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Amy Traub

More Salvos in the False “Class War” on Public Pensions

Repeat something often enough and it becomes, if not true, at least a solid bit of conventional wisdom. Consider Ron Lieber’s column in Saturday’s New York Times, which neatly recycles an editorial the Wall Street Journal ran back in March. The issue: the pensions that guarantee public employees a middle-class standard of living in retirement have become more difficult for cities and states to afford. This, according to Lieber and the chorus of conservatives singing the same tune, means a “class war” pitting sanitation workers who deferred compensation so that they could retire with dignity against “have-not” taxpayers who would like some retirement security of their own. Lieber even knows the outcome: public workers should to get ready for many more states and municipalities to engage in “rare acts of courage” and break their promises to pensioners.

Jonathan Cohn at the New Republic asks the obvious question “to what extent is the problem that retirement benefits for everybody else have become too stingy?”

It’s a point I’ve been making as well:

One out of three working Americans has no retirement savings to rely on beyond Social Security, many others have saved very little, especially now that the value of their homes has been destroyed. When it’s public pensions that are falling short, it’s very visible. When it’s the private savings of millions of individual households, it’s easy to overlook. But when we start to hear that it has become “too expensive” to provide teachers and police officers with a decent retirement, we know no one else has a chance at retirement security either.

Former Colorado Governor Richard Lamm, quoted in Lieber’s article, takes the point to its logical conclusion, arguing that “the New Deal is demographically obsolete.” Translation: we’d all better get used to the new normal of low pay, few benefits, and no retirement, sooner rather than later. After all, demographics are inexorable. Resistance is futile.

As Paul Krugman points out in today’s Times, the same air of inevitability hangs over the provision of critical state and city services. Cities and states are broke, the argument goes, there’s nothing we can do. We can neither keep streetlights on nor let teachers retire. Except that in both cases the argument is false:

We’re told that we have no choice, that basic government functions — essential services that have been provided for generations — are no longer affordable. And it’s true that state and local governments, hit hard by the recession, are cash-strapped. But they wouldn’t be quite as cash-strapped if their politicians were willing to consider at least some tax increases.

Krugman’s point about how we got here is equally true of the debate around public employees and their pensions:

It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right.

Unfortunately, Lieber’s column effectively adds to that rhetoric.

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Posted at 11:28 AM, Aug 09, 2010 in pensions
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