AFSCME President Gerald McIntee issued this statement on how unfair Steve Kroft’s segment was on public employee pensions:

Chris Christie is more interested in scoring political points than solving state and local budget challenges and getting the economy moving. The fact is, hundreds of thousands of public employees, just like private sector employees, have been laid off and taken pay and benefit cuts, even as Wall Street executives lined their pockets with taxpayer money and took home huge bonuses. And as Steve Kroft’s report noted, much of the pension problem stems from the fact that politicians did not contribute to their pension funds.

Contrary to what Christie would have Americans believe, public employee pensions are not the problem. The average pension for an AFSCME member is just $19,000, and eighty percent of this comes from investment returns and contributions by the employees themselves. The challenge can be met if state and local governments, began contributing just 1.5 percent more of their budgets toward their pension funds in the years ahead.

The long term solution to state and local fiscal challenges is a robust economy, one that is creating jobs and replenishing tax revenue. Christie’s decision to scuttle 6,000 new jobs to build a needed tunnel between New Jersey and New York shows that he’s more interested in scoring political points than he is in solving the problem.

Public employees stand ready to help state and local governments get through the economic storm. But to suggest that they have not sacrificed is a lie, and we will not allow politicians like Chris Christie to blame the economic crisis on working and middle class Americans.

Mr. McIntee’s statement is missing some key statistics, like the fact that public employees, teachers included, can retire at insanely early ages. He isn’t telling people about OPEBs:

Other Post-Employment Benefits

What Does Other Post-Employment Benefits – OPEB Mean?
Post-employment benefits that an employee will begin to receive at the start of retirement. This does not include pension benefits paid to the retired employee. Other post-employment benefits that a retiree can be compensated for are life insurance premiums, healthcare premiums and deferred-compensation arrangements.

According to this, it’s possible for a public employee to retire at an early age, sometimes as young as 52-55, then get a pension PLUS get OPEB benefits that pay for things like health or life insurance premiums, possibly even deferred-compensation packages. (I suspect that the deferred-compensation packages are for higher ranking officials, not the rank-and-file.)

That’s before talking about the retire-and-rehire aspect of retirement for public employees. This article does a nice job laying that out:

Double-dipping isn’t just a faux pas at the appetizer table. It also refers to workers who retire and then promptly are rehired, collecting both pension and salary.

This revolving-door practice among state workers is no secret; some lawmakers have tried periodically to clamp down on it, and a Seattle Times investigation earlier this year revealed that it’s going strong at state institutions of higher learning.

The state’s budget woes, coupled with an underfunded pension system, are giving new impetus to closing the so-called “retire-rehire” loophole for at least some state workers. Gov. Chris Gregoire is proposing changes that would apply to higher-education employees as part of a broader pension-overhaul plan.

Little wonder double-dipping is popular. Who wouldn’t love to “retire,” start collecting a generous pension and then get rehired in the same job, perhaps with a raise? If state rules allow it, a worker would almost be a chump not to take advantage of the policy, right?

Like the article says, this isn’t a secret. I remember President Reagan rail against double-dipping for federal employees. That’s almost 30 years ago.

A major problem with public employee pensions is that most, if not all of them, are defined benfit plans. Most private sector jobs have a defined contribution plan. The downside for employees for a defined contribution plan is that they don’t allow employees to retire at ridiculously young ages.

That’s actually an upside to the taxpayers and to the structural health of the retirement plan.

The things that Mr. McIntee didn’t say matter to the structural health of public employee retirement systems. His statement hid some of the structural problems. This isn’t dissimilar to the interference Barney Frank and others ran for Fannie and Freddie.

Remember Frank’s statement that people were being alarmist about the problems Fannie and Freddie were experiencing. Mr. McIntee’s statement isn’t significantly different. They’re both running interference for programs that are structurally unsound and that can’t be sustained.

We learned in October, 2008 that Barney Frank was wrong. Let’s hope it doesn’t take a full-blown crisis before we find out that Mr. McIntee is telling whoppers.

It isn’t a matter of whether Mr. McIntee is telling whoppers. It’s a matter of whether it’ll take a full-blown crisis to prove that he’s telling whoppers.

Let’s hope it doesn’t.

Either way, our politicians need to hear from us that we’ll have their backs if they straighten out this mess. It’s the only way we’ll avoid that crisis.

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2 Responses to “Haven’t We Heard This Before?”

  • anonymous says:

    A union pension might be $19k but a typical municipal employee will have in addition to the union plan, a city plan AND a 401k

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