Forum Post: Should CA cities take bankruptcy to break abusive union pension contracts?
Posted 12 years ago on Nov. 5, 2011, 12:02 p.m. EST by foreverleft
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San Fransisco is the latest, they have 28,000 retirees and 26,000 current employees and are asking for a voter referendum to alter the existing union contracts but if they lose will they take bankruptcy to kill off the union contracts?
Killing the unions works for me. There is no way the retirees will get al the money coming to them.
So many people contributing to this discussion seem to have values quite antithetical to those of OWS, which is open, welcoming and supportive of the 99% (which includes retired union members). Make the corporations pay!
corporate bankruptcy seem to scheme a seamless stream of bounty lost to accounting
It is simply unrealistic for ANYONE to think that they are somehow entitled to an economic benefit regardless of the giver's ability to pay for it. The people who promised the benefit lacked the authority to do so, as it depends on taxation, and that's under the control of the people.
"It is simply unrealistic for ANYONE to think that they are somehow entitled to an economic benefit regardless of the giver's ability to pay for it." Newsflash: pensions are not extra money that the government has to give out; pension money is withheld from these people's paychecks to go into a fund account that is supposed to be properly managed. Breaking the pension contract is out-and-out theft; it says that the government can pull money out of your paycheck and then decide that it can't be bothered to return that money to you. For someone who runs around screaming when you even suggest writing down bad mortgages you're sure willing to turn on the creditors when they happen to be the little guy....
I spend about 3 years working for my State's government and while I gladly took every single benefit (especially retirement perks) that I could, I could not help feel like I was taking the taxpayers for a ride. And I was not even in the union!
Though I agree that past contracts cannot be broken, something has to be done going forward to stop it. It will have to be drastic and it will infuriate the unions but things cannot go on like this without bankrupting the governnent.
Listen; public workers aren't "taking the taxpayers for a ride;" they simply never got the shit kicked out of them the way private sector workers did. The public service unions are essentially the gold standard for compensation and if we don't like what they have the answer should be to force better wages for ourselves rather than trying to drag public servants down to our level.
Not true. I quit after only 3 years because I made more in the private sector.
The abuse of things like the pension system and the almost complete inability to fire an incompetent worker truly leads to the taxpayers being taken for a ride. You must hear about how people use OT over only 1 or 2 years to completely inflate their pensions?
I do feel like we need to rethink how this country handles workers' rights and compensation because the current system doesn't really work. However, simply stripping away pensions and benefits in the interim is not something I find morally acceptable to get on board with. Honestly, if California's in that kind of shape I'd inquire into their income tax rates. There are enough millionaires in that state that a 10-15% income tax on all income over $10 million would probably fund public pensions indefinitely.
Or until all the corporations start to move their executive headquarters (along with their 10 highest paid executives) to another state. Texas would love to have them.
Honestly, fuck it. The problem with letting states deal with these things is that it only takes one Texas to make things harder on everyone. Whoever sets their standards the lowest and bends over the most readily gets rewarded and so we have a race to the bottom even within this country. In all honesty, I would jack up the federal income tax brackets by 10-15% and then include a state-dependent percentage reduction to offset the cost of state income taxes, so that it really wouldn't matter which state you lived in. I'd also tack on a lump sum tax of 20% of that year's revenue (not profits, revenue) each time a corporation moved its headquarters across state lines.
Why? To give more money to poor people to sit home on their ass all day? Or to bailout huge banks? The federal government spends its money so wisely.
Nothing's going to change until and unless corporations are actually solidly tied to communities instead of being able to prance from state to state and country to country looking for the cheapest labor and the quickest buck. If you want to cut the number of people on welfare and in prison (the latter of which is orders of magnitude more expensive than welfare but pushed by conservatives nonetheless) you need to bring back good blue-collar jobs on which one can support a family. If you can see a way to do that without government, then that's great; I'm listening. Otherwise, government it is.
I'm not saying these actions are GOOD, I'm only saying the ability of government to afford paying benefits is dictated by the public's willingness to pay for them via taxes. What else are the state governments supposed to do? People don't vote to support more taxes, the markets are increasingly unwilling to buy state debt, and states can't print money like the feds. Think "Greece."
In many municipalities only a percentage of the pension is taken from the workers, while the remainder is paid by the state. If pensions were 100% contributions by the worker then i would agree with you but they are not. In Florida the workers paid zero into their pensions and this year when a 3% requirement of employee contributions was put in place, you would have thought the state was executing them.
I am not familiar with the FL union contracts with that state, I've never had a need to be since I have never and do not plan to ever live in FL.
However, pension plans are normally negotiated as part of the pay package contract. IF (please note emphasis) the contract negotiated substitutes a pension paid by the state in place of another negotiating point then it is the responsibility of the state to honor that contract as the employees honored their part. In the case of pensions the obligation of the state is a delayed obligation which does not nullify the obligation.
Incidentally, Florida was a separate case, and I am not going to defend their actions. 3% does not refer to the percent of the pension payment that comes from the worker; it refers to the percentage of the worker's paycheck that goes into their pension account. In reality, typical pensions are comprised of about 33-50% of employee contributions. In case you were wondering, that's at or somewhat above the percentage of the total cost of a mortgage that's actually repaying the bank. Once again, I posit that if it's fair to confiscate a pension plan comprised of 33-50% worker money it's fair to blow off a mortgage comprised of 33-50% of the bank's money.
The end result though is that it really doesn't matter what the percentage is. It's the defined benefit over time that's promised that counts. There is virtually no way in hell that most of these plans are going to generate the returns needed to pay what they've promised so there will be cuts to benefits one way or another. If anyone thinks that can't happen, then just look at the Railroad Retirement system or some of the other large plans that defaulted.
My parents got screwed big time. Instead of receiving what was a good defined benefit plus what they'd paid into SS (from other later employment), they just rolled the remaining assets from the RR program into SS and all they got was the normal amount that they would have received from SS alone.
My dad was a union man who was lucky enough to be able to draw his pension from the union when his plant closed, and it was (and still is) a godsend. My point is that the government has a moral obligation first and foremost to its workers to honor its contracts, and if we're not going to give them all kinds of hell for trying to shrug off its contracts then there is no moral basis for continuing to hold people to mortgages, student loans, or credit card debt.
That may be true at a moral/idealistic level, but practical reality tends to kind of trump that. i.e, I may know that I should give you the money, but if I don't have it to give, then... ; )
Also, all debt is not from some general debt pool. It's a series of independent and largely private contracts. Because the state government doesn't pay per its contract, that doesn't really affect independent private contracts entered into between that person and other entities.
For example, if you sell someone a car, beyond the risk of non-payment which you price in or otherwise secure or insure your interests against, then you shouldn't really be held to any "moral obligation" re how their independent contract with their employer for their salary might change. If you change that model, then the costs that are priced in will just change to compensate for the added risk.
Chicago is the one that needs to do it to break these outrageous union contracts where these union leaders work 1 day out of 20 years for the county and collect $400-500k a year. But then Cook County and Chicago are the most corrupt liberal machines in the nation.
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