July 21, 2011
Not Careless Planning, but Political Calculation
The lengthy comment-section discussion appended to my pension post, from yesterday, is worth following, but I wanted to tease out one suggested made by Providence firefighter Tom Kenney:
The reason these systems are in such financial disarray? The state and the municipalities have continually deferred their expected (and required) contributions so much that the systems are going broke. In other words, careless planning and budgeting by the politicians who control the purse-strings are the real reasons we’re now facing such a shortfall.
Variations of this have been the preferred explanations from the general treasurer on down. Gina Raimondo blames abstract politics; Kenney blames vague politicians, many of whom have now moved on to other things and are no longer within reach of political consequences for their decisions (even if the public were perspicacious enough to impose them, which it is not).
And that was pretty much the point: Promising public employees golden lives through their golden years was a way of reaping political rewards without having to pay for them. The planning wasn't careless; it was a result of the incentives that unions created with their negotiating techniques and political heft.
Look, the money that ought to have gone to pensions in the past didn't just evaporate. Either it went to other government expenditures (whether to buy more votes or actually fulfill obligations) or it never really existed in the first place. If Kenney's politicians had fully funded their pension promises, they wouldn't have been able to fund other promises, and the reforms that are now on the table, or something like them, would have been necessary decades ago.
Personally, if I were relying on a pension for my retirement (which, in reality, I'm not expecting ever to experience anyway), I'd be paying close attention to the subject, and anybody who's watched private-sector pensions disappear, with the remnants slipping toward government subsidization, should have seen this coming. In part the failure to do so was born, in part, of an expectation that government can always confiscate more revenue through taxation. In larger part, it probably derived from the assumption that more-informed people would make everything work out, somehow.
Well, that should have been the politicians, and it should have been the union leaders — the very people with incentive not to face such issues head on, honestly, and in a transparent manner.
Justin,
First of all let me put some names to what you call my vague politicians - Cianci, Paolino, and to a lesser degree Cicilline.
As for "...and it should have been union leaders" - Local799 (Prov FF's union) went to court attempting to force the Cianci administration to make their annual required payments to the system. A judge ruled that "(paraphrasing) As long as the system is meeting its monthly payment obligations the city is not required to make the payments to the system on a regular basis."
This judge also told the city during his decision, "(again paraphrasing)But, don't come back to this court and state that you're broke and can't make your monthly payments".
Also, under Cianci the city "borrowed(?)" money from the system which has yet to be paid back. Obviously this borrowed money along with the deferred payments are the majority of the "unfunded liability". This, in effect, means that through their mayors the taxpayers of Providence averted tax increases on the backs of Prov FF's and Police. Now everyone expects us to give up part of our pensions because they believe that we're ripping off the taxpayers.
Posted by: Tom Kenney at July 21, 2011 10:47 AMJustin, you are a pretty good wordsmith, but "golden lives through golden years" is a bit much considering the pensions in question, with a few glaring exceptions are in the 20-40,000 range. And the discussion was pretty good until the three stooges, Mike, Tommy and Dan got involved.
Posted by: michael at July 21, 2011 11:45 AM"with a few glaring exceptions are in the 20-40,000 range."
That's NOT absurd, nor is it 'golden', but the terms on which it's given are QUITE generous.
I'm putting 16% in, for forty years, invested aggressively. I'll be able to draw-down about 50% of my earnings -once I hit 65-. That's not because I'm getting a bad deal or anything, it's just the actual math; it's reality.
Getting anything after only contributing for 20 years totally messes up the math, unless there's ample time for cash to sit and gain interest.
Posted by: mangeek at July 21, 2011 11:58 AMI'm no pension expert, but will you not also have a huge chunk of cash to pass on, or spend before you hit the state sponsored nursing home?
Posted by: michael at July 21, 2011 12:21 PM"Look, the money that ought to have gone to pensions in the past didn't just evaporate. Either it went to other government expenditures (whether to buy more votes or actually fulfill obligations) or it never really existed in the first place."
Like raises and extra staffing?
Posted by: Patrick at July 21, 2011 12:57 PM"will you not also have a huge chunk of cash to pass on, or spend before you hit the state sponsored nursing home?"
I doubt it. It looks like I'll have around $1.5M or so saved up by age 60, which gives me a $60K annual draw-down, which seems nice until you realize that if inflation tracks historical averages, It'll be like having $35K a year today... Which -should be- enough to get by with as long as I don't re-mortgage the house after I'm 30 years old.
I'm NOT planning on 'state-sponsored nursing home' or on 'Social Security' by the time I'm up. I know it's going to be there in some form, but I can't plan my life on a moving target. Plus, I'm just going to want to be left alone, probably in Maine somewhere.
