Someone please tell me why I fall for it every time. Paul Krugman, Nobel Prize Winner Extraordinaire™ (NPWE), writes a biased rant against anything that smacks of fiscal conservatism, and I get all worked up.
The latest is Krugman’s attack on how fiscal conservatives, who are not inclined to have the federal government go further into debt, will not pay for state budget gaps resulting in — allegedly — roads being torn up and lights turned off:
The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno….
So the end result of the long campaign against government is that we’ve taken a disastrously wrong turn. America is now on the unlit, unpaved road to nowhere.
It’s interesting that Krugman completely ignores the one problem which is destroying state budgets, abusive public sector employee pensions.
Here’s how The New York Times reports the problem:
There’s a class war coming to the world of government pensions.
The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.
At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.
The figure comes from a study by the Pew Center on the States that came out in February. Pew estimated a $1 trillion gap as of fiscal 2008 between what states had promised workers in the way of retiree pension, health care and other benefits and the money they currently had to pay for it all.
And some economists say that Pew is too conservative and the problem is two or three times as large.
Everyone, except for NPWEs like Krugman, knows the reason was are in this mess. For decades unions used their political power to win contracts which amounted to an unsustainable ponzi scheme with public funds, in which state workers were allowed to game the system.
Here’s how The Daily News reports the problem:
In the last decade, half of the police and firefighters who retired in Yonkers [NY]collected pensions that exceeded their base pay, in (at least one case) by as much as 75%.
Don’t blame the officers. New York’s pension rules make it pay more to retire than to work. And the horrible habits here are a window on a national pension picture that’s looking more disastrous by the day.
Tacking on overtime is only one of a long list of union-won perks behind New York’s rising pension burden….
For years, unions have succeeded in enhancing pension formulas while incentivizing workers to maximize their pension payouts. Called “spiking,” “padding” or “boosting and tacking,” the strategy of adding “extras” to the final salary in order to nab a higher pension has driven New York’s Metropolitan Transit Authority into a budget crisis.
The public trough has been abused. Federal government bailouts — which is what Krugman is advocating — will simply reward the most irresponsible states and most voracious unions.
We are all Central Falls, now.
The time has come for hard choices, not more bailouts.