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Home Publications Blogs Beat the Press The NYT Goes on the War Path to Cut the Pensions of the Upper Class (Garbage Collectors)

The NYT Goes on the War Path to Cut the Pensions of the Upper Class (Garbage Collectors)

Friday, 06 August 2010 19:27

Columnists are given considerably more leeway than reporters, but serious newspapers still expect their pieces to bear some relationship to reality. This is why the Ron Lieber's column warning of a class war ("The Coming Class War Over Public Pensions"), with government workers as the new "haves," may leave many readers wondering about the NYT.

We have just seen the Wall Street crew get trillions of dollars of loans and loan guarantees to protect their multi-million dollar salaries and bonuses. The government routinely gets taken left and right by Halliburton and other defense contractors. Doctors and drug companies use their political power to ensure that they can charge far above competitive market prices.

With all these millionaires and billionaires getting even richer at the public's expense, why would there be a class war over public pensions? Clearly this is Mr. Lieber's desire, but so what?

Lieber does his best to whip up the hysteria, near the beginning of the article he describes the pension shortfall: "At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying." Since we're doing the alliterations with "t," how about throwing in "two" as in a shortfall that is less than 2 percent of projected state and local government spending. Current spending is close to $2 trillion a year. If we assume that a shortfall must be filled over a 30-year period, then this would imply a gap that is less that 2 percent of projected spending over this period. 

That is not a trivial sum, but it is not obviously "titanic" or "terrifying," at least to adults who do not scare easily. The piece does eventually point out that most public pensions are not especially large and that in many cases these pensions are also substitutes for Social Security (many state and local workers are not part of the Social Security system), but that information only appears near the bottom of the piece, long after the call to class war.

The reality is that public pensions are better than private pensions, but this is largely because most private sector workers have little or nothing by way of pensions. With a few notably exceptions (police and fire pensions, along with those of IMF economists, tend to be very generous) most public sector pensions do not provide retirees with an especially high standard of living.

It is more than a little bizarre, and arguably more than a little offensive, that the NYT would publish an explicit call for an attack on the pensions of millions of workers who never earned more than $40,000 or $50,000 a year. This is in a country where people like Erskine Bowles (the co-chair of President Obama's deficit commission) get $350,000 a year serving as a director of a company (Morgan Stanley) that only exists today because of the generosity of the Fed and the taxpayers when they rescued it in its time of need. (What does a director of Morgan Stanley do to get $350,000 a year?) Of course, the full-time Wall Streeters can pocket 100 times as much.

Mr. Lieber obviously wants to direct public anger at school teachers and custodians rather than the people who hold real power and wealth in this country. It is a pathetic and disgusting exercise and the NYT should be embarrassed to provide Mr. Lieber with the ink and electrons for this effort.

Comments (14)Add Comment
written by diesel, August 06, 2010 8:25
Now, I mean no offense to teachers by this, but in general, most undergrads do not now, nor have they for the last 50 years, looked upon a teaching career as their first choice, or their second for that matter. It was a fall back when all else failed. And "at least you had your summers off". The biggest reason of course was salary. It just didn't pay that well. The job security, pension and health benefits kind of made up some of the difference, but still...

It is a measure of how far have our economy has fallen, that today, teachers and other public employees are being held up as examples of privileged, coddled, entitled elites who must be smacked down.

Rather that point to public employee benefits and saying "Look, we can all, each and everyone of us, enjoy that kind of security", public relations experts opining on behalf of America's truly Entitled divide and conquer the envious public with their deceptive misinformation.
written by foosion, August 06, 2010 8:38
>>Columnists are given considerably more leeway than reporters, but serious newspapers still expect their pieces to bear some relationship to reality.>>

Are there any serious newspapers? Please name a few.
I receive a state pension
written by LJM, August 06, 2010 10:32
I live in a state where there are no COLAs to our state pension, ever! Changes were made for workers coming into the system now to have to wait longer to retire and pay in more. I believe they've been told their pensions will be higher that way. Anyway, nobody is rich living on a pension in my state.
Government Routinely Gets Taken by Halliburton
written by Union Member, August 06, 2010 10:52

In global markets does not Halliburton occupy both the supply and demand curve in the business of war? And under such determinants, where is equilibrium? What is the price?

This negative attitude toward public workers
written by Hayduke, August 07, 2010 2:01
I worked as a state employee (highway design engineer - Texas) for 8 years until I switched to the private sector a few years ago. The employees worked just as hard or harder as those in the private sector. As a state worker, a portion of our paycheck was taken out each month to go to our pension. Also, salaries were lower compared to the private sector. Raises were small (1.50% to 3%) and sometimes years apart. There were no bonuses or profit sharing and of course it was not prestigious. But that salary difference was made up with that promise of a pension.

