Egypt has been replaced on the front page by the angry mob that gathered in Madison, Wisconsin yesterday to protest the new Governor’s budget plan. The source of outrage? The radical notion that public-sector workers should contribute a portion of their own health insurance and pension expenses.
Once again we see that liberal policy is barely distinguishable from a child’s tantrum. It’s the equivalent of asking for a raise in your allowance right after your dad announces he’s been laid off. The government of Wisconsin is faced with a simple math problem shared by a frightening number of states: they don’t have the money to make good on the promises to public sector unions, forged in deals brokered by mostly Democrat-party politicians over decades. The union members traded their votes for these doomed plans. The politicians they voted for are nearing retirement and many are rushing for the exits early. It is not going to be much fun to be a politician in coming years. Instead of trading favors, paid for by tax payers, they will be forced to be the bearers of bad news.
Some, like New Jersey Governor Chris Christie have embraced the challenge. Peggy Noonan recounts in her WSJ column that in September he faced a crowd of 7,500 firefighters at a convention days after announcing a proposal to raise their retirement age, eliminate the cost-of-living adjustment, increase employee pension contributions and roll back a pay raise.
As Noonan reports: He crumpled up his prepared remarks and threw them on the floor. He told them, “Here’s the deal: I understand you’re angry, and I understand you’re frustrated, and I understand you feel deceived and betrayed.” And, he said, they were right: “For 20 years, governors have come into this room and lied to you, promised you benefits that they had no way of paying for, making promises they knew they couldn’t keep, and just hoping that they wouldn’t be the man or women left holding the bag. I understand why you feel angry and betrayed and deceived by those people. Here’s what I don’t understand. Why are you booing the first guy who came in here and told you the truth?”
There are some simple truths that these public-sector union employees are going to have to come to terms with:
1. You are not going to get far demanding money that doesn’t exist.
2. We can do the math. Salary + Bonus + HealthCare + Retirement = Total Compensation. Add it all up and your compensation packages are out of whack with the private sector-otherwise know as the real world.
3. Politicians have proved that they cannot be trusted with retirement funds at any level of government. Privatized, defined contribution plans and 401K’s are going to be the only viable option going forward. This is the future for Social Security as well. Unfunded liabilities are the #1 fiscal problem at every level of government and the only solution is to eliminate them.
A friend emailed this set of suggestions recently. You want to retire at 50? Fine. But you can’t start collecting that pension until you are 65-and you only get one. No more double-or triple-dipping. Your pension will be a fraction of your average lifetime pay-excluding overtime, unused vacation days and other pension-padding scams. Your benefits package, including health care, will be counted in your total compensation score and that score will be tied to the average of the private sector tax payers who fund it all. You can choose from a selection of health care plans but you must ante up the difference if you choose the gold-plated plan. Incentives will be put in place to assure that all are watching every penny.
These austerity measure are coming to Illinois soon-whether the Democrats running the show pull their heads out of the sand or not.