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Why Labor Is Nuts to Fight Brown on Pensions

Oct31

Let’s stipulate that public employee pension costs are not the fundamental cause of California’s financial problems. We can even accept the argument from the union-backed Californians for Retirement Security that “the average public pension in California is $26,000-a-year,” that “three-quarters of CalPERS retirees collect $36,000 or less” and that “public pensions equal just 3% percent of California’s budget.”

But public employee unions and their Democratic sock puppets in the Legislature are kidding themselves if they think they don’t have a political problem anyway. Whatever portion of California’s fiscal failings is a function of public employee pensions – and no one is arguing that it’s zero percent – labor leaders and their cronies need to convince the vast voting public that they are part of the solution, not the source of the problem.

Which is why, as a political matter – and clearly, Calbuzz is far, far better equipped to discuss the politics than the policy — the unions and their legislative allies are nuts to take a hard line against Gov. Jerry Brown’s opening gambit on pension reform.

You want policy analysis? Read our pal Dan Borenstein in the Contra Costa Times who says, “Brown’s new pension reform plan signals he’s serious about restoring fiscal sanity to public employee retirement systems, but it lacks critical details and doesn’t stop the transfer of hundreds of billions of dollars of debt to our children.”

You want details, read this nifty outline by Jon Ortiz of the SacBeeMinus. Or read Anthony York and Michael Mishak in the ByGodLATimes for a compendium of reactions.

But if you want to see an ostrich response, check out this from Dave Low, chairman of Californians for Retirement Security:

“We are disappointed that the governor is proposing pension changes that will undermine retirement security for public employees. It is unfortunate that he has proposed to increase the retirement age, shift greater costs to workers and impose a hybrid plan on new employees, when public employees already have agreed to hundreds of millions of dollars in pension concessions at the state and local level.”

Impactful profundity: No it’s not “unfortunate” that Brown has proposed these changes. In fact, Big Labor ought to be damn glad the governor is seeking to maintain and not gut public employee pensions. What they don’t seem to get is what Steve Harmon and John Woolfolk of the San Jose MurkyNews picked up on when Brown unveiled his proposals.

“Brown suggested that, as they react to his pension proposal, Democrats in the Legislature should think about their broader political goals, such as winning voter approval of tax increases in November 2012,” they wrote.

“It’ll be up to the Legislature to rise above the pressures and enact real pension reform, particularly if they’re desirous of having a favorable reaction on the part of the electorate,” Brown said. “November could have some very profoundly impactful measures on the ballot. I’d say the Legislature is well-advised to take this very seriously and get it all enacted and get it on the ballot in November when there will be other things on it that they’re quite interested in.”

And that’s the central point in all of this. Calbuzz would argue that most, if not all, of California’s financial woes, not to say its social injustices, would be eliminated by addressing the inequality of Proposition 13’s application to commercial and industrial property; the lack of an oil-severance tax; a shift of sales taxes toward services; a return to pre-Schwarzenegger-level vehicle license fees, an increased income tax on millionaires and an end to the single sales factor break.

But if any of these measures are to have a chance of survival, the public has to be convinced that public employee pensions are not cause of what ails us. And to win that argument, public employee unions need to show they’re willing to participate in solving California’s long-term financial health – whether or not they’re the cause of the problem.

Bottom line: Perhaps, as Borenstein argues, Brown has not gone far enough. But he has laid out a set of proposals that, taken together, begin to address the public employee pension issue without attacking state workers or wiping out the concept of defined benefits and the rights of public employees.

That should be a starting point for constructive engagement – not a battle cry to the trenches.


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There are 9 comments for this post

  1. avatar OC Progressive says:

    Brown is trying to take away the one single issue where Republicans are connecting with voters – the perception that public employee pensions, and particularly management and public safety pensions, are too generous.

    It has long been my contention that the only way to protect the public employee pension system is to reform it incrementally, beginning with the concept that employees and employers share equally , 50/50 in the cost of the pensions.

  2. avatar smoker1 says:

    The pension system is clearly broken and even if we fix it today, there are thousands of mid-level government workers who have gamed the system and will walk away with enormous pensions. I think Brown sees this coming and has actually gone too far. A 67 year old CalTrans ditch digger? Really?

    Regarding taxes, most states have had budget problems in the last few years and if they adopted our tax system none of those states would have any problems at all (except for the political problems). We have the highest sales tax, the highest income tax and are about #10 in corporate tax. We have a very low property tax rate, but very high property values. Yes, we need to fix the corporate property tax loophole, but it is not required that we be #1 in all areas of taxation.

    What is wrong with California? Why are the taxes so high and the results so low? If I believed we were getting good value for our tax dollars I would gladly vote for higher taxes. But I don’t.

  3. avatar Chris Reed says:

    At the local level, as opposed to the state level, pensions very clearly are an enormous problem. San Jose Mayor Chuck Reed says his city is on its way to a Potemkin Village sort of existence, with few services and a volunteer fire program. The Calbuzzers, whose very well-written columns are always at least tinged with a we’re-much-smarter-than-the-rest-of-you vibe, undercut their own back-patting by implying pensions are largely a political problem. At the local level, they are a math problem.

  4. avatar thetruthsquad says:

    So, basically, don’t let the facts about pensions get in the way of Brown’s political expediency? State spending on pensions is less now then it was when Jerry was governor the first time. And let’s take a look at just what Brown is proposing: rewarding Wall Street with an influx of billions of dollars of money in 401k plans that are (1) more expensive for the state to administer and (2) will result in billions less available for Californians for their retirement. The latter, of course, means less funds to support California’s economy.

    Frankly, labor would be crazy NOT to fight the Governor on his radical transformation of California’s pension system.

  5. avatar SiliconValleyBob says:

    Brown has learned nothing from Obama’s experience in Washington and his own troubles trying to get a tax extension on the ballot. This pension proposal isn’t part of a deal or a package. It is Brown attempting to be “moderate” – assuming the right wing will be moderate in response. The results are totally predictable. Pensions will be irrevocably damaged. There will be NO tax measure on the ballot. The GOP will focus their efforts on the campaign to deny union members the right to participate in politics. Brown will be left asking – what fell on me? The answer – the same thing as last time. CalBuzz should know better.

  6. avatar tegrat says:

    Personal income taxes are higher in CA because we are subsidizing unnecessary lower taxes for businesses that clearly don’t need them, the most egregious example being the once cited by Calbuzz regarding the oil severence tax, but the most important one being the property tax loophole for commercial properties. Ceding ground on irrelevant issues like pension reform, especially reform that is broad-based and harmful to working class individuals, will get us nowhere. The Republicans in the state house will continue their intransigience regardless of public perception, that is quite obvious.

  7. avatar bogey says:

    what is the “singles sales factor break(?)”

  8. avatar Ernie Konnyu says:

    Well! Brown is right again, this time on pensions! CalBuzz is right again, this time on the politics of pensions. So how can such Lefties be so Right?

    Since it can’t be me….Brown and you on the Left are simply turning Right! Congratulations!

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