“When you cut someone’s wages, at least that person can say, ‘I’m not working for you.’ By cutting retiree pensions, this is literally reaching into their bank account and stealing from them after the fact.” –Ross Eisenbrey of the Economic Policy Institute
Across the country, the pension and health care benefits of retired public employees are under attack. On Dec. 3, a Michigan judge ruled that federal bankruptcy law allows the city of Detroit to gut the pensions ($19,000 a year, on average) of their employees. On the same day, the Illinois legislature voted for substantial cuts in state employee pensions. Interestingly, these rip-offs involved both parties. Michigan has a Republican governor and a Republican-controlled legislature. Illinois has a Democratic governor and a Democratic-controlled legislature.
This is despite the fact that the pensions of the Detroit and Illinois workers were protected by their state constitutions. Georgetown law professor Adam Levitin said this is a disturbing precedent and that states and cities are watching Detroit and Illinois closely. Steve Kreisberg, director of research and collective bargaining for the public-employee union AFSCME, expressed outrage. He said, “This is a bipartisan collection of politicians who essentially don’t respect democracy. They authorized a violation of their own state constitutions.”
Michigan and Illinois are two of seven states with clauses in their state constitutions that prohibit cuts to public pensions. Colorado is another such state. In 2010, the Colorado legislature passed a law reducing cost-of-living increases for PERA (Public Employees’ Retirement Association) retirees (in more than 400 government agencies and public entities). A lawsuit was filed charging that the law is an unconstitutional breach of contract. It is now before the Colorado Supreme Court.
Detroit and Illinois don’t participate in Social Security. This is the situation for many public workers around the country, including Colorado. So their pensions are usually their only retirement income (much of it coming from paycheck deductions).
Public employees have become scapegoats for a floundering economy. The right wing claims that public workers are paid much more than those in the private sector. Actually, studies show, taking education and experience into account, they earn less.
The London Guardian recently published leaked documents from a rightwing coalition called the State Policy Network (SPN) which revealed that they are planning campaigns to cut or eliminate public pensions in several states. Colorado is one such state. The group has an annual war chest of $83 million drawn from major corporations.
Lisa Graves, executive director of the Center for Media and Democracy (CMD), notes that: “The ‘experts’ of State Policy Network groups get quoted on TV, in the papers, or in the legislature as if they were nonpartisan, objective scholars on issues of public policy. But in reality, SPN is a front for corporate interests with an extreme national policy agenda tied to some of the most retrograde special interests in the country, including the billionaire Koch brothers, the Waltons, the Bradley Foundation, the Roe Foundation and the Coors family.”
The think tank Demos has released a study of the Detroit bankruptcy by Walter Turbeville, a former investment banker with Goldman Sachs in the municipal finance department. He says Detroit officials’ current “focus on cutting retiree benefits and reducing the city’s long-term liabilities to address the crisis [is] inappropriate and, in important ways, not rooted in fact.”
He concludes, “Detroit’s bankruptcy was primarily caused by a severe decline in revenue and exacerbated by complicated Wall Street deals that put its ability to pay its expenses at greater risk.”
Job-exporting trade policies and deindustrialization have been killing Detroit for decades. The state of Illinois is different. It has the fifth-largest gross domestic product in the nation and a low tax burden. Nevertheless, legislators have been chronically and deliberately underfunding state worker pensions for decades. Many states and cities have been doing this. They have also been stealing from pension funds to pay for government services rather than raising taxes.
While cutting pensions, Detroit decided to spend $285 million to build a new professional hockey stadium. On the same day the Illinois state Senate voted to eviscerate pensions, they also gave a multimillion-dollar tax break to the agribusiness mega-corp Archer Daniels Midland.
The money is there. We just need a government serving the people, not the rich.
— Anderson is a PERA retiree and was an activist with the American Federation of State, County and Municipal Employees and Colorado WINS (Workers for Innovative and New Solutions).
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