Doublethink Tank: Heartland Inst. pushes ALEC bill readjusting pensions, which "aren't the problem"

[highplainsdem]

I've already posted about the model legislation drafted and approved a few months ago by the American Legislative Exchange Council (ALEC) -- legislation to allow states to reduce already-accrued pension benefits for government workers to levels typical of the private sector:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x854864

Now the right-wing Heartland Institute has a column about the legislation, "Washington, DC Group Says Adjusting Government Employee Pensions is Constitutional," by Thomas Cheplick, a contributor to the American Spectator and Redstate.com:

Washington, DC Group Says Adjusting Government Employee Pensions is Constitutional
Written By: Thomas Cheplick
Published In: Budget & Tax News
Publication date: 04/21/2011
Publisher: The Heartland Institute


-snip-

However, in December of 2010, the American Legislative Exchange Council (ALEC), an organization of almost 2,000 conservative state legislators, adopted model legislation, devised and presented by a Washington, DC group called American Principles In Action (APIA), based on research by its sister organization the American Principles Project (APP), which may solve this $1 trillion problem by re-adjusting public employee pension contracts.

The APP, founded by Professor Robert George, who teaches jurisprudence at Princeton University, notes that accrued retirement benefit obligations to all state and municipal workers can constitutionally be immediately re-adjusted to levels comparable to that of private sector workers for positions of comparable responsibility and direct compensation.

Ralph Benko, senior economics advisor at APP, explains that his organization found two U.S. Supreme Court cases that clearly point out that public employee pension contracts are not as sacrosanct as public employee unions and their allies would have Americans believe.

-snip-

The column goes on to quote Chris Prandoni of Americans for Tax Reform, who says, "“Raising taxes to cover public pension plans would represent an enormous transfer of wealth to the politically connected government workers’ union." (Of course this same group has nothing against the much greater transfer of wealth created by raising taxes on the middle class and poor and cutting taxes on the rich and corporations. And Prandoni ignores the fact that pensions go to workers who negotioated for those pensions and contributed to them.)



But of course pensions AREN'T the problem.

A point made last month in a Weekly Standard opinion piece with the title "Pensions Aren't The Problem" -- a column by Heartland Institute vice president Eli Lehrer:

http://www.weeklystandard.com/articles/pensions-aren-t-problem_554833.html

Pensions Aren’t the Problem
How not to balance state budgets.
Mar 28, 2011, Vol. 16, No. 27 • By ELI LEHRER

-snip-

llinois’s story offers a lesson to other states looking to rein in employee compensation. Quite simply, pension benefits represent a reasonably small share of overall state spending (3.4 percent in Illinois), not all states have severe long-term funding problems, and state pensions are almost impossible to reform in ways that solve current budget problems. Moreover, there’s a commonsense case that reasonably generous public sector pensions are good public policy. Pensions, in short, aren’t the main cause of state budget problems, and many political leaders trying to bring public sector compensation down ought to focus their attention elsewhere.

-snip-

Let’s start with the facts: In all, 84 percent of state and local government employees are eligible for defined benefit pensions, and all the states allow at least some workers to retire before 65. (Only 10 percent of private sector workers, heavily concentrated in a few sectors, still get defined benefit pensions.) Although the long-term nature of pension liabilities makes the numbers sound scary—the Pew Research Center has popularized the idea of a “trillion dollar” pension liability gap, and some sources come up with even higher numbers—their actual costs are a drop in the state spending bucket. A lot of revenues also roll in over the long term. Pension contributions, according to the National Association of State Retirement Administrators, represent 2.9 percent of state expenditures, almost exactly what they were 15 years ago.

-snip-

For most states—even some with deep fiscal problems—pensions aren’t the leading factor. A study by the Wisconsin Legislative Council shows that only 8 of the nation’s 87 major state-level pension systems have gaps between promised benefits and liabilities greater than 30 percent. (Good stock market performance since the data were compiled means things would likely look a little better now.)

In the end, many states facing very large current budget gaps—New York, Florida, Texas, and Wisconsin among them—have pension systems that are likely capable of paying their obligations indefinitely with only minimal tweaks. Even in California, where absurdly generous public employee pensions have attracted enormous media attention, both of the major pension funds have shortages of around 10 percent that the state could cover pretty easily with some combination of economic growth, tax hikes, and service cuts, if its other fiscal problems were not so severe.

-snip-

I love it when someone at a right-wing think tank points out real facts like these.

Of course there was shrieking about Lehrer's column from many on the right, including at least one colleague at the Heartland Institute.

But the fact remains that even the vice president of the Heartland Institute recognizes and admits the hollowness of the right-wing arguments being made that slashing public employee pensions is the way to solve state budget problems.

So there's no real fiscal argument to be made for this radical new "model legislation" now being peddled by ALEC, claiming it would be constitutional for states to drastically reduce pensions employees have already earned (we're not just talking about reduced benefits or higher contributions for new employees; this would affect even employees who've been there for decades and are close to retirement, and apparently even those already retired who might see their pensions suddenly and drastically cut).

But although the argument is a hollow one, the Heartland Institute still trotted it out again, in that new column by Thomas Cheplick, to promote another foolish and harmful ALEC bill.

[highplainsdem]

1. kick

[highplainsdem]

4. again

[crickets]

2. Good find. K&R

[highplainsdem]

3. Thanks!