The California primary is little more than two weeks away, and the timer on the public pension time bomb continues to tick.
The unfunded liability on California state pensions is perhaps half a trillion dollars, as a Stanford University study directed by former lawmaker Joe Nation had it; or perhaps it’s only many billions, as the California Public Employees' Retirement System, which disputed the Stanford study, contends.
In a decade, the state’s annual contribution to its workers' pensions has increased from $145 billion to $3.5 billion, the Contra Costa Times reports.
And increasingly, from the left as well as the right, comes acknowledgement that the present system is all messed up, and reform is urgently needed: without change, basic state services will have to be gutted merely to pay for the retirement of past employees, critics say.
Here’s Gov. Arnold Schwarzenegger's pension adviser, David Crane, from a recent legislative hearing (the quotes were compiled by Pacific Research Institute’s Steven Greenhut):
"One cannot both be a progressive and be opposed to pension reform. The math is irrefutable that the losers from excessive and unfunded pensions are precisely the programs progressive Democrats tend to applaud. Those programs are being driven out of existence by rising pension costs."
Then there’s former Assembly Speaker and San Francisco Mayor Willie Brown, in his role as San Francisco Chronicle columnist:
“We politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers.”
Occasionally, a candidate for high office speaks frankly about the problem, as did San Franciso Mayor Gavin Newsom, a Democratic candidate for lieutenant governor, to columnist Dan Borenstein of the Contra Costa Times:
"I don't know about a more important progressive issue than pension reform. There is no discretion left in our budgets to advance our progressive values of investing in people and investing in place if that discretion is taken up to meet our (pension) obligations …
"(In San Francisco) these numbers are staggering. ... This is hundreds of millions of dollars next year more than this year that I'll have to deal with if I'm still mayor, or the next mayor will have to deal with, that comes right out of somewhere.”
Politics being what it is, most candidates duck the issue, lest they get targeted by the public employees unions that, quite understandably, don’t want their hard-won pension benefits trashed. And so, as Brown notes:
“Talking about this is politically unpopular and potentially even career suicide for most officeholders.”
Borenstein, who writes often about pension issues, is less sympathetic than Brown. He calls candidates who don’t speak frankly about the pension bomb “panderers.” Often, he says, they duck the issue by pretending to believe that palatable falsehoods, and not grim realities, are the true situation.
Interestingly, he’s critical of two candidates who have made pension reform centerpieces of their campaigns: Republican candidates for governor Meg Whitman and Steve Poizner.
Both candidates say they committed to making basic changes in state workers pensions to reform the system. But Borenstein sees them as panderers as well. As he writes after a recent interchange:
“What struck me, however, was Whitman's immediate exclusion of law enforcement and firefighters from the change. (For the record, Poizner has a similar position.) She said they deserve the special treatment because their jobs are dangerous. Moreover, she said, she met with ‘a number of sheriff's organizations, the police officers association and several other’s" and ‘their view is if they cannot be guaranteed a defined benefit plan at the end ... it's going to be much more difficult to recruit.’
“It was disappointing. Here is a candidate who promotes herself as a thoughtful business executive who will carefully analyze issues based on careful study and make necessary cuts even if they are unpopular. Yet, by her own admission, she has no empirical evidence to support the claim that it would be harder to recruit. She bases her position on anecdotal information from the very people who benefit from the pension program.
“As for her argument that it's a dangerous job, tell that to fishers, logging workers, iron workers, farmers and ranchers, roofers, power line workers and truck drivers, who are all on the U.S. Bureau of Labor Statistics top-10 list of most dangerous jobs and don't have pensions like California's public safety workers.”
“At some point, someone is going to have to get honest about the fact that 80 percent of the state, county and city budget deficits are due to employee costs.
“Either we do something about it at the ballot box, or a judge will do something about in Bankruptcy Court.”
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