Thursday, August 11, 2011

Ten Questions Regarding Our Legislators’ Focus

Let’s begin by stating that this is not about the current stock market disintegration; nevertheless, should Illinois legislators remain obsessed with the sustainability of the public pensions in light of this financial unpredictability? Shouldn’t they be obsessing over job creation and stagnant or falling wages and a more equitable tax system in Illinois, the state’s infrastructure, economic growth, debt payments, public education, or sustainable energy sources instead? Indeed, most of us would prefer a sensible social and economic reform fixation rather than this mania over the fiscal endurance of the public pensions which distracts the state government from solving more important matters.

Shouldn’t our state legislators be creating a jobs’ reform bill and awarding employers with tax credits for creating jobs in Illinois? Shouldn’t they be establishing a revenue system with a balanced but low and broad tax base to spread the burden of taxes to multiple citizen payers and restructuring the state’s antiquated single-rate income-tax method, or considering the taxation of services in Illinois to reflect its 2011 economy and increase the state’s cash flow? And shouldn’t they be raising taxes on the wealthy (their tax rates are the lowest it has ever been in 80 years) and eliminating their deductions and loopholes, while cutting taxes for the middle class and expanding the Earned Income Tax Credit for the poor? These are urgent concerns to contend with at the state (and federal) level: unemployment and the inequitable distribution of wealth, incomes, and opportunities.

So what does pension sustainability have to do with a state’s deficit reduction when it is a symptom of more substantial issues that need to be addressed, of which many are in a cause-and-effect relationship with a pension’s solvency? Will focusing on public pensions’ unfunded liability (pension plans will always have liabilities) revive the Illinois economy and produce jobs? Should Illinois legislators continue to waste their time debating and calculating unpredictable liabilities, varying statistical data and erratic funding ratios in this fall’s veto session?

We know that “TRS has survived for more than 70 years – because over the long term, the System’s income and accumulated assets continue to be greater than what are required to pay out in any given year… The only way TRS [will run] out of money is if income from all sources – teachers, school districts, investments and the State – dries up for a lengthy period of time. Not just one or two sources, but all sources” (David Urbanek, TRS Public Information Officer).

Is the belief in a so-called “pension crisis” then really a manufactured diversion that allows our state legislators to avoid confronting more significant matters? Are Illinois legislators holding the public employees’ pensions hostage the way a certain fanatical and pig-headed minority recently held the “debt ceiling” hostage at the federal level?

Illinois pensions are not in any imminent danger of financial collapse. Pension fund liabilities are long-term and do not face an urgent liquidity crisis today, tomorrow, or in the immediate future. “[Besides], there is no need for [public] pension funds to closely match assets and liabilities [ever]” (Economic Policy Institute).

For more information, please read “Spread the Burden of Taxes and Address Tax Inequities in Illinois” (July 25), “A Call for Caution for This Fall’s Veto Session in Illinois” (July 17), “Authorized Theft and Greed in Corporate America” (June 30), “How about Tax Reform, the Most Important Issue in Illinois” (June 8).

1 comment:

  1. Very well put. Pensions are a smoke-screen, a red herring.