WatchBlog: Public unions plan raid on taxpayers and private business to fill pension gap
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By Frank Keegan | Watchdog.org
WASHINGTON D.C. — They know they’re trillions of dollars in the hole for false government pension promises, and that tax increases required to fill it are politically impossible, so state and local government union groups Wednesday proposed a two-pronged attack on beleaguered private-sector workers and businesses.
The National Conference on Public Employee Retirement Systems, or NCPERS, released “The Secure Choice Pension: A Way Forward for Retirement Security in the Private Sector.”
A few hours later, the Center for State and Local Government Excellence, or CSLGE, had a national press conference to announce “Strengthening State and Local Government Finances: Lessons for Negotiating Public Pension Plan Reforms.”
One is intended to lure money from private workers and businesses into bankrupt state and local government retirement systems. The other is to preserve as much of state and local government benefits as possible under the guise of false reforms when massive tax increases hit because pension funds don’t have enough money to pay benefits.
Both proposals guarantee average Americans already mugged by Wall Street and the Federal Reserve will not have any hope of a secure retirement.
According to the NCPERS news release, a Secure Choice Pension, or SCP, “public-private enterprise” would spread “investment risks and costs over large pools of plan participants and employers. … Both the participating employers and employees would make regular contributions to the SCP.”
That would pump billions of dollars a year into those public pension plans that inevitably will be broke soon and others that ultimately may be without immediate increases in funding and cuts in benefits.
When it comes to locking down current public pension benefits for retirees and older workers at the expense of taxpayers and younger government workers, the CSLGE “lessons for negotiating reforms” cite Iowa, Oregon, Vermont and two cities where “pension funding problems can, and are, being addressed.”
Hard numbers for the three states measure exactly how that’s working out for taxpayers.
Despite the model reforms touted by CSLGE, taxpayers in those states must, for the next 30 years, pay additional hundreds of millions for pension benefits that governments were supposed to fund as public workers earned them.
Through rigged assumptions and accounting tricks, political leaders did not fully fund those promises. What money they did put in they lost, wasted or stole to the point that taxpayers who thought they had paid for this and public workers who thought they had guaranteed benefits ended up cheated.
What’s the true cost? According to a National Bureau of Economic Research, or NBER, study that came out in June, the average U.S. household will have to pay about $1,400 more in taxes every year for the next 30 years — over and above all current taxes and any future increases — just to meet pension obligations locked in as of right now.
How do the “reformed” states fare?
According to NBER, average Iowa households will pay more than $861 every year for 30 years. In Oregon, it’s more than $2,000. And in Vermont, it’s more than $1,000. Every year. For 30 years. On top of all other taxes.
NCPERS, the very people who got us into this mess, now expects taxpayers and their employers to make regular contributions to yet another plan?
Consider this. A 37-year-old Oregon head of household now could put the money extorted through taxes for unfunded pension promises into a personal 401(k) plan with 3 percent employer match, earning what public pension plans claim — but fail — to get, and have more than $450,000 extra for retirement at age 67.
Instead, state government will force that average taxpayer to turn over more than an extra $60,000 to pay for others’ retirements because the people in charge cheated and lied.
That’s a spread of more than half a million dollars. It’s a loss big enough to guarantee the average 37-year-old Oregon head of household will end up destitute in old age.
Asked after the telephone news conference if the reforms cited by CSLGE would prevent tax increases to pay existing pension benefits, spokesman Alex Brown said, “We didn’t look at it from that perspective.”
At least now these two organizations admit there is a problem. They had been in total denial.
But the solutions they propose still deny the immensity of the pension crisis and draconian measures required immediately to prevent the worst of the catastrophe in as many states and municipalities as possible. For some, like California, Illinois, Rhode Island and unknown others, it is too late.
Locking in current unfunded promises for senior public workers, transferring costs to younger public workers who never will benefit from what they contribute and bankrupting a generation of taxpayers in their old age is not a viable solution.
Anyone who thinks entrusting even more money in a new national Secure Choice “partnership between the private sector and public sector to provide lifetime retirement security for all” should check the public-sector history of stewardship.
Merely take a look at New Jersey, where a probe by reporter Mark Lagerkvist found 40 top sheriffs double dipping pension benefits for almost $3 million a year even as the Garden State leads our nation in unfunded pension liability.
Tough talking Republican Gov. Chris Christie, who just blew off more than $6 billion in pension contributions New Jersey resident still must pay, is unable to reform double dipping even in his own administration.
So, average households in his state are on the hook for almost $2,800 a year every year for the next 30 years no matter what “reforms” miraculously do happen to make it through a corrupt state government.
Think about that when those feeding at the public trough offer up solutions to our pension crisis.
Frank Keegan is a national editor for The Franklin Center for Government and Public Integrity, watchdog.org and statehousenewsonline.com. Any disgusted public employee, journalist, activist organization or citizen watchdog who wants help exposing government waste, fraud and abuse may contact him at: firstname.lastname@example.org.
For a comprehensive primer on state and municipal government pensions, check sunshinereview.org.
- WatchBlog: Trillion Dollar Legal Questions on Public Pensions Could Bankrupt Taxpayers (westvirginia.watchdog.org)
- Whose pension? (economist.com)
- WatchBlog: Bond Lawyers Not Waiting for New Public Pension GASB Rules (westvirginia.watchdog.org)
- WatchBlog: Public Pension Investments Fall Short, Increase Risk, Impose Taxes Without Consent (westvirginia.watchdog.org)
Posted under Blog, Budget, Economy, Pensions, Unions.
Tags: Franklin Center for Government and Public Integrity, Garden State, National Bureau of Economic Research, Oregon, Pension, Private sector, Reform, United States
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