The Left’s pension dilemma

You know the pension tsunami is getting close to shore when the mainstream media are filled with hard-hitting stories about the coming crisis, such as the front-page article April 11 in the Sacramento Bee and Fresno Bee, documenting the manner in which huge pension costs for retired public employees “threaten California cities [and] counties.”

Most of the news stories focus, understandably, on the unsustainable costs to government and taxpayers, as the bill for these millionaires’ pensions come due. There’s no escaping the financial problem, borne of elected officials who have bought labor peace by selling out current and future taxpayers to the politically muscular public employee unions. In a down economy, it’s impossible to hide the numbers much longer.

But the other real story is that these pension crises are undermining public services.

Conservatives seem to get it, even when it comes to their “heroes” in law enforcement and firefighting – the folks who can retire as early as age 50 with 90 percent or more of their final generous pay levels. But I still hear from liberals who defend the current arrangement. Democratic gubernatorial candidate Jerry Brown recently defended these defined-benefit pensions and public employee unions in general (which he legalized as governor in the 1970s) as a form of democracy. Liberals I hear from argue that public employees deserve the high pay and benefits, and that critics are mainly driven by hostility to government.

But anyone hostile to quality of public services would embrace the current system, which drains funds from programs and gives the money to the people who administer those programs.

Today’s column is directed to folks on the left – who I describe as people who believe in the value of government power and programs as a unifying and uplifting presence in society. I don’t agree with their philosophy, but I am not using the term liberal as a pejorative here, but as a simple description. The liberals I know strongly believe in public schools, public parks, public safety programs, public arts programs, public infrastructure and other public “goods.”

All of these goods are threatened by the looming pension and health care debts for retirees and by the power of public employee unions. The Bee papers are known as fairly liberal, yet the recent news story began with these sobering facts: “This year, the city of Roseville will spend as much to fund its pension plan as it does on parks and recreation. San Luis Obispo will spend five times as much on pensions as it does prosecuting criminals.”

How does that add up to the advancement of the public good?

You can’t have thriving public programs if most of an agency’s budget is directed to pay for lavish retirements for former employees. The public is paying more and getting less. The Fresno Bee editorial related to the series made this point: “In the upside-down world of California government, the role of public agencies has changed from serving their constituents to the residents serving those who have jobs in the public sector.”

Former Los Angeles Mayor Richard Riordan, in recently arguing that bankruptcy is L.A.’s best route away from its pension crisis, was quoted in the L.A. Times as saying, “Who wants to live in a city without decent police or fire protection or libraries or parks? Unless we get these pension costs under control, we won’t be able to afford any of those things.”

Exactly. Yet the unions will not relent. They are perhaps the most powerful piece of the current liberal Democratic coalition, yet they are putting their own special interests and greed above the good of the public and their supposedly beloved public programs.

What good is a program designed to help the poor when most of the money is siphoned off by the middle men and women who provide the services to the poor? As my former colleague Chris Reed has written on his blog, “There is no evidence that this [union] political power is being used to help the poor, the needy, the sick. Instead, the opposite is true. … [P]ublic employees … have, by and large, been spared because they have demanded cuts come elsewhere – which almost always translates into less help for the poor, the needy, the sick.”

When Orange County’s nonpartisan-but-Republican Board of Supervisors voted in 2004 to retroactively increase public employee pensions, former Fullerton councilwoman Jan Flory spoke out against it. She testified that when her city voted on pension increases for police, the union promised that the deal would pay for itself, and yet, within a year, the increase began consuming a large chunk of the city budget. That, of course, meant fewer dollars for the programs Ms. Flory and others value.

Liberals, conservatives and libertarians such as myself can have an honest debate over what programs the government should offer. But those debates aren’t possible when pension and health care costs for government retirees – many of them living the good life in their 50s – are eating up a larger chunk of the budget.

Here’s San Diego City Councilman Carl DeMaio, who fears that the city’s recent pension-system tweaks won’t go far enough to fix the problem but might cause city officials to declare victory and avoid further reform: “When factoring in the cost of all city retirement benefits, taxpayers are servicing a cost of more than $370 million annually, or a staggering 69 percent of city payroll.”

So the public is paying more (as a portion of payroll costs) for retired San Diego employees than current ones. That really is unsustainable, and borderline insane.

It’s hard to imagine how successful any company could be if it had to spend more on retired employees than current staff. Back to the Bee editorial, which quotes a Fresno-area public official: “My concern is that county government is becoming a pension provider that provides government services on the side.”

My questions to self-described liberals: How does this square with your passion for helping the poor, creating widespread educational opportunities and supporting the environmental, community and other programs you claim to advance? If you really care about those things, shouldn’t you rethink blind support for public employee unions and jump on the pension-reform bandwagon?

Steven Greenhut is director of the Pacific Research Institute’s Journalism Center.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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