The Lileks Zone

Pension problems solved

The surest path to public pension reform? Publicize this:

Professors Jonathan Rauh of the Kellogg School of Business and Robert Nova-Max of Rochester University have a new paper out that looks at how much revenue states will need to be able to pay in full the pensions of local and state public employees over the next 30 years. The answer: a lot of money.

“Without policy changes, contributions to these systems would have to immediately increase by a factor of 2.5, reaching14.2% of the total own-revenue generated by state and local governments (taxes, fees and charges). This represents a tax increase of $1,398 per U.S. household per year, above and beyond revenue generated by expected economic growth. In thirteen states the necessary increases are more than $1,500 per household per year, and in five states they are more than $2,000 per household per year. Shifting all new employees onto defined contribution plans and Social Security still leaves required increases at an average of $1,223 per household. Even with a hard freeze of all benefits at today’s levels, contributions still have to rise by more than $800 per U.S. household to achieve full funding in 30 years.”

Publicize it. Then start charging people. Send everyone a bill, due in 30 days. Failure to pay will result in penalties and interest; long-term failure will result in revocation of any state licenses, forfeiture of property, bank liens. Tell them that failure to pay isn’t just illegal, it is an attack on the middle class.

Right? Right. It’s  isan indisputable truth to the left: public employees are a sacrosanct sect of the Working People whose benefits cannot possibly be adjusted in any direction but “up” or any speed but “fast”.Touch their bennies and you’ll get Michael Moore in his trademark Ordinary Fella Costume to bellow hot twaddle about paying for everything by taxing  that magic pile of self-renewing money the plutocrats keep in the garage, back by the gold Bentley. But there aren’t enough of them to pay for everything, so if we’re going to let public employees retire at 57 before they drop dead of sheer exhaustion, then we need to fund those pensions.

So. Let a Republican in each state legislature switch sides, and make his first act as a Democrat the proposal of the Mandatory Public Worker Security Initiative. Shame the rest of the Democrats into signing on. Point out those who don’t want to send out the bills, and ask why they hate teachers. If it seems like an undue burden on the poor, point out how they probably use more public resources, and thus should be extra happy to pay. If anyone makes a peep about the Constitutionality, note that the money spent on the pensions could be used on commerce, so it’s covered by the commerce clause. Call it a stimulus package: if money is taken away from person X and given to person B, well, person B will use the money for economic activity! Person X might have set it on fire or buried it, you know.

Come up with an ad campaign that will remind us of our priorities: “Why are you doing going to Disneyland this year when high-school junior administrators might have higher co-pays in 2017?” I mean, really let people know what’s at stake. For extra credit, require people to smile while they sign the check. Don’t want any grumblers. We’re all in this together.

You want action on pension reform? You’ll get it.

 

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