Pensions and Promises and Perfidy
Townhall.com ^ | January 1,
2012 | Paul Jacob
Promises,
promises.
Politicians love to make ’em. But who has to fulfill those promises, and how?
The tendency to rely upon
political assurances without establishing workable, reasonable plans and
follow-through has to be high on the irresponsibility list. Our politicians may
promise us the stars, but what we wind up with remains of a
more earthy nature.
Take pensions. There are two
basic ways of setting them up. One is to sock money away, or
invest it, taking it out at retirement. The other is to promise to give
somebody a certain amount of money on retirement . . . and figure out how to
pay for it later.
Between these two extremes
lie compromise positions, of course. The government takes
money from people now, for instance . . . but then immediately spends it on
current retirees. That’s Social Security, and it combines the two methods in a
rather fraudulent way. It’s not “our money” going into “our retirements”; it’s
“our money” going into other
people’s retirements. We will (if the system survives) take our
retirements from younger “investors.”
It’s a dubious deal on the
face of it. Like a Ponzi scheme, it tends to reward
earlier participants (retirees) at the expense of later ones. Of course, the
government, being government, had an advantage Ponzi
did not: It forces us all into the scheme — something ol’
Ponzi could not do — and it changes the deal as it
goes along, and makes us accept it. Hence the long-term
“viability” of Social Security.
But Social Security isn’t the
only pension system to over-rely on promises and skip the actual savings and
investment part. Many a government employee pension system
does the same. Not only do they unfairly shift burdens onto future retirees and
future taxpayers, they also build up huge debt loads to whoever has done the
promising.
Well, that’s not exactly
right. Politicians make the promises. Taxpayers get stuck
with the bills.
The defined benefit pensions concocted by politicians are now
throwing towns and municipalities into
bankruptcy, and California and New York are just two of many states to be greatly
harmed by the unworkability — the sheer irresponsible
design — of the defined benefit packages contracted with government workers.
This problem has been brewing
for some time. In the mid-2000s, Congress attempted to forestall disaster with
the U.S.
Postal Service by requiring fully funding postal worker pensions.
Now that the postal service
is failing — for reasons having to do with any number of factors, including a
decline in need for the service — the people who decide the fate of our public
institutions are trying to take money from the pensions and save the current
accounting.
When private businesses do
this, people cry Fraud! Theft! Greed!
But when it happens in a
badly run outfit controlled by government, you can count on some people to
attempt to take a most dubious “high moral ground.” Consider this petition from
the people at MoveOn.org:
To be delivered
to: The United States House of Representatives
We, the undersigned, urge you to co-sponsor and vote for H.R. 1351,
which will restore the U.S. Postal Service to a sound financial footing. We
oppose H.R. 2309, which will unnecessarily destroy many good jobs and ultimately
the U.S.
Postal Service, itself.
USPS management is proposing a drastic downsizing and service reduction. In
part, it is due to an unreasonable requirement instituted by G.W. Bush through
the Postal Accountability and Enhancement Act of 2006, which requires the prefunding of retiree health benefits for 75 years within
ten years. H.R. 1351 will relieve the some of the most unfair aspects of this
legislation and refund to the USPS part of the current overpayment.
Yes, a MoveOn
fellow wants to take money from a funded pension program and “refund” it to the
USPS, diminishing the viability of a pension system — not merely promised to
current employees, but contracted
— to shore up a failing enterprise?
One could be cynical and
respond by saying that, if the commercial concern fails, they wouldn’t have a
job, and . . . which do they want more?
But this would simply sell
out principle for short-term gain — it’s the kind of thinking that leads to
utter disaster. Real businesses exist in
time, over time. If they
cannot meet current obligations, and move funds from a contracted future
obligation to meet a current crisis, the danger is real, and smacks of
embezzlement. Moving money from worker pensions to a business is not
traditionally associated with those who lean left, like those at MoveOn.
How can they justify the
idea?
Well, the email promoting the
petition provided a clue.
“The management of
the U.S.
Postal Service is proposing a drastic downsizing and service
reduction—including possibly shutting down [your local] branch post office...,
harming local service, and laying off 100,000 workers nationwide.
You see. The appeal is partly
to local patrons. Those services you use every now and then, why, some might be
cut out so that at least a few core services can be financially sustained. How
shocking! Whatever you think about mail delivery, six-day-a-week delivery and a
post office in every podunk
town is not written into the Constitution.
Upon
mere whims, nebulous expectations, and outrageous promises made by politicians? A campaign to take pension money and give it to the USPS to
continue a losing business plan.
Taking a wider view, one
could ask why the postal service has a pension plan at all. Why not fund each
retirement account at time of wage payment (in a defined contribution plan)
and let the workers — perhaps guided by their union? — decide how to manage
their individual pensions. At that point, any attempt to grab their pension
would not only become unthinkable, but unachievable.
Even for someone at MoveOn.
Of course, MoveOn’s got itself covered. The above petition, and its
promotion from the MoveOn.org email, was written by a MoveOn
member, “not by MoveOn
staff, and MoveOn is not responsible for the
content.” Thank you. I believe MoveOn that MoveOn is not responsible for this bit of content.
In general, it’s been my
experience that, when it comes to understanding the nature of contracts and of
responsibility itself, MoveOn is, indeed, not
responsible.
http://www.freerepublic.com/focus/f-news/2827383/posts