Ask not what your country can do for you. Ask what you can do for public employee unions!
When John Kennedy proposed we should not ask what our country could do for us but what we could do for the country, he didn’t have in mind what we could do for government workers.
Yet, with a $1.5 trillion unfunded liability promised to 25 million current and retired state and local government workers for pensions and retiree health care, more generous than available from private employment, our needs for public safety, education, health care, roads, and other taxpayer priorities are less met.
The New York Times reports that: “Relieving the strain on government budgets from rising health care costs will probably mean taking one or more unwelcome steps: tax increases, union givebacks, sales of bonds or public assets, mass-transit fare increases, or increases in the cost of other local services.”
Further: “The local troubles also offer a sense of the challenge in store on a national scale as the obligations of Medicare and Social Security rise sharply to cover the retirement of the baby boom generation.”
Public sector employers are now required to determine actuarially their pension and retiree health care liabilities. Formerly ignored, as politicians made promises they didn’t fund, these debts are staggering.
My parents were civil service, and I’ve never crossed a picket line. This isn’t a matter of being anti-union or anti-government worker but of being pro-taxpayer and pro-government meeting its primary obligations first.
According to the Bureau of Labor Statistics, while union membership has declined sharply in private industry to 7.8 percent, ithas burgeoned in civil service to 36.5 percent, with higher proportions in the northeast and pacific states.
Also, according to the BLS, median wage scales among union members is usually on par or higher than among non-union, and among state and local government workers compared to federal workers.
The pension and retiree health benefits promised to state and local government workers are not necessary to recruitment, nor, except in the case of police, fire and other public safety jobs with considerable dangers, particularly justified.
Moreover, I see in my employee benefits practice that the premiums for lavish government worker health benefits are often far higher than for quality plans in the private sector.
In city after city and state after state, even with current strong economies and tax revenues, crucial needs are going unmet. California has a structural budget deficit of almost $6 billion.
The leading commentator on California politics, Dan Walters of The Sacramento Bee, estimates the demands for health care, education and prisons at an additional $30 billion a year. Yet, California has an unfunded retiree health care promise of over $70 billion.
Other states and cities have similar confrontations between the needs of citizens and the unfunded promises to government workers. North Carolina reports a $23.8 billion unfunded liability for retiree health care, more than three times its other ordinary debts, a state legislator saying, “The numbers make your jaw drop.” One’s jaw drops further in New York City, with a $53.5 billion unfunded liability.
Public unions have spent lavishly to lobby and defeat proposals for reining in their benefits. They spent about $100 million last year in California alone to defeat Gov. Schwarzenegger’s reforms.
Nonetheless, some government units are taking measures. Retiree health benefits are less entrenched under the lawthan pensions. San Diego County supervisors and the state of Alaska just trimmed benefits for future retirees.
South Carolina, Georgia, Vermont, Virginia and New York City have begun — inadequate, but still reducing funds available for other needs — some prefunding of their retiree health care promises.
If taxes were to be sharply increased to fund the huge liabilities run up by politicians’ promises, a recent study shows the additional impact on other residents.
Based on data from the U.S. Census Bureau, the rates of poverty tended to decline during the 1990s in states with lower taxes and spending, while increasing in the states with high taxes and spending.
Most government employees work hard, often harder than I see in private offices. Their labor is to be valued.
However, they, like the rest of us, have critical other needs from government and opportunities for economic advancement, more important than protecting unaffordable retiree health benefits.
Examiner contributor Bruce Kesler is a financial adviser.
