There is nothing like a long, lingering economic drought to expose the barnacles stubbornly clinging to the nation’s ships of state. Whether they are the smaller boats of municipal governments or the big boats of state governments, many could run aground as the economic tide remains low.
As we have seen in California, some boats have already sunk. The cities of Vallejo, Stockton and San Bernardino have all declared bankruptcy. Just as boats must lighten their loads to stay afloat in shallow waters, governments must unload their ballast of bloat to avoid the rocks of financial failure.
While apologists for government largesse like to blame the Great Recession for these shipwrecks, the cause of this calamity is not insufficient taxes, it is excessive spending, most notably it is the lavish compensation ladled out on government employees by parades of complicit politicians seeking election support from public-employee unions.
The politicians move on, but the pension liabilities they approved remain. Nationally, the unfunded public employees’ pension liability is measured in trillions of dollars and is the single largest item threatening the solvency of many state and local governments across the United States.
Kathy Miller, vice mayor of Stockton, blames that city’s bankruptcy on excessive public-employee benefits. She says that if those benefits had been properly penciled out it would have been readily apparent how impossible it would be to meet the funding obligations they created.
It doesn’t require a degree in finance to understand that if employees can retire at age 50 or 55 with full or nearly full pay and medical benefits for life, it won’t be long before a city or state is paying for two or even three times the staff but only getting the services of one. Consequently, some municipalities are doing without adequate levels of police and fire protection. They can no longer afford the high pay and benefits public-safety unions have extracted from cooperatively cozy elected officials, so these cities must get by with fewer cops and firefighters.
Ironically, the very fear of insufficient police and fire protection that public-safety unions and their political allies employ to scare the public into accepting the latest demands for higher compensation results in the very thing feared — less police and fire protection.
Nevertheless, the gorging at the public trough continues. And, of all the public pension pigs, police and firefighter unions have been among the most gluttonous. Typically, they can retire earlier and with higher compensation than not only most anyone in the private sector, but also in the public sector as well.
The argument made to justify their exorbitant compensation is that their work is so dangerous. Yet, the Bureau of Labor Statistics and the Occupational Safety and Health Administration consistently list 10 occupations that are more dangerous than police or firefighter, among them commercial fishing, logging, farming, mining and truck driving. How many workers in these more dangerous jobs retire early with fat compensation packages?
For years now, insatiable public-employee unions and irresponsible self-serving politicians have worked symbiotically to enrich themselves at public expense, consequently undermining the financial stability of local governments. Now, as so many concerned observers had warned, come the predictable repercussions.
Because most often the unions and their allied elected officials have secured agreements and laws that subordinate all other financial obligations to union retirement benefits, the only option remaining for cash-strapped governments is to declare bankruptcy and default on those retirement obligations.
Prudent compensation policies and fiscal responsibility would have seen governments retain solid reserves to weather economic downturns. That would mean elected officials had to say no to incessantly greedy unions and to all wasteful spending. But, instead we effectively have gorge-and-purge policies — profligate spending leading inevitably to harsh austerity when the money runs out.
Pension payments will have to be reduced to reasonable levels for both existing and future retirees, who will also have to contribute to the cost of their medical benefits and to their retirement funds — just like the rest of us do.
The barnacles must be scraped off the boat and the excess baggage thrown overboard before ships of state can sail again. That is what Wisconsin Gov. Scott Walker did when he rescinded public-employee union bargaining rights. It does no good to negotiate with these unions. They are greedy, invasive weeds that must be pulled out by the roots. The voters of Wisconsin understood that. Eventually, California voters must, too.