Euphemism of the Week
[AP Photo/Seth Perlman]
Last week, that is. I’m a little late with this. And on uncertain ground with regard to the facts. Nonetheless, when I read the NYT article a week ago on State of Illinois pension woes, I was struck by Governor Quinn’s use of the phrase “pension reform,” suspecting immediately that “reform” is a polite word for “cuts”.
Are cuts necessary? Again, I’m no expert on this. Clearly the state has made a mess of things. A huge mess. From Mary Williams Walsh’s NYT article:
For the second time in history, federal regulators have accused an American state of securities fraud, finding that Illinois misled investors about the condition of its public pension system from 2005 to 2009.
In announcing a settlement with the state on Monday, the Securities and Exchange Commission accused Illinois of claiming that it had been properly funding public workers’ retirement plans when it had not. In particular, it cited the period from 2005 to 2009, when Illinois also issued $2.2 billion in bonds.
The growing hole in the state pension system put increasing pressure on Illinois’ own finances during that time, raising the risk that at some point the state would not be able to pay for everything, and retirees and bond buyers would be competing for the same limited money. The risk grew greater every year, the S.E.C. said, but investors could not see it by looking at Illinois’ disclosures.
The charges put the state’s pension system, generally thought to be the weakest of any state, back in the national spotlight. In his budget address last week, Gov. Pat Quinn, a Democrat, issued a clear warning that the system had to be fixed.
“Without pension reform, within two years, Illinois will be spending more on public pensions than on education,” said Mr. Quinn. “As I said to you a year ago, our state cannot continue on this path.”
By 2003, the state was so far behind that it issued $10 billion of bonds and put the proceeds into its pension funds to make them look flush. The main underwriter of those bonds, Bear Stearns, was later found to have made an improper payment to win the business, figuring in the corruption trial of a former governor, Rod R. Blagojevich.
In 2005, the state passed another law, giving itself a holiday from making even the inadequate annual pension contributions called for by its 1994 schedule. It said it would offset the missing money with bigger contributions from 2008 to 2010, but then did not do so. By 2010, the reported shortfall of the pension system was $57 billion, and senior officials were warning that the system was at risk of breaking down completely.
I just wonder if ultimately reform means that employees who have paid into the pension system are destined to receive less than they contracted for. That’s certainly what right-wing Americans for Prosperity has in mind. In his article Fix Illinois Pensions Now, state director Joe Calomino argues:
Generous pension benefits that the State cannot afford are at the root of this problem. While the state took a step in the right direction last year by reforming benefits for NEW government workers, CURRENT government workers continue to participate in the State’s traditional and costly plans.
They can retire at age 55 or 60 and receive generous cost-of-living adjustments each year. These lifetime benefits can be worth more than $1 MILLION for a full-career employee who retires at 55 or 60. They are completely out-of-line with the benefits offered to taxpayers working in the private sector. Yet the 95% of Illinois taxpayers who do not receive such generous benefits will pay higher taxes to pay for the 5% of State residents who do.
Short of the facts though I am, I can at least say that when cutting contractually promised benefits to current employees is called reform, language is being abused.
I know, it’s those lazy, overpaid, underworked state employees who are the problem. They deserve to have their generous benefits cut! As a state employee myself, albeit in another state, I am not a fan of public sector employee bashing. And I can tell you, the two retired friends of mine who devoted their careers to Illinois and its residents could have made far more money in the private sector, but chose instead to do good for the state. It’s a mystery to me what they’ve done to deserve benefit cuts.
Anyway, the pension issues need to be addressed, and maybe Governor Quinn is on the right track. I just object to the changes being labeled “reform.”