Taking from AFSCME to Pay the Teamsters
AFSCME Council 94 President J. Michael Downey has an op-ed on yesterday’s opinion pages in which he makes a couple of flawed analogies in trying to convey his point (emphasis added):
State workers pay a lot of money for their pensions. We put 8.75 percent of each paycheck into the pension fund — higher than any other state employee in the country pays for this kind of plan. This contribution rate covers 85 percent of the pensions’ normal costs. Slashing the pension plan that we have been paying into for decades is
And if Governor Carcieri gets his way, he will be no better than Bernie Madoff or anyone else who succeeded in swindling working families out of their hard-earned money. …
It takes 10 years of service to become vested in the state employees’ pension system. After a worker pays into the system for a decade, his or her benefits are supposed to be guaranteed. But the governor’s proposal would change the rules for all state employees and teachers who retire after April 1. Changing our pensions so drastically after many years of contributory service is similar to a bank’s trying to tell you that you don’t own your home after you have made faithful payments for 30 years. To suddenly change the pension system for people who contributed to the system and played by the rules is just plain wrong.
In the first instance, changing the pensions is more like a bank’s changing the interest rates over time, which we all tolerate every day. In the second instance, vestment isn’t full ownership. It’s more akin to allowing a homeowner to borrow more money based on 10 years of equity; the bank still owns the house for 20 more years. And at any rate, the town could raise taxes, or some other expense could go up changing the totality of the arrangement that the buyer initially expected.
We can put that all aside, though. Let’s accept Downey’s premise that the government is responsible for promised retirement benefits. That doesn’t mean that it has to find the money by raising taxes. It could also reduce other employee benefits to compensate. It could, for example, take a dollar-for-dollar reduction in healthcare, perks, salaries, and so on, in order to honor its deal with vested retirees. Downey calls pension reductions “stealing from workers.” I can imagine what he’d say to the proposition of taking from them in order to give back to them.