Perdido 03

Perdido 03

Saturday, January 3, 2015

NY Post Editorial Calls For Pension Cuts To New York And New Jersey Retirees

I missed this in the days after Christmas, but the AFL-CIO didn't.

The Rupert Murdoch-owned NY Post says there's no money for government worker pensions and cuts must be instituted to "save" them:

Some promises are made to be broken. As 2014 draws to a close, it’s looking more and more likely that among them will soon be those made to retired public workers.

We don’t say this lightly. When governments make promises, they should keep them.

Here’s the problem: The same pols who made these promises looked the other way when it came time to funding them.

It doesn’t matter whether you’re a public worker for a city such as New York, which can go bankrupt, or a state such as New Jersey, which cannot. Fact is, even though more and more tax dollars are swallowed up by these pensions, the gap between what taxpayers will owe future retirees and the funding for them continues to widen.

That’s true in New Jersey, notwithstanding reforms in 2011. These were solid reforms — but nowhere near the fix both Democrats and Republicans pretended they were.

Now the pension gap is back with a vengeance, and Gov. Chris Christie is cutting payments into the system, because he says the state simply cannot afford them.

New York City is not as desperate, but it faces the same squeeze. Since 2000, the amount of money this city has been pumping in to pay for its pension promises has increased 12 times, to more than $8 billion. And it’s still not enough.

The government-worker unions and the pols in their pocket know this. For decades, they’ve played a game of deliberately underestimating the problem and fighting even modest cuts.

But they have played the game too long. It’s now starting to backfire, because the shortfalls can’t be made up with more taxes or contributions alone. Painful cuts will have to be part of the medicine.
For decades the public unions have assumed agreed-to benefits are sacrosanct. But if there is really no money in the till, all bets are off.

In this light, the recent deal in Washington on multi-employer plans was instructive. Though the deal involved pensions for private-sector retirees, the terms were illuminating. In the interest of keeping the program solvent for all, some retirees will get less benefits than promised. And there’s no congressional bailout.

Some version of this is likely to come to the public sector if we continue to kick the can down the road. The multi-employer deal looks more and more like the canary in the coal mine, and it’s hard not to imagine some judge approving cutbacks on the grounds that this is simple reality.

Those who hold such pensions will scream this is unfair. They will be right. But what should really worry them is that, if there’s really no money in the till, it won’t matter.

Mario Cilento, President of the New York State AFL-CIO, responded to the Post editorial:

It’s telling that during the same week the Dow Jones hits 18,000, a historic and once unthought of high, The Post calls for reductions to the pensions of current employees and retirees  (Pensions and Promises, Dec. 28).  

In the past, The Post’s advocacy for reducing worker wages and benefits would be hidden behind cries of economic crisis; now, there is no attempt to even mask that agenda.

New York continues to have some of the strongest public-pension systems in the country, and contrary to the assertions of the editorial, employer contribution rates are set to begin declining.  

The problem of income inequality is troubling and well-documented.  Gains in the economy have been enjoyed nearly exclusively by those at the top of the income ladder.  

It’s unconscionable to advocate for cutting one of the few ways workers directly benefit from growth in the market – pensions.

New employees have already had to eat two new pension tiers with reduced benefits in New York, but apparently that’s not enough.  Now, current employees and retirees are on the menu.

The NY Post editorial came five days before Governor Cuomo issued this threat in his "second" inauguration speech on January 1 in Buffalo, NY:

Yesterday I surmised that Cuomo wouldn't have the political muscle to push through pension reform this time around, given the relative weakness of his political position to his first term.

But if he does push pension reform, it seems he will have the NY Post to provide political cover for him, even though as Mario Cilento points out in his response to the Posties, the economy is on the rebound, the Dow is at an all-time high, and two new pension tiers were added in recent years that reduce benefits for future retirees in New York.

But that's not enough for the plutocratic functionaries at the NY Post - they say there's no money for pensions for current employees and retirees and cuts must be instituted immediately.

Will Governor Cuomo agree with that false prescription for a fake crisis?

He just might.

But if he does, he's going to have a hell of a fight on his hands.

This isn't 2011 with the state still reeling from the worst economic downturn since the Great Depression.

This is 2015, with the Dow at an all-time high and the job market creating 200,000+ jobs a month again (albeit, not enough and not good ones - but a far cry from 2011 when the state and private sector were shedding workers.)

Cuomo and his fellow pension haters do not have an economic argument to use to try and cut pension promises to current employees and benefits to retirees.

Instead it would just be a naked money and power grab.

Is that what Governor Cuomo plans for his second term?

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