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Thursday, August 29, 2013
…Nothing is 'saved' in pension 'fix'? by Jim Broadway
“…Here's why: for seven decades our elected officials - governors and legislators - gave us programs and services that cost far more than they had the courage to ask us to pay with our tax dollars. They ran up debts yearly, but they papered over these debts with thefts from the pension systems - with public employees' money - and with artfully crafted lies.
“Add to that the Great Recession's effects and we find that the five state-administered pension systems are obligated by about $100 billion… more than their current assets can cover…
“‘Why do we have to pay it?’ you ask. ‘Can't we just 'save' it?’ You just can't, okay? The obligation has been incurred. It won't go away, not a dime of it. Every dollar will be paid by somebody and will be accounted for in some way.
“But our policymakers - governors and legislators - are afraid to ask us to pay for the fiscal mismanagement they have committed on our behalf. They always look for someone else to pay inconvenient debt, someone powerless to complain.
“Their favorite victims are "sin tax" payers. In the past they've hit up smokers, drinkers and gamblers to pay for services unrelated to smoking, drinking or gambling. Now that medical marijuana is legal, look for the tokers to pay their price.
“But [$100B], that's a lot of money. The tokers can't afford it. And hitting up the general taxpayers - that is, us - is out too. The policymakers are afraid of us, you know. They've pandered on taxes so long that they now believe their own pander.
“Does that mean there's no one to victimize, no constituency that has played no role at all in creating $100B in pension debt but whom our policymakers - our governor and legislators - can coerce into paying it off anyway?
“Calm down. A class of victims is visible through the fiscal fog. It is the members of the pension systems themselves. Sure, they've made all their payments, every one of them, to secure their relatively modest retirement benefits. But they're still vulnerable.
“We - that is, the State of Illinois - can just renege on our - that is, its - promises made to them in their contract (state law) and slashing their benefits. That will cut our (the state's) obligations by a big number - which we then will call ‘savings.’
“You want details? Forget it. The Conference Committee on SB 1 - ten legislators whose job it is to come up with a way to screw over the pension members - are deliberating behind closed doors. (The Open Meetings Act doesn't apply to them.) There's no way of knowing exactly how the deed will be done.
“The details provided by the Associated Press are of little help. They're going to fiddle with the COLA and allow pension members actually to reduce their employee contributions - and somehow that's going to save the systems. It will be interesting to see how that is purported to add up.
“[The AP] article goes on to mischaracterize other proposals as ‘saving’ vast sums of money, $187 billion in the case of a plan favored by House Speaker Michael Madigan, $47 billion by one backed by Senate President John Cullerton.
“Get it straight. Nothing is ‘saved.’ Part of the obligation may be reduced by state payments. Part may be accounted for as benefits and subtracted from what the contract (state pension law) currently calls for. But someone will pay every dollar.
“What's next? Isolated details of the committee's discussions may dribble out now and then, but no legislative action is expected before the veto session that convenes on October 22. We'll all be mushrooms until then.
“Bond ratings 'talked down?’ Corporate interests have warned for years that, unless Illinois (that's us, remember) solves our ‘pension crisis,’ the credit rating agencies will lower Illinois' ratings making it costlier for the state to borrow funds.
“Recently the state's credit-worthiness ratings were lowered. Now the We Are One Illinois coalition of unions believes corporate leaders actually lobbied the agencies to lower the ratings - to lend credibility to the ‘pension crisis.’
“Former Illinois Attorney General Ty Fahner flatly denied (in media interviews) that he would never do such a thing. But the coalition hopes you'll pay attention to Fahner's comments at a closed-door meeting of corporate leaders in Chicago.
“The meeting was for the Civic Committee of the Commercial Club of Chicago. Fahner is the committee's president. You wouldn't think anyone would even consider doing anything with such costly effects just to lend a sense of urgency to an issue of public policy. The state's former top law enforcement officer would be especially reluctant to do so, right?
“Those folks are pretty disgusting sometimes.”
Jim Broadway is publisher of State School News Service