April 13, 2010
Unfunded pension liabilities are indeed of growing concern to state and municipal treasuries, as we have noted in previous articles. Indeed, the fiscal burden of public pension plans has become even worse in recent years because managers invest such a large percentage of pension fund assets in the stock market. State and local governments may need to trim back pension benefits or raise employee contribution levels to fill the fiscal gaps. But what, exactly, is a "fair level of pay and decent retirement" for an individual teacher, firefighter or cop? The answer will probably vary from state to state and from city to city, and can only be decided by state and local governments.
Furthermore, if public employee unions should be barred from using their "political muscle" to secure the support of lawmakers, shouldn’t the same rules apply to private firms? As of March 31, public sector unions were only the sixteenth biggest-spending industry group during the 2010 election cycle, with total donations of $6.1 million to members of Congress so far, according to the Center for Responsive Politics, a nonpartisan research group. Lawyers and law firms are the top givers at $31.1 million, and health professionals are second at $19 million. The securities and investment industry, meanwhile, has given $15.4 million, the real estate industry has given $13.9 million, and the insurance industry has given $12 million. For all that alleged political muscle, public employees still seem to pack a modest punch in electoral politics relative to private industry.
Indeed, given Greenhut's opposition to public employee union influence over the political process, it is interesting that his plan to solve government budgeting problems begins with political action:
Ultimately, it's time to start a new political movement. We've seen the TEA [sic] parties get going largely though genuine grassroots outpourings – even though establishment Republicans have tried to co-opt these events and Democrats have tried to demonize the participants. We've seen angry Americans show up at health-care town hall meetings to express displeasure at the Obama administration's attempts to give government more control over this vital industry. It's time for the grassroots – and not just conservatives or libertarians, but everyone who is concerned about the misuse of resources and abuse of power to benefit a special group of powerful Americans – to get agitated and to decry the plundering of America.
Public employees should not be chastised for championing their own interests, or for trying to get the very best deals they can from governments. But neither should corporations, or Tea Party protesters. After all, as James Madison wrote in his Federalist No. 10, "the causes of faction cannot be removed, […] relief is only to be sought in the means of controlling its effect." If we outlawed all public employee unions, as Greenhut suggests, or enacted new rules to prevent public sector unions from participating in politics, some other type of group would emerge to take their place at the political bargaining table. Twenty-one million government workers – 16 percent of the labor force according to the Bureau of Labor Statistics – will not be denied a voice. For better or worse, the only real solutions will come from the long, slow grind of the democratic process.
Charlie Curnow is an Assistant Editor at Advisor Perspectives.
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