Right-wing critics of public employee pensions will use any angle to convince folks that these plans are bankrupting states, cities and towns. In the Wall Street Journal this week, Steve Malanga blames pension plans for today's economic difficulties and in the same piece urges governments to sell off their assets.
Malanga fails to mention that most public pension plans are in good financial condition and does not note that states built up rainy-day funds and cut taxes during this time. It's a fact that most of us are required to contribute to our plans regularly, and our contributions, along with our employer's, are invested to earn additional income. While the economic downturn has caused some dips in funds, estimates of the ratio of pension assets-to-liabilities for state pension plans indicate that they are in good shape. Most plans have diversified their investments so the impact of today's market losses is softened. Over the last twenty years, most pension funds have had a good rate of return, even during downturns, because they keep fees low and use professionals to routinely beat market benchmarks.
Pension funds, with assets from employers and employees, are an essential part of this nation's capital market, particularly at a time of economic crisis such as the one we are currently facing. Public employees have sacrificed pay increases and made contributions in order to ensure that their pension plans are adequately funded. And governments have also been prudent about building up their reserves - as of July 2007, state rainy day funds stood at 10% of total budgets, which would have been sufficient to deal with a moderate cyclical recession. Of course, what we're seeing is far worse.
The truth is that in these times of real budget challenges, pensions make good economic sense. Pensions put money into the economy, offer real retirement security to workers, and allow government employers to recruit and retain a quality workforce to make the vital public services that America relies on happen. The investments made by pension funds have helped make America work and can help turn our economy around in the days and months ahead.
Most Americans recognize that today's government challenges are the result of an economic downturn rivaling that of the Great Depression and a Bush Administration that willfully ignored the economic problems. Malanga himself acknowledges several times in the piece that "rapidly declining tax collections" are the cause of the states' budget problems. Yet this fact is ignored in the diagnosis and prescription of the fiscal crisis we are in.
Malanga also argues for privatization of roads and other public goods. The solution is not privatization, which all too often means that the public pays more and gets lower quality services while public workers are laid off and corruption scandals make the news. Americans need quality public services and efficient governments that help achieve real progress for communities. While some view selling public assets like toll roads to private firms as a panacea for infrastructure investment, the public is fiercely - and rightly - opposed to selling our roads for the pursuit of private profit.
Public pensions are providing benefits for the economy, retirement security and taxpayers. As states find their budgets under pressure, it is important that states put in place procedures and practices that will mitigate against rosy projections regarding investment income and provide a means to pay for the benefits their employees have earned.
While improvements can always be made, pensions are not the problem. The economy is the problem, and the President and Congress need to take real steps to revitalize the economy and help the American people.
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The fact is that those profession
To keep employees at a cheap cost, the state government dangles the promise of a pension and healthcare
Take away the pensions and you will see a mass exodus of profession
In order to keep these, the state would have to dramatical
These pensions are a benifit. On average people who work in the public sector make less money. If you got rid of the pensions, you would also get rid of the people that you want working for our cities and towns.
I am a state employee. People don't realize just how low our pay is--for a comperable job in the private sector, I'd make 3 figs easily. But I chose to work in public service, specifical
The people who think we're a drain on the system should try living on our state paychecks.
From the 13 weeks paid vacations for steelworke
And now, we're to use taxpayer money to fund retirement accounts.
They've gotten exactly what they asked for.
But not to worry, the unions will get their money from congress and the Obama administra
These ideology challenged people think there should only be two classes a rich and a poor.
Are UAW members flying to Washington on private jets to beg for money from Congress?
How typical to blame the workers instead of the poor strategy that auto execs making $25million
Mr Malanga seems guilty of fauxconimi
Is this what we have to look forward from Rupert Murdoch's Aussificat
Furthermor
Article I of the US Constituti
"Each House may determine the rules of its proceeding
It's all about choices...
No problem with state pensions, I would rather have them less liable to bribery...
Another benefit of pensions is that it keeps retirees spending, or in a position to do so throughout their lives. This benefits the cash flow required for a strong economy. There is also the issue (perhaps the most important issue) of human dignity that says people who have worked hard all their lives shouldn't have to struggle in their later years when they are least able to do so.
Pensions are regenerati