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Public Employee Pensions ask for bailout: An opportunity within the disaster

Submitted by Soren Dayton on Sun, 10/26/2008 - 08:33
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Earlier this week, an extraordinary story hit. CALPERS, the California Public Employee Retirement System, announced that it took a HUGE hit. From the WSJ:

The California Public Employees' Retirement System, known as Calpers, said its assets have declined by more than 20%, or at least $48 billion, from the end of June through Oct. 10.

But here's the catch. While people in 401(k)s or IRAs also took a 20% or so hit, CALPERS and other defined-benefit contribution plans are demanding that the taxpayer make up the hole in their pension plans:

Unless returns improve, Calpers is poised to impose an estimated increase in employer contributions of 2% to 4% of payroll starting in July 2010 for about two-thirds of its state-employer members, and in July 2011 for the remaining third. Any decision will be made after Calpers knows its returns for the fiscal year.

This is a transfer from already overburdened taxpayers to public employees that they didn't even get to vote on. This is a political opportunity for the right. Corrupt unions are asking for money from the taxpayers to fill their pensions while their own pocket books are getting slimmer.

This is a bailout. And Americans didn't like the bailout.

Note that when the bailout bill came through Congress, AFL-CIO and other unions wanted their piece of the action too:

He also said the bailout must include protections for worker pensions which suffered large losses because of Wall Street irresponsibility--a point Teamsters President James Hoffa echoed--and it must “ensure that taxpayers receive any future profit from mortgages bought by the Treasury.” 

Whether you agree with the framing of "Wall Street irresponsibility" (I do, to an extent) the unions and their lackeys in Congress are going to have to explain why they deserve a bailout on the backs of the rest of us.

This is an opportunity for the right. These fights will often be at the state level over an issue that people understand: their taxes. The leaders who articulate why this is wrong will become recognizable voices on behalf of all Americans, not just the 12% in union pension programs, will become public figures.

Between this issue and the broader issue of the state budget crisis, there are the seeds of the rebirth of the next right.

 

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Comments

Where's Arnie?

Submitted by jhmccloskey on Sun, 10/26/2008 - 09:21.

And what does Neocomrade Governor von Schwarzenegger have to say about it, if anything?

 

Happy days.

 

 

 

 

Broken Promises

Submitted by NarsBars on Sun, 10/26/2008 - 12:16.

Unlike an investment where you take your chances and hope you can make a good pick and possibly make a huge profit, a State employee pension is a promise for a definite amount in return for services.

When hired a State employee is promised a paycheck subject to bargaining and subject to the whims of a legislature, friendly or not. In most cases as proven by many impartial studies the hourly rate for State employees has always been lower than private industry and raises over the last fifteen years in most cases have not kept up with private industry or with inflation.

The promise of a stable pension fund leading to a stable pension is the carrot that gets many employees to give years of their lives to public service. Do you really want to hire the lowest bidder for State jobs? Picture the paramedic working for minumum wage, the firefighter more interested in leaving early for their second job than getting a ladder up to your kids bedroom.

How about a health inspector that thinks that germs don't exist because they are too small to see? You don't seem to have any problem telling others that the word of the State is worthless and the promises given over twenty or thirty years should be broken. As a State employee I promised to do my job the best way I knew how, to look out for the taxpayer dollars, remember I too am a taxpayer and to be a good example to the public for my state and myself. I have kept my promises, why is it so hard for you to keep yours?

Are you saying that broken promises and lies can be the rebirth of the right? Rebirth means change and If you want rebirth you can't  just continue to do the same old thing.

 

Asleep at the Switch

Submitted by lagomorph on Sun, 10/26/2008 - 12:21.

Insurance comanies are asking for a bailout as well.  Yet again, another issue the taxpayers did not vote on. 

Americans are asleep at the switch, dreaming of ushering in a new utopian golden era.  And by switch, I not only mean the trainwreck analogy, but also the tour de force changeling switch which is being implemented between what we used to know as the Democratic Party and the real organization behind this, which is a patient, persevering and extraordinarily focused and professional "small-c" communist Left. 

The Revolution will certainly be televised, unless you're associated with a television station offering tough questions about the Revolutionaries, in which case you'll just be blacklisted and blacked out. 

Pensions are contracts, 401k's are not

Submitted by GWMustGo on Sun, 10/26/2008 - 13:51.

Although I considered the bailout a necessity, I was not happy with it. Not just the situations that led up to the financial brouhaha, but the idea of "profits individualized, losses socialized".

However, you can't put pensions and 401k's in the same boat. Pensions are funds that are designed to return specific amounts for retirees. Organizations (public and private) that control pension funds are required to fund them at a level that can pay out the specific amounts pensioners are entitled to. Given the hits many pension funds have taken lately, some will be in trouble. Public pension funds have no choice but to go to the public to re-fund the pension funds.

Owners of 401k accounts (like me) have no such contract. This is one reason many companies (the past 4 I have worked for, for example) have switched from defined benefit plans (pensions) to 401k's - the company's obligation for a 401k plan ends with any matching they choose to make. They do not have to boost funding to account for market losses in their employees' 401k accounts.

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