Posted by: mangeek at July 21, 2011 3:43 PM"Which -should be- enough to get by with as long as I don't re-mortgage the house after I'm 30 years old.
...
I'm just going to want to be left alone, probably in Maine somewhere."
So chances are that by then, your mortgage will be so low, you can buy your new Maine house with the profit from your RI house.
Who knows in 30 years though.
Posted by: Patrick at July 21, 2011 4:16 PM"Personally, if I were relying on a pension for my retirement (which, in reality, I'm not expecting ever to experience anyway), I'd be paying close attention to the subject"
In my short tenure in the public sector I can tell you in that community, the police union was in a ten year fight to get access to funding levels of their private pension. The town's argument was the cops were only beneficiaries of a contract between the town and the plan and weren't entitled to the reports. They finally got access through contract negotiations. You won't be surprised to know that they closed the plan. They started by moving all new hires to the state system and then eventually the small number of leftovers from the old plan. It was a combination of disabilities, sweetheart deals, and overloading the top years that crushed the plan.
Posted by: Max Diesel at July 21, 2011 5:05 PMEvery insult Michael hurls at the libertarians and conservatives of this blog is just another affirmation that our arguments are on the mark. A braver individual would ask why these economic arguments against public unions are bothering him so deeply and personally. How hypocritical his earlier post decrying the lack of civility on this blog now appears in comparison.
Posted by: Dan at July 21, 2011 5:53 PMActually Dan, I reserve my insults for you, Mike Capelli and Tommy Cranston.
Posted by: michael at July 21, 2011 6:08 PMHey Morse you better retire so you can grab a couple of years checks before a newly appointed Providence bankruptcy trustee calls your piggish union in for a meeting....
"A Hard Rain's Gonna Fall"
Bob Dylan
All of whom happen to be libertarian/conservative... and you take your constant stream of potshots at Justin et. al. I take everyone to task for what I perceive as flawed logic, regardless of affiliation or pet positions. You've heard me disagree with Justin, Andrew, Tommy, Max, and others. It's called being principled. When have you ever had a harsh word for Tom Kenney or OldTimeLefty or various other progressive/union agitators when they are hurling around childish insults or stretching logic to the breaking point? Never, because they support your self-serving union and that's all you truly care about.
Even though you may not *agree* with my arguments against public unions, they are based in sound economic theory and I have explained these rationales many times. Never once have you made a legitimate attempt to address these arguments; all you have are insults and dismissals. Wring me and others off as "stooges" just reflects poorly upon you more than anything, especially in light of your hypocritical, holier-than-thou posts about incivility and dragging down the level of discussion. Invest in a mirror.
Posted by: Dan at July 21, 2011 10:04 PMIn case anybody is reading, and wonders why I always let Dan get the last word in, it's because these comment threads would go to infinity if i didn't.
Posted by: michael at July 22, 2011 9:11 AMAs usual, the union dopes won't face facts.
Just go pull all of the campaign finance reports and see who the unions supported.
My, oh my, it's the scumbag politicians that didn't fund the pensions.
So why did the unions support them? Because they knew damn well that if the pensions were funded properly each year, there would be no money left for the wage increases also. So, playing mickey-the-dunce, thinking we would never catch on, they gave a wink and a nod to allow these slimy politicians to do that, thinking in the end, they would get both.
Well guess what you union pigs - the gig is up and you are are going to pay the price.
He who laughs last, laughs loudest. Hah, hah, hah!
. So, playing mickey-the-dunce, thinking we would never catch on, they gave a wink and a nod to allow these slimy politicians to do that, thinking in the end, they would get both.
Well guess what you union pigs - the gig is up and you are are going to pay the price.
He who laughs last, laughs loudest. Hah, hah, hah!
VERY aptly put.
Posted by: Tommy Cranston at July 22, 2011 9:44 AMMichael - If you actually offered up a substantive argument once in a while rather than your usual insults and substanceless condescending remarks (see e.g., this thread), these threads would take a totally different course and 90% of the back and forth would be avoided. How you see yourself here and how you are in reality could not be more different. You are the one dragging every one of these discussions down into the muck through personal attacks and a total unwillingness to discuss the real issues. Your perennial excuse is that we're all too stupid, ignorant, evil, etc. to have those types of discussions - why don't you try us one time and you might be surprised what you see in return. I can't even count how many times I've asked you to tell me why you object to right-to-work. I get the equivalent of a big fart back every time I ask you.
Posted by: Dan at July 22, 2011 9:44 AM@ Mike Cappelli:
In your last post you state that the union "dopes" won't face facts.
