I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Sunday, March 1, 2015

Pension "Reform" = Screwing Public Employees

Leave it to the Star-Ledger's Editorial Board to reliably present the plutocratic argument for screwing over public employees:
Gov. Chris Christie deserves the scorn that has been heaped on him for breaking his 2011 promise on pension reform. It was a cynical move that created lasting distrust, making it much harder to find common ground this time around. 
But it's time to move on. Because the hard reality is that without a second round of reform, the state is doomed to a future of spending cuts, tax increases, and economic decline. The math is beyond argument. [emphasis mine]
You see, New Jersey public employees, it doesn't matter that you are under-compensated by 5.88% compared to similarly educated and credentialed employees in the private sector. It doesn't matter that your pension payments are compensation for work you have already done. It doesn't matter that pensions actually save taxpayers money in the long run. It doesn't matter that reformy folks like the S-L Editorial Board think having great teachers is a top priority, and labor market economics dictate that attracting the best and the brightest into teaching means paying teachers competitive wages.

No, all that matters is that we "move on." Which means, of course, that you, New Jersey public employees, need to get screwed yet again:
For a hair-raising analysis of this, consider the most sobering fact presented last week by the governor's bipartisan panel on pension and health reform: It found that without a course correction, these costs will absorb 23 percent of the state budget within two years, roughly double the portion today. 
Whether you are conservative or liberal, that is a potential disaster. It amounts to just over $8 billion a year. 
For perspective, the millionaire's tax favored by Democrats would raise $600 milliona year, barely enough to make a dent. There is no feasible way to raise taxes high enough to cover this cost. 
The same is true on the spending side. You could fire every state employee tomorrow, and you still wouldn't raise enough money to fill this hole.
And here we see the true function of the S-L editorial page: creating a "truth," based on assumed "facts," that takes off the table anything but a modest tax increase on the state's wealthiest citizens.

Let's look, once again, at the state and local tax rates by income for the Garden State:

New Jersey's wealthiest citizens are paying a much lower tax rate than the state's poorest taxpayers. The millionaires tax the S-L is willing to accede to should, at the very least, force the state's top 1 percent to pay the same rate as its bottom 20 percent.

Will that be enough? Almost certainly not, which is why we need to start hacking away at the billions of dollars in tax expenditures this state gives away to special interests. We also need to reign in the outrageous increases in health benefits premiums the state allows every year. Having a conversation about legalizing marijuana is also in order, even though I have serious reservations about going down that road.

Also, as David Sirota has repeatedly pointed out, we need to stop letting Christie's political patrons manage the pensions: they're doing a lousy job and they cost a fortune.

The point I'm trying to make here is that we have more options than just reinstalling a small millionaires tax while taking a hatchet to public employee compensation. But the Star-Ledger doesn't want to consider any of these other courses; as usual, giving public employees the shaft is always the paper's favored plan:
The core conclusion of the governor's commission is that benefits for public workers should be roughly equal to benefits in the private sector. That would result in big savings. The commission estimated that savings on health care alone would amount to $1.7 billion a year, money it would recycle into the pension funds. 
That's a reasonable place to start. The unions hate this idea, saying the answer to this imbalance is to lift benefits in the private sector, rather than set off a "race to the bottom." That's an appealing idea, but not a realistic one. In practice, it amounts to an unreasonable demand that middle-class families should pay higher taxes to cover the costs of benefits they don't receive themselves.
Again: even when accounting for benefits, New Jersey public employees are under-compensated compared to the private sector. So if the S-L thinks it's "reasonable" for public and private employees to have comparable benefits, isn't it also "reasonable" that they have comparable wages? Or do we not care about the quality of our public work force?

You can't keep slashing the compensation of public employees while continuing to expect high-quality candidates to enter public service.

How many capable young people are going to enter law enforcement if they know the benefits their predecessors earned will no longer be there, and their wages won't be any higher to cover the difference? How many bright college graduates are going to enter teaching when pensions and health benefits are removed, but salary remains the same? Why would anyone in their 20s with good prospects be drawn to public service when the private sector pays better and offers the same level of health insurance and retirement benefits?

Back in 1985, Tom Kean, Sr. implemented a plan to raise the minimum salary for teachers. Kean understood you need to pay competitive wages to attract good people into the profession. A few years later, the demagogic Jim Florio, caught up in a recession, wagged his finger at "the education establishment" for paying teachers decently. He then proceeded to short change the pensions, leading to the current mess.

History, then, teaches us what pension "reform" is really all about: cutting the compensation of public employees under the premise of a fiscal crisis. And it's the job of media outlets like the S-L's op-ed page to proclaim that the situation is so intractable that we have no choice but to break promises and allow Chris Christie's bandit friends on Wall Street to keep feeding at the pension trough. And all while folks like the Newhouse brothers, owners of the Ledger, continue to pay historically low tax rates while gobbling up historically high shares of income.

The last thing public employees should do in this situation is back down. The pensions are our money. We earned them. The state owes us this money for work we have already done. The courts have now declared multiple times that the state must meet its obligations.

Don't believe the Star-Ledger when they tell you that it isn't fair to demand that the state make its payments; it's only unfair not to make them -- especially when the Ledger's owners and their friends aren't paying their fair share.

Tax expenditures? Never heard of them...


David Milboer said...

The only thing you forgot to mention is the fact that the NJEA seems hell bent on negotiating changes. Even if there is no "agreement", the road map agreed to by the NJEA will end the current system. I do not understand why our (yes I am a teacher) union is interested in reducing our benefits.

AJC4Others said...

Maybe they (those in office at NJEA) obviously are more interested in standing with Christie than with members whom they are charged to represent. I have yet to meet a teacher worth their commitment to teach who endorsed the candidates published on the union cover that election. Back door deals will always occur when back door king makers reign. The fact is the union is in court over pensions because NJ Legislator would not stop Christie nor have they done anything to curtail his immoral and selfish agenda. He keeps spending our money while they DO nothing to stop him. The appearance of impropriety is enough to take action. Articles and honest writers have laid proof of his evil bare no research required. The big problem may be lawmakers do not fathom representation when it is so much easier to pay back big back door donors. Accountability and prosecution is what NJ voters need to see from our government just like they swore to protect US with their hand on the Bible before GOD and the public. If they don't take that oath seriously that is also grounds to ensure they never serve again. It is the good who do good while no one is watching and the corrupt who do evil and do not care who is watching. Thanks to an honorable Judge NJ pensions are to be restored. How is the question which remains. Certainly the 7 mil Christie paid for his staged innocence is a good start.

gbrown said...

What is at stake across the nation is not a potential adjudication of claims that public employees will have against policymakers who want changes to retirees’ and public employees’ earned compensation and rights, but to respect the retirees’ and public employees’ contractual and constitutional promises because they are legitimate rights and moral concerns not only for public employees, but for every citizen in Illinois: for any unwarranted acts of stealing a person’s guaranteed rights and earned compensation will violate interests in morality and ethics and the basic principles of both the State and United States Constitutions that protect every one of us (http://teacherpoetmusicianglenbrown.blogspot.com).

walt sautter said...

What is really wrong with public education is that teachers today are unwilling to stand up against the "educrats" who want to privatize it for the benefit of their wealth supporters. "There's gold in them there schools" and corporations with the help of their political cronies are coming to stake their claim! Meanwhile teachers sit by and suck down the abuse without so much as a whimper! Back in the 60s and 70s teachers refused to accept the criticism and degradation. There were picket lines, work slow downs and even strikes. Teachers actually went to jail to obtain fair treatment. Does the name Albert Shanker ring a bell for anyone? From what I see I guess not! http://wsautter.com