Manufacturing Outrage

Representatives for Detroit public workers are fighting to keep pension cuts to a minimum and they are unleashing the big gun: guilt.  How dare these bankers/brokers/lawyers slash the pensions of the widows and orphans of dead police officers and firefighters!

Of course there is an easy fix.  Why not maintain survivor pensions on a case-by-case basis (maybe even increase some) while reducing the pensions of the political class leeching off the system even more (or completely)?  But that is not the goal of this propaganda campaign and a reading of David and Goliath by Malcolm Gladwell offered a similar example but with a better cause.

In 1963 in Birmingham, Alabama Mr. Gladwell contends that Martin Luther King Jr. was party to a conspiracy to incite violence for the ultimate goal of obtaining racial equality:

What they did is not “right,” just as it is not “right” to send children up against police dogs.  But we need to remember that our definition of what is right is, as often as not, simply the way that people in positions of privilege close the door on those on the outside.  David has nothing to lose, and because he has nothing to lose, he has the freedom to thumb his nose at the rules set by others.  pages 190-1

In the case of Detroit the Davids are the retirees and their slingshots contain those they see as most deserving within their ranks.  But they are missing their targets.  Whereas they seek to have Detroit (or other) taxpayers make good on promises flippantly provided where is the outrage at the politician/union/actuary cabal that spread the lies of maximum benefits with minimum funding?

Has one politician lost an election for accepting (or legislating) underfunded pensions?  Has one union been decertified for negotiating in blind faith? Has one actuary lost an assignment for bringing in an ARC of $3 billion when it should have been $10 billion (as is the case in New Jersey)?

It’s not the arms, it’s the aim.

10 responses to this post.

  1. Posted by Tough Love on December 26, 2013 at 2:19 pm

    Quoting… “Representatives for Detroit public workers are fighting to keep pension cuts to a minimum and they are unleashing the big gun: guilt. How dare these bankers/brokers/lawyers slash the pensions of the widows and orphans of dead police officers and firefighters!”

    Ridiculous Unions arguments.The bankers/brokers/lawyers never ripped off Detroit’s Taxpayers …the Unions did. Did they not BUY the favorable votes of the elected officials who granted such unjustified and unsustainable pensions? Did they not push for and get (for decades) the ILLEGAL 13-th pension check, stripping assets from Plans already seriously underfunded?

    Public Sector Unions are the wolf in sheep’s clothing…..and a CANCER inflicted upon Society.

    Reply

  2. Posted by George on December 27, 2013 at 2:00 am

    Why shouldn’t bondholders take the hit? It would serve a social purpose, keeping professionals like doctors who buy tax free bonds in the workforce as long as possible. Cancelling pensions will only bring barely employable people back into the work force to compete against other barely employable people.

    Reply

  3. Posted by Tough Love on December 27, 2013 at 3:06 am

    Not enough people seem to understand the enormity of the damage being done (by the grossly excessive Pensions & Benefit Promises being made to Public Sector workers EVERYWHERE) to necessary public services and to the ability of NON-Public Sector Taxpayers (who are called upon to pay for 80-90% of promised Public Sector pensions…..notwithstanding Union BS to the contrary) to save for their own (much SMALLER) retirements.

    It’s WAY past time for the financial “mugging” of the Taxpayers by the Public Sector Unions (and their bought-off elected officials) to end.

    Besides there being ZERO “legal” justification to treat bondholders (MANY of whom are small investors of lesser “wealth” than many Public Sector workers) any better than pensioners, America is desperately in need of a message from the Federal Courts that State Constitutional and Statutory pension “guarantees” protecting these grossly excessive Public Sector pensions will be disallowed in the Federal Courts ….and that it’s time for SERIOUS UNION givebacks…or risk losing it all.

    Reply

    • Posted by Tough Love on December 27, 2013 at 3:26 am

      In my above comment,.”better” should have been “worse”.

      Reply

      • Posted by Anonymous on December 27, 2013 at 7:35 am

        Doesn’t judge Rhodes ultimately get to decide? Those poor pensioners what will they do?

        Reply

        • Posted by Tough Love on December 27, 2013 at 2:35 pm

          The total liability for Detroit’s pensions (accrued to date) is about $19.5 Billion with an asset shortfall of somewhere between $2-$3.5 Billion.

          Even if the largest $3.5B is used and they only get the “draconian” 16% of that shortfall (the figure we keep hearing about) the Plan will STILL have assets sufficient to cover $19.5B – 0.84 x $3,5B = $16.56B or $16.56/$19.5 = 84.9% of promised benefits for past service accruals.

          So unless I’ve misunderstood what may happen (John….please help out here) the potential reduction is hardly “draconian” and certainly a great deal LESS than what their pensions would have been had their Unions and elected officials not colluded in granting these unnecessary and unaffordable pensions in the first place.

          Reply

          • Posted by Anonymous on December 27, 2013 at 7:45 pm

            Somebody help me out. Pensions for retires and current workers will be cut by 16%? Doesn’t sound all that bad. What am I missing. What about the health benefits?

          • Posted by Tough Love on December 27, 2013 at 8:23 pm

            Anonymous, Their retiree health benefits are likely gone ….so that will just make them EQUAL to what Private Sector retirees generally get from their employers in retirement…NOTHING.

            And considering that the value of the Taxpayer paid-for share of Public Sector pensions are VERY RARELY less than 2x times greater in value at retirement that of comparable Private Sector workers (making the SAME pay, retiring at the SAME age,and having the SAME years of service) and MOST OFTEN 3x-4x times greater, a 16% reduction in a grossly excessive pension (when compared to their Private Sector counterparts), barely scratches the surface of the necessary and appropriate reduction to equalize Private/Public Sector TOTAL COMPENSATION in comparable jobs.

            Sorry, but Public Sector workers are entitled to Total Compensation…EQUAL TO but NOT BETTER than their Private Sector counterparts….on the Taxpayers’ dime.

            And the “whoa it’s me” sob-story will get you no sympathy with those who understand the math and the enormity of the Taxpayer-ripoff that has taken place and has grown worse over the past two decades.

    • Posted by George on December 30, 2013 at 8:19 pm

      ” ZERO “legal” justification to treat bondholders (MANY of whom are small investors of lesser “wealth” than many Public Sector workers) any better than pensioners, A”

      Triple tax free investments only make sense for people who plan on having high incomes until the bond matures. .

      Reply

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