Search This Blog

Saturday, February 19, 2011

Wall Street's profligacy cost Public Worker pension funds $900 billion:

So what's a good Republican to do - blame Public Worker Unions for state deficits naturally. New Jersey is a prime example. When Christie Todd Whitman became Governor, the pension fund stood at %100 billion which amounted to 104% of its liabilities. 8.5% of salaries were deducted for the fund while local governments matched that 8.5%. Whitman's administration secretly withdrew billions from the fund to pay for tax cuts an to balance the state budget.

At the same time she exempted local governments from their 8.5% contributions costing the fund an additional $3 billion over 8 years. Not to worry said Whitman. those financial geniuses on wall Street will more than make up for the difference. This policy was continued under subsequent governors as the $3 billion liability continued to grow. These liabilities are still due sometime in the future. Between these deferred liabilities, the theft of funds to finance tax breaks and the financial meltdown the fund is now down to $66 billion so the pension fund has gone from a 4% surplus to a 41% shortfall.

Gov. Christ Christie has become a hero on the right for tough talk and for blaming the union when it was the politicians who abused and stole from the system for their own benefit and for the wealthy citizens of the state.

Our current governor, facing the same financial crisis of those going before him, has chosen a similar route, but one with a more vilifying tone. He has again found the same victim: Your public employees. When asked about the pension situation in the state of New Jersey, Gov. Chris Christie replied “I wasn’t going to put $3 billion into a failing pension system. We need pension reform. I passed some already for new hirees, and this fall we are going after the current employees and pension reform and benefits because we are broke.”

Nowhere does he mention how the public employees had already bailed out this state years before, and now he is focused on “going after” the current employees to fix a mess created and compounded by politicians. To say otherwise for him would be political suicide should he aspire to higher political office, and as most of those before him, he is not about to risk his future. Rather, he would gamble on the future of those men and woman and their families who have served this state with honor and integrity.

The principals of the pension system are not broken Mr. Governor. What is broken is the manner in which the politicians have treated and abused it. Yes, the system is failing now, but not because of your police officers and firemen. As of 2009, the pension fund should have assets of $112 billion to meet its obligations, yet it is currently sitting at $66 billion.

It is the largest unfunded liability in the country. New Jersey is the first state ever to be charged with fraud by the Securities and Exchange Commission, and Gov. Christie, strangely, has no comment on this. Yet he continues his rhetoric on the evils done to us by our police officers and firemen, ignoring the truth and lambasting and vilifying us at every turn.

These are the words of Michael Poquat, a police officer in Mount Olive Township in New Jersey. These are not public government leaders who sit on their asses and draw six figure salaries but but people who risk life and limb on a daily basis to protect citizens. In a disgraceful 60 Minutes segment that came across more as a campaign ad for Gov. Christie than a piece of investigative reporting voices such as Michael Poquat went unheard.

Public workers and their unions are being vilified in a manner never seen before. Republicans and right wing pundits have created an perpetuated the big lie that pulbic workers are paid more on average than private sector employees on average but only because the private sector includes young $8 an hour burger flippers for whcih there are no equivalent public sector employees. When you compare apples to apples and similar education and experience, public sector employees average lower salaries than those in the private sector. People working in the public sector trade lower earnings for the security of health care benefits and a pension for retirement. For this they are being vilified for fiscal problems created by Wall Street and politicians.

A public sector worker who averaged a lifetime annual salary of about $45,000 gets an annual pension of $19,000. They paid for that with salary deductions throughout their career yet somehow they are being blamed for their states and local governments fiscal woes.

In Wisconsin public employees and Democratic Party elected reps are finally starting to fight back with a fervor and a commitment that has surprised many. Newly elected Gov. Scott Walker's actions are no less egregious that the politicians in New Jersey. In his case he inherited a $121 million surplus which he immediately turned into a deficit with tax cuts and other favors for his supporters with tax breaks and other favors, using his newly created deficit as an excuse to eviscerate the power of public sector unions.

Interestingly bargaining rights for public employees haven't caused state deficits to explode. Some states that deny their employees bargaining rights, such as Nevada, North Carolina, and Arizona, are running big deficits of over 30 percent of spending. Many states that give employees bargaining rights -- Massachusetts, New Mexico, and Montana -- have small deficits of less than 10 percent.

No comments: