B.S. Mantra: "the New Deal is demographically obsolete" the case of public pensions

[amborin]

A Class War Over Public Pensions

There’s a class war coming to the world of government pensions.
The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.
The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.
At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.

snip

Earlier this year, in an act of rare political courage, a bipartisan coalition of state legislators passed a pension overhaul bill. Among other things, the bill reduced the raise that people who are already retired get in their pension checks each year.
This sort of thing just isn’t done. States have asked current workers to contribute more, tweaked the formula for future hires or banned them from the pension plan altogether. But this was apparently the first time that state legislators had forced current retirees to share the pain.
Sharing the burden seems to be the obvious solution so we don’t continue to kick the problem into the future.
“We have to take this on, if there is any way of bringing fiscal sanity to our children,” said former Gov. Richard Lamm of Colorado, a Democrat.
“The New Deal is demographically obsolete. You can’t fund the dream of the 1960s on the economy of 2010.”
But in Colorado, some retirees and those eligible to retire still want to live that dream. So they sued the state to keep all of the annual cost-of-living increases they thought they would be getting in perpetuity.

snip

Meanwhile, Gary R. Justus, a former teacher who is one of the lead plaintiffs in the case against the state, asks taxpayers in Colorado and elsewhere to consider an ethical question: Why is the state so quick to break its promises?
After all, he and others like him served their neighbors dutifully for decades. And along the way, state employees made big decisions (and built lifelong financial plans) based on retiring with a full pension that was promised to them in a contract that they say has the force of the state and federal constitutions standing behind it. To them it is deferred compensation, and taking it away is akin to not paying a contractor for paving state highways.
And actuarial necessity or not, Mr. Justus said he didn’t believe he should be responsible for past pension underfunding and the foolish risks that pension managers made with his money long after he retired in 2003.

The changes the Legislature made don’t seem like much: there’s currently a 2 percent cap in retirees’ cost-of-living adjustment for their pension checks instead of the 3.5 percent raise that many of them received before.
But Stephen Pincus, a lawyer for the retirees who have filed suit, estimates that the change will cost pensioners with 30 years of service an average of $165,000 each over the next 20 years.
Mr. Justus, 62, who taught math for 29 years in the Denver public schools, says he thinks it could cost him half a million dollars if he lives another 30 years. He also notes that just about all state workers in Colorado do not (and cannot) pay into Social Security, so the pension is all retirees have to live on unless they have other savings.

snip

http://www.nytimes.com/2010/08/07/your-money/07money.html?_r=1&scp=1&sq=class%20war&st=cse



more here:


http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8608048

[Lance_Boyle]

1. A 2% increase instead of 3.5%? When most of those of us STILL WORKING are salary frozen?

I'd like to sympathize, Mr. Pincus. But it does come off slightly obscene to demand a higher raise for not working when those who are working can't get any increase at all.

[amborin]

2. yours is the desired reaction!

just what the ruling elite hope to elicit; pitting worker against worker!



why align with their interests?

why take from retired workers who, in good faith, forfeited wages for a promised pension?


why not take your wage increase from the rightful source? the greedy corporations who are raking in huge profits, while denying you the wage increase?

[Bozita]

5. +1

[Starry Messenger]

7. +2

[sinkingfeeling]

3. IBM Corporation stopped giving retirees COLAs back in the early 1990's. I think this will

happen to government pensions across the nation. Since the feds said there was no inflation to justify a SS increase this year, then state and federal government retirees shouldn't see an increase either.

[Hannah Bell]

4. what liars these cat food people are. their compensation is *never* demographically obsolete, you

notice, you notice -- even though they're the only class which has consistently seen growth in compensation since the 70s.

[dsc]

6. I did some looking

according to the colorado pension webiste, the law actually states that retirees get the LOWER of 2% or the CPI which means they got nothing this year. Secondly employees pay 8% of their salaries to this plan (they don't pay into SS). Assuming a salary of 40k per year for 30 years, the employee has put in 96000 in cash plus the interest rates over that time. The employer had to put in 10% over the same time frame. That isn't outrageous.