I read the anomosity toward government workers on several financial blogs, usually written by those who are already set for life, and who recommend austerity for others. Ron Lieber mentions that those in the private sector have seen their 401(k)s blow up due to the market and/or poor investment decisions (putting all their 401(k) into company stock). Perhaps they're jealous? But this strategy, by whomever it is, to pit the middle class against each other appears to be quite intentional.

Near the end of his column, Lieber writes this: "And if you’re a government retiree or getting close to the end of your career? Consider what it means to be a citizen in a community." The implication is that government retirees are greedy because they want their contract fulfilled.

Nowhere does he mention that the overpaid executives and CEOs of corporations should sacrifice or consider what it means to be a "citizen in a community." Only the middle class should sacrifice.
written by purple, August 07, 2010 5:14
Yep, that pretty much sums it up.
Right Class, Wrong War, The Real Rent Seekers
written by izzatzo, August 07, 2010 6:54
The real class war between government and private jobs has evolved with privatization, into the difference between entry level jobs in government which effectively act as training for advancement into lush private sector positions that make government jobs look like intern positions.

Those who don't make it are condescendingly regarded as losers by "winners" like Erskine Bowles, pursuing coveted slots at the top of the concentrated wealth and income food chain. Government is no longer regarded as a complementary support to the private sector, instead seen as the inferior version of some substitutable good or service which can always be privatized however inefficiently.

The "winners" are no longer the top performers of real output produced under capitalism. Instead, they have become exactly that to which Lieber et al direct their venom, parasites on the system whose expertise is protecting unearned economic rents held by the upper class, triggered all the more by the deep recession. Because their rents are threatened, they must distract attention from themselves as the true "rent-seekers", towards ordinary government employees, the same ones who earlier assisted the rich in securing their economic rents.

Now that there's less real output to go around after they brought down the economy, suddenly new versions of infantile arithmetic have emerged to demonstrate that the upper class really can subtract as well add. And for that of course, they deserve another undeserved raise.
Yes Ron Lieber's column is disgusting
written by nancycadet, August 07, 2010 10:41
And I am sending a complaint to NYTimes. With income inequality at its highest (ie. CEO pay vs. worker) and reductions in all kinds of ordinary income protections for workers, Ron Lieber has to attack a benefit that survived GOP-nomics? Shame on him.
written by skeptonomist, August 07, 2010 12:15
The BEA has detailed data on income by industry, etc.:


(Section 6, for example 6D). Whether you look at wages and salaries or total compensation, state and local employees are slightly below average. Federal employees are well above, up there with finance and insurance. There does not seem to be a category for journalism, but publishing is even higher than finance.
What about the "DROP"?
written by MB, August 07, 2010 5:46
Hmm. Until the concluding paragraphs, the article seemed like a straight forward assessment of the facts about the strengths of public vs private pensions and budget problems.

Is it not true that the guaranteed status of public pensions earns priority in budgets so that general revenues are obligated to support public pensions, but at the expense of essential services which can be reduced in order to meet the obligations of the pensions? And that private sector employees, mostly, have no such guarantees about their own retirement plans but will also be tapped to pay higher taxes for reduced services?

Here's a situation. Philadelphia's public employees can enroll in a deferred retirement program which was supposed to be a useful tool for managing the replacement of experienced employees. It was supposed to save money but a recent study concluded that it is actually very expensive for the city, in part because it encourages employees to go out earlier than would have otherwise. It is also abused by elected officials who qualify for the program, "retire" for one day, collect substantial payouts, and then go back to work. It's been a hot-topic in the city's citizen engagement efforts focused on political and budgetary reform. So now the mayor, who at other difficult decisions has sometimes been described as "a responsible adult", is calling for the DROP to be dropped. But the city's unions do not agree (http://www.philly.com/dailynews/opinion/ 20100806_DROP__Benefit_for_a_few__costs_for_the_rest_of

So far the coverage is not distinguishing sanitation workers from police, but they are pointing out that elected officials are well paid. Have not heard any stories about sanitation workers retiring for one day and then going back to work. So is dropping the DROP an expression of class warfare?

Lieber's article seemed ok until the end when he chastised workers for unreasonable expectations, as if he believes that the hit or miss 401k plans for private workers are perfectly adequate, fair substitutes for decent pensions; as if it's ok to renege on commitments. It's all very confusing. Retirement in America seem very out of whack. Plus the ordinary public really has no sense of proportion regarding appropriate versus excessive versus inadequate retirement benefits. The goal should be to strengthen weak retirements, to create sound programs, but the public debate feels like a grudge match determined to confuse people and make all workers satisfied with low expectations. No wonder so many Americans have no other retirement incomes besides Social Security.
The War on Unions
written by FoonTheElder, August 09, 2010 10:26
Now that the right wing has completed their war on private company unions, they are using the recession as the reason to do their best to destroy public unions.

Secy. of Education Arne Duncan is a major proponent of private charter schools promoted by the Gates and Broad Foundations. If you look at Duncan's former district of Chicago, his policies have created a complete mess.
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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.