The Rightwing Attack on Public Employee Pensions
The rightwing argument that public employees bankrupted Detroit is incredible on its face. But it is part of an ominous national push to raid pensions, give away tax dollars to corporations, and impose austerity on regular working people.
Never mind that Detroit has been hollowed out by job-exporting trade policies, deindustrialization, and American auto manufacturers' poor business decisions. Never mind that the city has stopped plowing local roads, that you have to run to a main thoroughfare in the wintertime to pick up your mail, that the average response to a 911 call takes 58 minutes.
As economist Laura Dresser, associate director of the Center on Wisconsin Strategy points out, Detroit was the big loser among the inevitable-winners-and-losers we heard so much about when free trade was being foisted on the rust belt.
"The trade argument is: Yes there are people who will lose, but society as a whole gains from these deals because prices go down," Dresser points out. "And with those gains, we could compensate the losers."
Guess what? Detroit did not see that compensation.
"If any city has experienced the pain of U.S. trade policy, it's Detroit," says Dresser.
But you have to look hard to find that big-picture background in the current national discussion about Detroit's bankruptcy.
Kevyn Orr, the emergency manager imposed on Detroit was on All Things Considered on NPR last night, explaining that, for Detroit to grow again and realize it's great potential, people are going to have to make "painful sacrifices."
And who are those people? Elderly pensioners living on $19,000 a year on average. The size of their sacrifice has yet to be determined, but Orr would not rule out pension cuts of 50 percent. Keep in mind that these elderly people, who were guaranteed their retirement income, will not likely see the future benefits of a resurrected Detroit.
A handful of very smart people have talked about how wrong-headed the rightwing analysis of the economic crisis in Detroit is.
David Sirota points out in Salon that the city is still planning on spending $283 million on a taxpayer-financed hockey stadium, even as it tells its retired public service workers to stock up on cat food.
Paul Krugman points out that the now-mainstream rightwing corporate analysis that endorsed austerity for Greece is being misapplied in Detroit as well.
But that's not all.
Working people everywhere should be very leery of a rightwing propaganda push that paints teachers, union members, local officials, and other public servants as greedy dependents who are sucking up taxpayer money and putting economic stress on cities and states across the land.
We saw what this narrative did in Wisconsin, where Governor Scott Walker busted public employee unions and survived a recall effort in large part by stirring up resentment against middle-class public employees among strapped, non-union private sector workers who envy their kids' teachers' health-care benefits and secure retirement.
This race-to-the-bottom mentality could turn us into a nation of Detroits.
Take this ominous recent article from the Wisconsin Reporter, part of a network of rightwing state government news outfits funded by the conservative Franklin Center for Government and Public Integrity.
The article, headlined "Public Workers Haul in Millions." appeared about a week before Detroit went belly-up.
In it, we learn that an Illinois-based group called Taxpayers United of America has released a study of Milwaukee public employee pensions.
The report seeks to shame public employees, including Milwaukee Mayor Tom Barrett, for allegedly raking in outrageous compensation including hefty pension guarantees.
You have to read to the bottom of the article to discover that both Milwaukee and Wisconsin have been ranked top in the nation by the Pew Charitable Trusts for maintaining fully funded pension systems.
That's because these pension systems are funded by employees, who pay into the funds throughout their working years.
Rae Ann McNeilly, executive director of Taxpayers United grudgingly acknowledges in the Wisconsin Reporter piece that "the Wisconsin Retirement System, the Badger State's public pension program, is one of the healthiest in the nation, nearly fully funded by existing accounting standards," Kittle writes.
"The reason Wisconsin's retirement system works is because what people take out is what they put in," Dresser explains.
Not only are Wisconsin's public workers owed a pension, legally, because they were promised it--just like workers in Detroit--there is no argument about whether the money is all there (and the state has not raided the fund, as happened in New Jersey).
But never mind the facts. "That's like saying instead of having the bubonic plague they only have E. coli," says Rae of Taxpayers United.
Instead of the pay-as-you-go model that has kept Milwaukee and Wisconsin's public employee pensions solvent, Rae and other "pension reform advocates" argue that state and municipal workers should be thrown on the mercy of the private market.
This is the same argument we used to hear about Social Security. It sounded a lot better when the stock market was booming during the Clinton years.
"All you have to do is look at what happened to 401(k)s between 2006 and 2009 to see why that's a bad idea," says Dresser.
Today, it's harder to get a lot of political traction with a plan to throw AARP members on the tender mercies of Wall Street.
But retirees as a group have a lot more political clout than do public employees, as union-busting governors Scott Walker and Rick Snyder have demonstrated in Wisconsin and Michigan.
Watch out for the insidious argument that public employee pensions--even those that employees have contributed to for years and kept solvent--are a form of theft from taxpayers.
Like the rest of the anti-worker, anti-public-sector argument, this divide-and-conquer argument will only lead to pain and destruction.
© 2013 The Progressive Magazine