Wednesday, December 4, 2013
Earthquake for Unions in Detroit
To residents in New York, or California, Illinois or others, who wonder why their property taxes are so high, the answer isn't complicated: it's the wildly generous pensions we pay to our public employees, particularly teachers. The typical teacher where I live is able to retire at age 57 with a (present value) retirement package worth $1.6 million (see "Your Kid's Teacher, Millionaire"). Some of us have been arguing for years that this is an unsustainable tax-and-spend death spiral that will result in New York's gradual slide towards bankruptcy, like Detroit.
Not surprisingly, public unions are not particularly accommodating of this argument; after all, in many states, such as here in New York, state constitutions protect retirement benefits from ever being touched or modified in any way.
Except, no. In a remarkable ruling last week, a federal court ruled that federal bankruptcy law trumps state constitutional law, and that existing pensions in Detroit could be cut or even eliminated.
If this isn't a wake up call to public sector unions and their political enablers, I don't know what is. Your pensions are not safe, and it's a problem of your own creation. Your members, many of who don't even want to be but are forced by state law, will be the victims of your decades of overreach.
It would be nice if this could be calmly fixed before the inevitable crisis, but don't hold your breath.