America is sacrificing its future to pay for its past. Promises made to public pension plans have become impossible to pay for by government entities across America and the problem continues to escalate.
It’s not just a Wisconsin issue, as some detractors want you to think. Chapter 9 bankruptcies in places like San Bernardino, Calif.; Detroit; and 36 more in process across America are becoming the norm rather than the exception.
Taxpayers can’t keep paying for city upkeep and also meet pension obligations promised by fiscal errant negotiators. According to a CNN World News article, “California’s pension-related costs rose 20-fold in the decade since 1999. This frightening trend is true almost everywhere in America, and it’s simply not sustainable.”
City workers and retirees in San Bernardino balked at making any concessions to help alleviate a $45 million deficit on a $130 million annual budget. The unions made what they termed a “major concession” allowing new public safety workers to retire with 90 percent of their salary at age 55 rather than the negotiated age 50.
Who in their right mind approved these contracts to public workers, which, by any private-sector standard, are outrageous? Who retires at age 50 with full benefits and pay?
These types of benefits aren’t isolated to California and are breaking the backs of government and taxpayers faced with reduced city and state services to meet these obligations.
Democrats and public-union membership decried Gov. Scott Walker’s Act 10, but his bold and controversial move kept Wisconsin afloat while many other states and cities are drowning in debt obligations. Those vivid images of union mobs at the state capitol might be fuel for nightmarish dreams for Chicago Mayor Rahm Emanuel and Detroit Mayor Mike Duggan. Both nearly bankrupt cities are faced with huge deficits backloaded by excessive union employee pension benefits and salaries.
When a company can’t meet its obligations, it files for Chapter 11 protection. If all else fails, the company liquidates assets to pay off debts. When municipalities file for Chapter 9 protection, there’s nothing to sell. Unions either renegotiate or the courts will do it for them. Either way, the promised pensions and benefits will take a hit.
The lesson should be clear, yet officials across America continue to make promises they can’t meet. In June 2010, with Chicago failing, the Democratic-controlled Illinois Legislature voted for an automatic cost-of-living pension increase. This further burdened Chicago’s pension fund, which is only 36 percent funded.
Things must be pretty bad that Emanuel, a Democrat, pressed the Legislature for serious pension reform proposals. He reasoned that cost-of-living adjustments written into current law aren’t sustainable and major cuts in benefits must be made to protect taxpayers and beneficiaries.
Critics in Wisconsin made this process of trying to rewrite ill-conceived benefits to public workers a political issue. In reality, when looking at this situation unfold across America, it’s now obviously a fiscal issue.
The Democrats and unions attacked the messenger and not the problem, which they in part created and refused to fix. The minor union concessions offered barely scratched the surface. Too much promised without forethought not only created insurmountable debt, but also a political divide. The union’s solution is clear and unwavering — pay what you promised, meaning taxpayers today will pay for the past, which compounds into the future.
Detroit union workers are looking at taking a 34 percent hit in benefits if the courts concur. It’s kind of ironic, if you think about it.
Here in Wisconsin, unions and Democrats are forcing a decision by the courts to strike down Act 10. If Walker would have done nothing, Wisconsin would have been forced to make drastic public-worker cuts and face inevitable municipal bankruptcies. Bankruptcies would have been decided in courts, leading to the same place where we are today — fewer union benefits.
This American crisis is in its infancy and we as taxpayers will continue to take hits in services. We’ll also be asked in future cleverly worded referendums and added fees to pay more to cover for the thoughtless generosity of the past, which will continue to haunt our future.
We didn’t dig this hole, but it’s ours to fill.
— Dave Kendall is an Appleton resident. He can be reached atpcletters@postcrescent.com