It seems that you can't face facts seeing that every word in your post was your own narrow opinion and not a single word could be supported by fact.
Every word and every assumption was entirely wrong...but, you and many posting here are more than willing to believe that.
Posted by: Tom Kenney at July 22, 2011 12:36 PMP.S.
The reason that michael & I stand out on this blog as the only real union "dopes" is that most people (and there are many more than are repesented here) who agree with our stance on labor issues don't even know this blog exists, and if they do, they wouldn't dare post and open themselves up to this kind of treatment.
Also, what many of you don't know about me is that I agree with about 75% of what's posted on this blog, ie: conservative values. I just don't agree whatsoever with the labor and financial stance of conservatives.
Posted by: Tom Kenney at July 22, 2011 12:42 PMDan, you are simply unbelievable. Your delusions know no bounds. You present an argument with a preconceived resolution, one that fits your views and never veer or learn from anything, using this forum as nothing more than a soapbox from which to preach.
You use this blog as a if it were your own. Start your own and see how far you get with one sided views and no compromise, or growth. Your contention that I insult people here and never bring anything of value to the table is preposterous. I have a little fun with you because you are so stereotypical it is easy, and Cappelli and Tommy Cranston I just play along with, I really don't think they take their commentary here seriously.
Get over yourself, and leave the posts to the contributors, and the comments to us. That is the way these things work, the blog owners or contributors make a statement and the rest of us chime in. A little brevity goes a long way.
Posted by: michael at July 22, 2011 2:34 PMMichael - Who says I'm unwilling to compromise? What evidence do you have of that statement? Zero, as usual. You make a lot of assumptions, and this caricature of me you've created has no basis in reality. I'm all in favor of common sense compromises and incremental sustainable reforms. I've stated here numerous times that I'd be thrilled if we could cut the size of government by even 5%. That makes me an extremist in your opinion?
Your accusation that I use this blog as a "soapbox" is simply confusing. What is the purpose of a blog if not to share information and views with each other? Oh, but you don't care for my views so they're illegitimate and invalid and I need to be driven away - how tolerant you are of dissent. Like you're doing some great public service by sharing your irrelevant emotionally-charged firefighter stories about dead babies in pension threads. You're shameless.
You still haven't responded to me regarding right to work, nor will you ever by my estimation because all you truly care about is defending your union and pay from the evil conservatives and trading war stories. I doubt you even know or care how public unions actually operate by statute. RI is dying a slow bankrupt death and you don't know why - let somebody else figure it out, right? But make sure your checks keep coming in the mail or you'll raise hell.
If you ever want to discuss the "issues," I'm right here. I've never seen any intellectual curiosity of that sort from you - just a lot of hatred and resentment with no relevant substance. If I made a list of every name you've called me over the past few years it would stretch on for pages.
Posted by: Dan at July 22, 2011 3:02 PMI think I've only called you three names, boring, if that's even a name, an idiot, got me there and a stooge. You would have to write those over and over a thousand times to get "pages" of insults.
You do amuse me, so I continue this demented dialogue. I imagine the Anchor Rising crew gets a small kick out of it as well or we would have been shown the door by now.
Want to know why I've never engaged you concerning work to rule? I don't know what work to rule is, nor do I need to find out. My life is full, I have plenty to do, and think about, and write about. I found this blog one day when Justin had to put his Husky down, and I had to do the same with mine, and I felt his pain and enjoyed the writing and it hooked me in. Ive been invited to be part of the team but politely declined, due to what I figured would be a relentless attack on me, as opposed my ideas, which are conservative, and lean toward libertarian. I may not have the whole definition of libertarian or even conservative figured out, but I know what I am, and who I am, and that's it.
Posted by: michael at July 22, 2011 3:56 PMOK Tommy boy,
You say "It seems that you can't face facts seeing that every word in your post was your own narrow opinion and not a single word could be supported by fact."
Here's some facts any moron can understand.
On the RI Secretary of State's website, under campaign finance reports; PROVIDENCE FIREFIGHTERS LOCAL 799, IAFF
Who were just a few of the beneficiaries of your union's money??
Friends of Young
Friends of Aponte
Friends of Cicilline
Friends of Jackson
Friends of John Lombardi
Friends of Peter Mancini
Grace Diaz
David Segal
I could be mistaken but these sound like the names of politicians that might have had something to say about funding your pension.
In fact, aren't most of them Providence City Councilors?
Year after year your pathetic union gave them money.
Go look for yourself Tom.
THOSE ARE FACTS!
