Most
Illinoisans seem torn between anger about state pensioners supposedly getting
rich off taxpayers, and concern about state-worker neighbors caught between
incompetent lawmakers and greedy credit agencies in cahoots with big banks. The
real debate should be one timid type in Springfield (or Washington) to avoid:
What do citizens want government to do and how will it be funded?
Gov.
Quinn called a one-day legislative session [last] Friday, [August 17]. House
Speaker Mike Madigan [did not] call House Bill 1447 for a vote… (Full
disclosure: I earned a modest pension for 22 years of service as a state
university teacher, so I’m affected; that’s why I’ve been reluctant to comment.
But I’ve recognized private-sector workers screwed out of pensions by companies
exploiting bankruptcy laws or busting unions, and most Illinoisans are affected
in some way, so I’m weighing in.)
Legislators
failed to come up with a way to “reform” state pensions this spring. Top
lawmakers this summer met to discuss a compromise but failed...
The
systems are about 40 percent funded, but that’s misleading. Actually, Illinois
wouldn’t have enough to pay its pensions ONLY if every state employee retired
NOW — if every state cop, clerk, transportation worker, university professor,
prison guard, judge, etc. retired TODAY. But pension benefits are distributed
over decades. The money is not due all at once any more than a mortgage must be
paid the day a new buyer moves in.
Other
overlooked points:
•
It’s the responsibility of the legislature and governor to fulfill promises the
state’s made, whether paying bills, funding schools, building roads or
protecting communities. If that requires changes — decreases to discretionary
spending or increases in taxes — do so.
•
The situation was created by lawmakers and administrations for years. Since
1994, the state contributed its required pension share just once (in 2004).
Four times (1994, ’95, ’96 and 2006), it paid less than one-third of the
necessary amount.
“Governors
and legislators of both parties have been skipping or shorting the state’s
share of pension payments for decades,” agreed Koehler, a Peoria Democrat. “The
[Republican Gov. Jim] Edgar administration kicked the can down the road during
the boom years of the 1990s to avoid making tough decisions and spending cuts
at a time when the state could have better afforded it.”
Pension
funds aren’t just missing state contributions; they’re missing the investment
returns and interest that money would have earned.
State
pension recipients — whose median benefits are less than $24,000/year — cannot
collect Social Security for years employed by government — also saving
government (and taxpayers) money since those employers don’t have to pay FICA.
•
Whether state pensions, guaranteed by Illinois’ constitution, or private
pensions, they’re part of a pay package pledged in exchange for services
performed, only deferred compensation paid later. It’s an asset, sort of a
promissory note. Compare your finances. If your lender on its own hiked your
monthly house payment, your company unilaterally cut your pay, or your bank on
its own decided your savings account was worth two-thirds of what your passbook
says, would that be “reform”? Technically, yes; it’d be wrong, too.
•
Plus, it’d be bad for the economy, particularly in rural areas.
“Pension
expenditures may be especially vital to small or rural communities, where other
steady sources of income may not be readily found if the local economy lacks
diversity,” says the National Institute for Retirement Security’s recent report.
“Additionally, reliable pension income can be especially important in
stabilizing local economies during economic downturns, because retirees know
they are receiving a steady check despite economic conditions.”
•
Balancing budgets on the backs of workers (who pay taxes too) reduces
consumers’ spending and hurts morale since it pits workers against the public
they’re serving.
As
far as public opinion: Most robbery victims would sympathize with other people
about to be held up, but right-wing media and wrong-headed legislators have
created scapegoats to cover their own failures. Bill Fletcher, Jr., author of
“They’re Bankrupting Us!” and 20 Other Myths about Unions, explained the
disconnect: “What the right wing has managed to do is get workers who have been
crushed angry at somebody else. It is easier for regular working people to
start blaming someone that they can physically identify — someone that cannot
penalize them — rather than actually taking on the real powers, the people in
Wall Street who have walked away with billions.”
This
article was originally posted on www.PekinTimes.com. It is posted here with Bill Knight's permission. Contact Bill Knight at
Bill.Knight@hotmail.com.
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