Democrats Nibble at the Pension Problems in California
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The unions are in an uproar, but don’t expect elected Democrats to pay attention to them. While it’s certainly true that the Democratic Party – nationally and even more so in California – is a bought-and-paid-for eunuch belonging to the unions, the unions are stuck because they’ve got nowhere else to go. They’re not going to get a better deal from Republicans.
California has a problem with their budgets and with their pensions. On the pension side, they’re about $600 billion short of funding their pension plans. Union advocates and liberals will argue that the shortfall is nowhere near that. They’ll say the root of the problem is that CalPERS, the public employee pension fund, projects a 7.5% gain from investments. The reality is, it should be looking at around 1%.
In other words, the Democrats running the state pension funds are lying. Color me shocked.
Here’s the crux of the Democrats plan:
Starting next year, most newly hired public workers would be eligible for retirement with full benefits at age 62 instead of the current 55. Local police and firefighters hired on or after Jan. 1 would be eligible for full benefits at age 57, while currently employed public safety workers would still be able to retire with full benefits at age 50. …
Democrats said the bill would save state and local governments tens of billions of dollars over the coming decades, and Ana Matosantos, director of the Department of Finance, said the changes to retirement ages alone would save $36 billion over the next 30 years. State retirement system officials said they were still calculating the savings and would release an estimate later this week.
Tens of billions of dollars. $36 billion over 30 years.
When you read those numbers keep in mind that the people who are doing the estimating are the same people who rammed a tax increase through the Democratic legislature last year on the promise of increased tax revenue. They’ve missed their revenue estimates significantly for five of the last five quarters. The last quarterly report, in July, showed a $538 million shortfall.
Remember the $600 billion shortfall? Even if the $36 billion is correct – and I will bet the farm it’s way too high – that’s a grand total of six percent of the problem. Six percent.
You might guess at what the unions had to say:
Public employee unions, as expected, expressed anger at many of the changes, saying they have made many concessions at the bargaining table in recent years.
Dave Low, chairman of a coalition that represents 1.5 million public employees and retirees, called the proposal an “incredibly wide-sweeping, draconian, unilateral change to pensions that is unprecedented” and said unions may fight them in the Legislature and, if necessary, in court or at the ballot box.
He said workers are being punished for the sins of Wall Street and what he called the current antiworker political climate.
“It goes well beyond anything necessary to stabilize a pension system,” added lobbyist Terry Brennand, who represents SEIU, the state’s largest labor union. “It’s punitive to public employees for no reason, and we are going to object very strongly to it.”
The whining from the SEIU and their thug cronies is simply bull. Dan Walters lays out the reality of what’s going on in California.
What’s important is what Brown said 10 months ago, that the system is unsustainable, based on pie-in-the-sky assumptions of pension fund earnings and gobbling up ever-larger shares of state and local budgets and thus compelling offsetting reductions in vital services.
Brown’s original proposal would have had a minimal effect, at most, on that ever-growing debt, and the one he now accepts would have even less. …[N]either Brown nor the Democratic legislative leaders were truly interested in overhauling an unsustainable system and preventing its massive debt from falling on future generations. Their goal was to enact something that they could call reform to help pass Brown’s tax increase measure, Proposition 30.
A tipoff to that motive is the outpouring of denunciation from the unions. Their harsh criticism of the plan will be used by the tax campaign to make Brown and other Democratic politicians look like they’re being tough and courageous on pensions.
Finally, as a statute, the new pension plan could be changed after November’s tax election, no matter how it turns out. It’s happened before.
Politicians gaming the voters. Working with the unions to fleece the taxpayers. Whod-a-thunk-it?
Hopefully California voters will wake and realize they’re being taken for a ride. I don’t have a whole lot of hope that will happen. They’ve been on this ride more than a few times and they seem to like being lied to.
The bottom line here, and across the nation, is that raising taxes doesn’t reduce deficits. It provides and incentive to the spenders. Not only has California come up short on their expected increases in tax revenues for the last five quarters, they’ve overspent their “budget” in every one of them as well.
Think Californian’s will wise up?