Your union has you so brainwashed you can't even think for yourself. Do you know how stupid you sound?
Just get a damn computer and go online to see it for yourself. Or, did your union tell you not to?
Facts, Tom. Those are FACTS!
This is precisely what I don't understand about you, Michael. You are a smart man and a hard-working man, this I know. And you genuinely seem to care about your city and the public dialog. But then, in stark contrast to these admirable qualities, I've never seen anyone so intellectually lazy when it comes to understanding the underlying causes of the crisis Rhode Island is in and how your union has played a part in that crisis. If you spent even 10 minutes a day educating yourself about the history and economics of collective bargaining, supply and demand, public unions, pension systems, labor boards, and right to work, you would easily come to understand how the system is broken and the Democratic-union alliance contributed directly to the Rhode Island disaster story, now #50 of the business list. Even now that your pension is directly threatened, you don't seem to care in the slightest bit about educating yourself about the situation or taking proportional responsibility for fixing it.
What will it take? How many more municipal receiverships and bankruptcies? When the checks stop coming, then will you finally start paying attention to what we've been warning you about again and again and again? "Let somebody else figure it out" and "It'll all work out in the end" is all we ever get from you. It's time to grow up - there is nobody else, your policy leaders have failed you, and no, it will not necessarily work out in the end. Ask your union brothers in Central Falls if everything's working out for them and if they're happy they turned a blind eye for 30 years. Even that debacle is apparently not enough to knock you back to hard reality.
Posted by: Dan at July 22, 2011 5:52 PM@ Mike Cappelli:
We regularly donate political money to City Council members who don't show a record of ALWAYS voting against our issues. I knew of these and I think the donations are part of the political reality of the 21st century. Does that make me stupid? Does that make my union dishonest? Does that make myself or my union reprehensible?
If you believe it does then there's nothing we need to discuss anymore, because I don't.
Also, the donation to Friends of Cicilline is either from early in (or before) his first term or after he finally signed a contract with us. And he's the only one on your list who had a say in funding our system - and he actually began funding it after many years of nothing - even though he didn't fulfill the city's entire obligation.
The facts that you listed about our contributions are actually facts - I'll give you that. However, that entire post was completely inaccurate as you held me as ignorant of those facts and downright stupid. You held my union as betraying me and other stupid members. They never did - you're accusations are baseless.
Go find some other "facts" that have nothing whatsoever to do with the present conversation and hit me with them too.
P.S. I'm attempting to hold my temper and not get into stupid arguments or name calling because the only thing that Dan ever said to me that was something I could agree on is that by getting into name calling and stupid arguments with some of the stupid posts here I will certainly lose some credibility.
Posted by: Tom Kenney at July 22, 2011 5:53 PMOK, Tom, so now that I back up my contention you come back with "I knew of these and I think the donations are part of the political reality of the 21st century." What's with that?? I thought I didn't my facts straight. Looks like I did now, doesn't it Tom?
My contention Tom was that your union gave money to those who screwed you. You have now acknowledged that as a fact.
Further, you claim that Cicilline "the only one on your list who had a say in funding our system?" Get a clue Tom, the council has a lot to say about that. Of course, they clearly said NOTHING, which is why we are in this little mess.
Do yourself a favor Tom, don't bring a knife to a gunfight. You are so ill-prepared to discuss these things. Man, just listen to yourself! Your union has been f'ing you all along. You have been preaching to false Gods.
You know what Tom, as long as you want to keep your head in the sand about all of this, you will never see the light of day.
Tom Kenney - Your union gave money to all those wretched Democratic politicians because they promised to reward your union in turn. Only with Cicillini, it backfired because he acted like the wretched politician he was and screwed you in the end for his own benefit. Serves you right for playing that dirty game. This is not just political reality, this is *corrupt* politics and your beloved union is a major player in Rhode Island. Other states do NOT operate this way. There is a solution - your union could stop getting in bed with these unsavory characters over and over again. It's not worth prostituting yourself just to make a quick buck. The practice is not illegal, but it is highly immoral and has directly contributed to the bankrupting of the city of Providence.
Posted by: Dan at July 22, 2011 10:26 PMThe last two posts are laughable. I'm sorry but I don't see anything that I said or that my union did by donating a small amount of money to these candidates as "highly immoral". You two are absolutely certifiable.
Posted by: Tom Kenney at July 22, 2011 11:47 PMOn one hand Tom Kenney wants to blame the politicians and on the other hand he sees nothing wrong with "donating a small amount of money" to those very same politicians. How moronic!
Notice how Tom's premise keeps shifting as the discussion goes on.
