Monday, December 20, 2010

The Public Employee's Benefits Problem

New Jersey Governor Chris Christie:  "The credit card is maxed out."

Courtesy of  Mike "Mish" Shedlock  "Mish's Global Economic Trend Analysis"

Dan Kroft at 60 Minutes conducts a very hard hitting interview with Meredith Whitney, Illinois state Comptroller Dan Hynes, and New Jersey Governor Chris Christie on  "State Budgets: The Day of Reckoning".  As of now, Chris Christie is the only governor facing the problem.  "The only choices left are choices that people previously have said were politically impossible, that you couldn't do. You couldn't cut K to 12 education funding. You couldn't do those things.  You couldn't talk about pension and benefit reform for the public sector unions. These were third rails of politics. We are now left with no alternatives.  "We have a benefit problem," Christie said. "It's not an income problem from the state.  It's a benefit problem.  And so we gotta change those benefits.  This is what I say to public sector unions:  'Listen you can boo me now, but I'm the first governor who has walked into this room in ten years and told you the truth. And here is the truth. If you don't partner with me to get this done in ten years you won't have a pension.' And that's the truth."

Public Union Problem in a Nutshell

Here is the public union problem in a nutshell: Union members lobby vociferously for untenable wages and benefit packages. Greedy politicians willing to accept bribes to get reelected, go along. On any threat of reduction in benefits, union organizers get out the vote with massive fear-mongering campaigns promising ruin if they do not get what they want. At election time unions donate massively to candidates willing to back union sponsored agenda. Over time, school boards, city halls, and legislative bodies in general get packed with politicians accepting bribes (campaign contributions) from the unions.

If you want to see just how aggressive public unions can be, please see 15,000 Illinois Protesters Chant "Raise My Taxes"; Unions Getting More Aggressive and Obnoxious; Record Turnout in N.J. Tells Unions to Go to Hell

As a result of coercion, bribery, and thug tactics, cities go broke, counties go broke, states go broke.

What Should the Goal of Elected Officials Be?

The goal of public officials should be to provide the most amount of services for the least cost.

Unions typically offer the least services for the most cost. Unions will argue with that statement but it is very easy to prove. Put all contracts out to bid, then accept the best offer from the most qualified bidder. Let's see how many unions win the bid.

Six Common Sense
  • Scrap Davis-Bacon and all prevailing wage laws.
  • Scrap collective bargaining for public union workers entirely.
  • Implement national right-to-work laws.
  • Outsource every public sector job possible including police and fire departments to the lowest cost private sector provider.
  • Kill defined benefit pension plans for all new hires and for all public employees that do remain in the system.
  • Tax public union retiree benefits over a certain amount.

The key to solving the 3 trillion pension deficit (see Interactive Map of Public Pension Plans; How Badly Underfunded are the Plans in Your State?) are the last two points above.

1. Kill defined benefit pension plans for all new hires and for all public employees that do remain in the system.
2. Tax public union retiree benefits over a certain amount.

As a starting point I previously suggested a plan to tax 90% of public union pension retiree income over $120,000 but that is likely far too generous. $80,000 or even lower might be a better starting point.

Whatever, the number is, the beauty of my proposal is that tax proceeds collected can be fed back into pension plans to help make them solvent. In addition, my proposal would win the support of many union employees at the low end of the benefit scale. Those pensioners would then see an likelihood their retirement benefits would be guaranteed. Finally, everyone would benefit via lower property taxes.

Hard Part Is Implementation

The solution is straight forward and easy to understand. Implementation is the hard part. Union sympathizers permeate every major city in the country via the bribery, coercion, and fear-mongering tactics described above.

Please remember that public employees are supposed be "public servants". Instead their one and only mission is to raise your taxes so they can feed at the trough with pension benefits the likes of which the average person can only dream about.

That Chris Christie could get elected in spite of public union tactics tells you just how fed up with tax-and-spend policies people are. Huge pickups by Republicans, especially Republican governors, in the last election is a very encouraging sign.

However, the battle has barely begun. Please show up at school board meetings, show up at town hall meetings, and work for candidates who will stand up for taxpayers, not public union workers.

It is imperative to take on and oust from office every public union supporter in the country, town by town, county by county, and state by state, one by one. If you don't help, you have only yourself to blame for rising sales taxes, rising property taxes, and rising income taxes that most cannot afford, and unless you are a public union worker, tax hikes across the board that you probably do not support.

Please get out the message.

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