Back in March David Cay Johnston took offense at my discussion of how public sector unions have helped cause the public sector pension mess.
The public pension plans that are underfunded are in that shape because politicians, Christie Whitman when she was governor of New Jersey being a prime example, cut money going into the plans and used them to finance tax cuts. The workers fought like hell to prevent that, but failed.
Hmmmm, how interesting. Unionized workers negotiate for a solid and sound compensation package and along come vote-seeking (dare we say rent-seeking) anti-tax politicians who end up costing the taxpayers more, not less, because they violated well established, centuries old economic practices.
The Chicago Tribune has been detailing how the public employee union leaders in Illinois have been fighting like hell to protect their employee pensions:
Most city workers spend decades in public service to build up modest pensions. But for former labor leader Dennis Gannon, the keys to securing a public pension were one day on the city payroll and some help from the Daley administration.
And his city pension is more than modest. It’s the highest of any retired union leader: $158,000. That’s roughly five times greater than what the typical retired city worker receives.
Not bad for one day. But for somebody fighting like hell to ensure that public employee plans are adequately funded, it’s surely a bargain.
Via Death and Taxes.
Tags: David Cay Johnston, Death and Taxes, public employee pensions
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Had I used the reasoning you do — one outrageous example — to dismiss otherwise sound policies you, Joe, would have been all over me. And you be right to do so.
Nothing I wrote defended anything like the singular and infuriating example you cite, yet you try to smear my sound work using something you know I would not defend.
Indeed, the column I originally wrote focused on sound financing of pensions.
Since you can buy an individual pension, aka annuity, in the market they are inherently sound, especially for large groups where they increase economic efficiency. In places where they are properly funded and the money prudently managed (like Wisconsin, which I wrote about) they save taxpayers money.
And unlike this single example, millions of people have been robbed of their pensions by lax laws and millions more have been harmed by politicians who failed to behave prudently.
I am foursquare for sound public finance, sound private finance and disclosure and you read enough of my work to know that Joe so how about sticking to real issues and avoiding cheap shots?
David, I’m not “smearing” your work. I’m citing a data point that calls your defense of public sector unions into question.
While a “single” incident, it involves a prominent union member conniving with friendly politicians to line his own pockets at the expense of the taxpayers and the less-influential participants in his pension fund.
Considering the hopeless state of Illinois pension funding, and the obviously considerable influence of the union leadership for things of true importance to them — their own pensions — it seems unwise to put much trust in them as pension watchdogs.
You ignore that my column was premised on sound financing, making your linking my reasoned approach to this scandal utterly baseless.
I’m half expecting a “Jane, you ignorant slut” moment to break out between the two of you. “Now, children…. be nice to each other…”
Did some mediation back in my labor relations days, mostly informal, sometimes effective. So this is coming from that part of my brain.
Can we not agree, Mr. Kristan, that numerous public officials (even some pretty competent, reasonable, and well-meaning ones) HAVE avoided their fiduciary responsibility to the extent they could get away with it, by shortchanging pension funding thereby leaving a mess on the road for others to solve later? How many is debatable, but look realistically at people you know well — family and close friends. I think, in my case, about 20%-33% of them would operate this way. Some because they’re overly optimistic (“no worry, it will work out somehow”), and some are simply opportunistic (“I need to look out for #1, and that includes getting reelected comfortably”). So maybe that’s a decent assumption, until some better data comes along.
And Mr. Johnston, could we not stipulate that Mr Kirstan could come up with numerous other examples of union leaders who feather their own nests, and take compensation out of proportion to the benefits derived for represented workers? Maybe (pure speculation now) they’re even more inclined toward that now, because the future job and financial security of union leaders isn’t so rosy anymore — what with unions generally on the decline and taxes increasing for all of us in future years.
So, let’s move on, gentlemen. Urination contests don’t add much value to the discourse.
Terry, you speak wisely.
I do think you are too optimistic about public officials — while they are as well-meaning as anyone else, they also respond to incentives, like anyone else. All of their incentives are fairly short-term, which leaves them likely to do the easy short-term thing.