By David Sirota
USA Today, 11/18/13
Credit where credit is due: Conservative activists, business groups and politicians such as New Jersey Gov. Chris Christie have successfully sold the idea that public pensions are unsustainable.
In their mythology, greedy government workers are bankrupting states and pension-slashing politicians are saving the day. But there’s a big problem with this: It is inaccurate.
States do confront a $757 billion pension funding gap. But this gap was created mostly by losses associated with the 2008 Wall Street collapse, not by unsustainable benefits.
Additionally, the shortfall is over 30 years, meaning it is comparatively tiny — just 3.8% of state and local spending, according to a study by Boston College. This has led McClatchy Newspapers to correctly conclude: “There’s simply no evidence that state pensions are the current burden to public finances that their critics claim.”
The budget problems of state and local governments have more to do with wasteful corporate subsidies than pensions. While states face an annual $25 billion pension shortfall over 30 years, they give away $120 billion a year in unjustifiable handouts. That includes the $80 billion that The New York Times reports that are given away in direct subsidies, and an additional $40 billion in corporate tax loopholes.
These numbers reveal that demagogues like Christie aim to exclusively demonize public pensions in order to distract attention from the corporate subsidies that so often benefit their campaign benefactors.
In Christie’s case, he has berated public workers and cut their pensions — all while handing out more than $1.5 billion in corporate subsidies. Meanwhile, he and other pension-cutters fail to specify how America can maintain any retirement security for the middle class.
To combat this, elected officials who care about the truth must spotlight the subsidy data showing what is really bankrupting states. They must also remind voters that pension cuts harm real people.
Public-sector workers are not leeches. They are firefighters, police officers and teachers who negotiated agreements to defer some compensation until retirement.
Reneging on retirement promises to them in order to help politicians protect wealthy corporations is immoral. Getting this message out is important — and can be a winning political strategy.
David Sirota is a newspaper columnist and author of the study “The plot against pensions.”