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Mortimer B. Zuckerman
The American public feels it is drowning in red ink. It is dismayed and even outraged at the burgeoning national deficits, unbalanced state and local budgets, and accounting that often masks the extent of indebtedness. There is a mounting sense that taxpayers are being taken for an expensive ride by public sector unions. The extraordinary benefits the unions have secured for their members are going to be harder and harder to pay.
The political backlash has energized the
How did we get into such a mess? States have always had to cope with volatility in the size and composition of their populations. Now we have shrinking tax bases caused by recession and extra costs imposed on states to pay for
It is galling for private sector workers to see so many public sector workers thriving because of the power their unions exercise. Take California. Investigative journalist Steve Malanga point out in the
The business community and a growing portion of the public now understand the dynamics that discriminate against the private sector. The public sector unions organize voting campaigns for politicians who, on election, repay their benefactors by approving salaries and benefits for the public sector, irrespective of whether they are sustainable. And what is happening with California is happening in slower motion in the rest of the country. It must be one of the reasons the
There has been a transformation in the nature of our employment. Labor is no longer dominated by private sector industrial workers who were in large part culturally conservative and economically pro-growth. Over recent decades public sector employment has exploded and public workers have come to dominate the labor movement. These public sector employees have a unique and powerful advantage in contract negotiations. Quite simply it is their capacity to deliver political endorsements and votes for the very people who are theoretically on the other side of the negotiating table. Candidates who want to appear tough on crime will look to cops, sheriffs' deputies, prison guards, and highway patrol officers for their endorsement.
These unions will naturally back a candidate willing to support better pay and benefits for their members, and this means as much as, or more than, the candidate's views on law enforcement. The result has been soaring pay and the ability of state police and other safety officers to retire with pensions that place an increasingly unbearable financial burden on the states. In California, such retirees at age 50 often receive pensions at 90 percent of their pay; comparable retirees in most other states get about half their final working salary.
In New York, public service employees have received gold-plated perks for much of the 20th century, especially generous health insurance benefits. Indeed, where once salaries were lower in the public sector, the salary gaps in the public and private sectors have disappeared in the last two decades, or even reversed for most job categories. A
On the other hand, private sector workers in the survey were mostly in "defined contribution" plans, which means that, unlike their cushioned brethren in the public sector, they do not have a pre-determined benefit at retirement. If New York City were to require its current workers to pay contributions toward health insurance equal to the amounts paid by the employees of local private sector firms, the taxpayer savings would approximate $628 million a year. In New Jersey, Christie says government employee health benefits are 41 percent more expensive than those of the average Fortune 500 company.
What we suffer is a ruinously expensive collaboration between elected officials and unionized state and local workers, purchased with taxpayer money. "Scratch my back and I'll scratch yours." No wonder the
California is a horrible warning for the nation of how dreams can turn to dust. In most states, politicians face a contracting local economy and shortfalls in tax receipts. Naturally, they look to cut expenses but run into obstruction from politically powerful unions that represent state and local government employees, teachers, and healthcare workers who have themselves caused pension and healthcare insurance costs to soar. It is not an accident that in framing the national stimulus program,
The lopsided subsidies for pension and health costs are a large part of the fiscal crises at the state and local levels. The subsequent squeeze on education and infrastructure investment is undermining the very programs that have made it possible for our economy to grow -- thousands upon thousands of teachers let go, schools closed, mass transit slashed.
Between New York and California, the projected deficits run about $40 billion -- and that doesn't account for projected billions of dollars in the operating deficits in the states' mass transit systems or the multibillion-dollar unfunded liability in many of the state pension plans. New York is badly hit because it is being deprived of tax revenues by the government's indiscriminate attack on the securities industry, which has been so critical to the economy of New York State and to the United States.
City government was developed to serve its citizens. Today the citizenry is working in large part to serve the government. It is always hard to shrink government spending. It is particularly difficult when public sector unions have such a unique lever of pressure.
We have to escape this cycle or it will crush us. One way is to take labor negotiations out of the hands of vulnerable legislators and assign them to independent commissions. They would have a better shot at achieving a fair balance between appropriate salary increases and the revenues and services of local municipalities. The electorate won't swallow any more red ink.
Available at Amazon.com:
What Is Happening to News: The Information Explosion and the Crisis in Journalism
The Virtues of Mendacity: On Lying in Politics
Bush on the Home Front: Domestic Policy Triumphs and Setbacks
The Political Fix: Changing the Game of American Democracy, from the Grassroots to the White House
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The Crippling Price of Public Employee Unions