave New Films makes clear, that notion is just a load of crap. Pension benefits are not all that generous for the vast majority of workers; the average benefit for the workers in Prichard, Alabama (who were eventually cut off) was pretty much the size of Social Security, around $1,000 a month. They signed a contract to receive those benefits, a contract singed by both sides, but contracts only matter when they have to do with AIG credit default swaps.
It’s worth making this comparison, which the video does over and over again. The reason state and local budgets are in trouble simply has nothing to do with their spending on public employees. It’s about the financial crisis which triggered the Great Recession. In 2009, the recession dipped state tax revenues by 1/3. There’s no way on earth to attribute that to public workers. The obliteration of state revenue is entirely to blame. And the folks who created and sold toxic mortgage instruments and sucked trillions in wealth into a high-risk vortex shoulder the burden.
And yet they are not shouldering any of the responsibility; those danged public workers are. Chris Christie talks tough about public pensions but fails to mention the theft of those pensions from the workers over a 15-year period.
And how exactly did the crisis “reveal” that some pension funds were close seriously under water? A more accurate rendition would be that, at least in New Jersey, the state has been raiding the pension kitty for over 15 years. This is not news to anyone who has been paying attention, any more than underfunding of corporate pensions. In the Garden State’s case, Governor Chris Christie skipped the required $3.1 billion pension fund contribution last year. He claimed this move was to force reform, but what impact does another $3.1 billion failure to pay have on an unfunded liability that was already over $50 billion?
Although Christie has been gunning for the unions in his zealous efforts to address the budget shortfalls, inconveniencing those at the top of the food chain is off the list. Christie nixed a millionaire’s tax last year.
The whole sordid story is at the link. Financiers raided the pension fund, made awful investments, and actually got reprimanded by the SEC for phony accounting. The politicians just withheld pension fund deposits. And now, everyone’s surprised by the post-recession shortfall.
Yves Smith thinks that the unions, in a tough spot, will have to regain the moral high ground by calling for shared sacrifice. If they have to give up some benefits, the people at the high end of the income scale will have to pay as well. Republican Governors like John Kasich, who are lamenting high public union costs while increasing the salaries of their own staffs, or Governors like Rick Scott hiring a full-blown security detail for his lavish inauguration, are ripe for this critique.
The larger point is that the ax is falling on people who had nothing to do with the problem, while the rich and culpable get away with everything.
UPDATE: You have to love John Kasich’s reply to the report of his inflated staff salaries. He said “we have to pay well to get the best people.” Really, he said that. Wouldn’t that apply to public workers in every sector, too?