Daily News on Pensions and Taxes: 3 Opinions
Today’s opinion section in the Daily News today has three separate articles on taxes and pensions for government workers. Well, two-and-a-half, really.
First, the lead editorial argues that government worker costs are way too high, and ends with this conclusion:
The runaway costs of pensions and health care are a major reason the city and state are in such deep fiscal holes. They must be reined in because taxpayers cannot afford to pay for salaries and benefits that are so much richer than their own.
The editorial even has the guts to go after the sacred cows of cops and firefighters:
Nowhere are the expenses more startling than in the Police and Fire departments. Average pay in both has topped $90,000, including overtime, while pension costs have hit $52,000 for cops and $70,000 for firefighters.
Do the math, and here’s what you find: The average cop costs $164,045 a year, and the average firefighter tops out at an astronomical $186,464.
The editorial also makes an important point that the tax eaters still misrepresent:
It used to be that government paid less than the private sector but offered job security and solid benefits. Now, public wages have outpaced private ones - and public benefits have become gold-plated.
Of course, they note how the state constitution locks in benefits, but fall short of my previous call to amend the constitution:
Worse, many of the expenses are locked in. The state Constitution bars cutting existing pension benefits. They can be reduced only for future employees - and that must happen.
Second, opinion columnist Michael Goodwin argues that the feds should not subsidize mismanaged states with too-high taxes who misspend money. He also argues that it makes no sense for the feds to give money to individuals (through tax cuts or otherwise) only to have their states confiscate it and spend it on useless stuff like overgenerous pensions for people who can retire in their 40s or 50s.
Having strapped families paying more local taxes means they will have less money to spend in local stores and markets and could increase foreclosures. Small businesses, which employ about half the nation’s workers, could be forced to make more layoffs or cut capital spending to pay higher local taxes.
And it’s not as though local governments spend that tax money efficiently or wisely.
A business group study found that the average cost of a single New York City employee is now nearly $107,000 a year, counting both wages and benefits, and has been growing twice as fast as the private sector. City health and pension costs, some forced on it by the state, have risen 182% since 2000 and cost $38,000 per employee, the study found.
Instead of helping the states without regard to those exorbitant costs, Washington should act in ways that are consistent with the principles applied to industry bailouts. It attaches strings to money given to businesses to guard against waste, and should do the same with states and municipalities.
The most important condition should be that any government entity taking a federal bailout agree not to raise broad-based taxes and fees for one year. That way, more of the money Washington spends would help families and produce a net gain in economic activity.
Third, Errol Louis appears to be angling for a position on the New York Times editorial staff. He just wants taxes to be higher for the sake of having higher taxes, and, of course, he says nothing about government pensions, because he cannot say anything to justify the overgenerous payments to people who can retire so early:
Since state governments with shovel-ready projects will get top priority under Obama’s plan, he should crisscross the nation, spotlighting the public university campuses, highways and ports that would be improved under the recovery plan. Let the people see what their money will buy.
There’s more in his article, but it isn’t worth quoting. As he discusses taxes, but not pensions, his article only counts as the 0.5 in the 2.5 articles I mentioned earlier. Overall, a job well done by the Daily News today.
UPDATE: My original entry with background on NY pensions is here. An E. J. McMahon article with much more background and hard data is here.
“It used to be that government paid less than the private sector but offered job security and solid benefits. Now, public wages have outpaced private ones - and public benefits have become gold-plated.”
Low wages vs good benefits were certainly the case when I worked for a rural County in California in the late seventies. When we ultimately organized and went into collective bargaining our push was to increase those benefits. It never really occurred to us that we could reasonably demand private scale wages. Clearly sometime since then the public unions changed their tactics and got both. Not really unusual or unreasonable since the mindset of any negotiator is to win more for your side. That was certainly my attitude.
The lesson here is that if you don’t want politicians awarding compensation that is above market rates you will have to make it law to prevent them. You can’t trust elected officials to stand firm against public unions. The obvious reason is that they don’t have the same limits on income in the way a private company does since they can just confiscate more money from the pubic. But more importantly they have conflicted interests since the people they are negotiating against also determine their future job prospects. The unions are quite willing to trade off a few percent more taxes to their members for many times that in increased wages and benefits. The politicians are quite willing to trade off the publics money for the job security they get from union support.
Pretty slick setup for everyone but the tax payers. We taxpayers have only one way to stop this - the vote. Unfortunately the last election cycle elected a crew devoted to the idea of making everyone a public employee. This apparently looked like an easy way out but we have in effect elected a class of people who believe in some sort of economic perpetual motion machine where my taxes are supposed to pay my own wages. Like all machines of that sort – they will not work. Then what?
“The lesson here is that if you don’t want politicians awarding compensation that is above market rates you will have to make it law to prevent them. You can’t trust elected officials to stand firm against public unions. ”
Yes, though the other option is to simply outlaw public sector unions. Government employees already get to vote for their management, there’s no need for a union.