Tom - quit while you are ahead. As they say, better to be thought a fool than to open one's mouth and remove all doubt.
The more you talk, the more you get slapped around here.
I can just see you all in your little union cult meetings, singing kumbaya, sitting there just listening to those dopes fill your heads with this garbage about how they care about you, as you all nod with your stupid happy faces on. How's that all working out for you now Tom?? Tom you need to grow a set and go after the scumbags who run your union. Those are the people ultimately responsible for screwing you, not me and others here. We're just telling you the truth. Wake up!!
Tom Kenney - Imagine a hypothetical highly questionable politician from a corrupt local party who I think would do a terrible job running the city. Imagine that I donate to this politician's campaign, organize for him, and vote for him for no reason other than that he promised to reward the company I own with lucrative contracting opportunities. This is the exact same thing that your union does every single year in Rhode Island. If you don't see anything immoral or corrupt about the practice I describe, then we have *very* different concepts of morality and good government.
One final hypothetical: if the above politician then reneged on his promise to me and awarded the contracts to somebody else because it was politically convenient, what would you have to say to me if I complained about broken promise and how nobody is honest anymore?
Set aside your assumptions and really think about this for a moment, Tom. Why do you honestly think Rhode Island is at the bottom of the pile for business? Not #25, not even #40 - #50, Tom. You really think that has nothing to do with this corrupt Democratic-public union cycle I describe? What is your explanation?
Posted by: Dan at July 23, 2011 9:06 AMI may not have the whole definition of libertarian or even conservative figured out, but I know what I am, and who I am, and that's it.Michael, you're in luck. I'm working on an essay that will describe all of political philosophy in about 1,000 words or so, and will make everything clear.
I just need to put together a single sentence that describes the entire contribution of Plato and Aristotle, to get it started off right...
That was perfect, Andrew! I was about to attempt to make some sense of Dan and Mike's comments when I realized the futility of that little foray into frustration and can now spend some time doing something constructive instead!
I vote for people who share similar values. The Democrats often are those people. I like to think they support labor, therefore I support them, rather than labor supporting them, therefore they support labor. Call me naive if you will, but I still hope for some ideals in my politicians.
It is popular to blame labor for the ruination of Rhode Island, and to blame the labor contracts and pensions for the same. If the same vigorous media attention were focused on our Medicaid and Medicare payouts, "the unions" wouldn't be so "popular." The Providence Fire Department budget is 7% of the city budget. Shoot me if I cannot accept blame for the downfall of our city.
Posted by: michael at July 23, 2011 11:28 AM"The Providence Fire Department budget is 7% of the city budget."
And what you leave out is that current retirees receive half of all tax revenue collected by the city. Do you honestly think that's sustainable, Michael? You don't have to be an econ genius to understand that it's not.
Municipal bankruptcy is knocking on your door and yes, your union did its part in getting you there. You are clearly unwilling to accept financial reality, but your union brothers in Central Falls just learned that reality has a way of catching up with you even when you make a point of ignoring it. Pensioners go to the back of the line of creditors in bankruptcy, FYI.
I'm going to beautiful Mt. Vernon today in Virginia. We're slated to run a surplus again this year, thanks to right to work legislation, but you don't know or care what that is so don't worry yourself about it. Somebody else will figure it out. Or not. Enjoy your day.
Posted by: Dan at July 23, 2011 1:28 PMAnd I'll be taking freeloaders to the hospital and earning my pay and contributing to my retirement while you enjoy your day.
Posted by: michael at July 23, 2011 1:33 PM[[[[ If Kenney's politicians had fully funded their pension promises, they wouldn't have been able to fund other promises, and the reforms that are now on the table, or something like them, would have been necessary decades ago. ]]]]
Justin,
Whether the true motives behind the original negotiations was careless planning or political calculation should have no bearing on those who played by the rules and paid into the system as required for the length of their service.
And this is exactly the reason I need a union to be able to fight this battle for me so that I don't have to spend an exhorbitant amount of money on attorney's fees by myself.
Some here, especially attorneys, would argue that if it were not for the unions we wouldn't be in this situation in the first place. That's b/s. The unions are not the one's who did wrong here and the lack of a union ready to challenge the city would only allow them to tamper with the contributions to the system more dramatically.
Unions are protection for th employees. Can anyone argue that the city would have simply imposed the cuts in pay and benefits they originally asked for, along with drastic cuts in pension benefits, long ago if not contractually bound by a CBA? IMO anyone who states otherwise is being intelectually dishonest. My family and I would automatically pay the financial price for the stupidity (or dishonesty) of others.
Posted by: Tom Kenney at July 25, 2011 10:19 AM