Slash teacher pensions so fat cats can get richer?

That’s what widely read economic blogger MISH would have us do. See, teachers aren’t special, no one is special – read below. 
 
In MISH’S world, every person who works for government is actually the problem. These people are just plain greedy, giving their lives in service to others just so they can collect a pension that allows them enough to live on after 30 years of work. Greedy fucking pigs. You show em, MISH! 
 
 Yet MISH offers no word on the growing numbers of Americans that make millions or even billions of dollars every year. I guess taxing them to pay for teachers and firefighters and police and garbage collectors would be unfair. They must be the truly special ones. 
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In response to New York Mayor Seeks Pension Overhaul; New Jersey Governor Tells Unions “Sue Me” Over Pension Cuts I received yet another email stating a line I frequently hear, that some occupations are “special” and need protection.
Here is the exact statement: “I think that teachers are special and must be separated out in this debate and protected.”
Ironically, if anyone is “special” in the student-teacher relationship, it is the students (and those who cannot protect themselves), not the teachers!
With no disrespect to teachers or any other profession, no one is “more special” than anyone else.

 

People who believe they are special are a huge part of the problem. Everyone wants their group protected at the expense of everyone else. Every group has their own excuse why they are special. It’s one of the reasons we are in this mess.
The person who emailed me has decidedly biased opinion (his wife is a teacher). I also hear it from police think they are special because their lives are on the line.
However, stats show that agricultural work is far more dangerous than police work. Fishing and roofing are of the most dangerous professions of all. Should fisherman, roofers, and agricultural workers get “special” pension benefits?
It is time to stop kidding ourselves and admit that no working class is more special than any other class.
Correcting Outrageous Pensions
Having laid sound rationale that no one is special, I recognize there are many teachers and others whose pensions are not that large. It is generally police, fire, administrators, and politicians whose pensions are most outrageous.
I have already proposed a solution to that problem: Tax pension benefits above a certain level, take the money out upfront, and put it back into the pension plans to make them solvent.

Many police, fire, school administrators, now collect $75,000 pensions and up. Worse yet, many retire at age 55. There are many who receive well in excess of $100,000 a year annually, then continue to work as contractors. This is preposterous.

First, the retirement age needs to increase to some realistic level, preferably pegged to the same level as the SS retirement age, but certainly no sooner than age 62.

Next, we should tax excessive pensions heavily. I do not know what the precise point, but it should be set at a level that will make the pension plans solvent in a reasonable period of time, say 10 years, with a reasonable discount rate of the lower of 5% or the long-bond yield.

As a side note, from this starting point in Case-Shiller PE ratios, 5% is actually far too generous.

Higher Taxes Will Not Fly

The alternative to my proposal is bankruptcy or default. Higher taxes will not fly.

People have had enough of higher taxes that go to ungrateful union members who think they are entitled to “special” benefits the average person can only dream about. It is very important for unions to see that.

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2 Comments

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2 responses to “Slash teacher pensions so fat cats can get richer?

  1. matt

    If you believe our financial system is a big ponzi scheme, that will come crashing down eventually, how can you support pensions that will saddle future state budgets with crippling costs?
    I firmly believe in paying today for today’s expenses in my own life and my governments, and pensions do not meet that philosophy.
    And I agree with mish – teachers and police and garbage collectors are doing nothing more special than baby sitters and security guards and janitors.

    • Your last point first Matt – teachers are more important than babysitters. Did your babysitter make you what you are today? Or is what you are today simply a product of your own bootstraps? I’m sure that you had some pretty important teachers in your life. (full disclosure – I’ve taught at UK for 22 years and my mother has taught high school English for 48 years.)

      City employees as a whole are what keep our thin veneer of civilization alive. I hate government waste as much as the next person – I pay a lot of taxes. And I also believe that government shouldn’t make promises it cant keep except at the cost of future generations. That is what we are seeing in the federal situation. Yep – its a ponzi scheme.

      But I also believe that we don’t make those who benefit enormously, even outrageously, from the systems supported by government to participate in funding them adequately -yes, there are those in this country who don’t pay enough in taxes. If we cripple government, as I sense that many people want to do in this country either by cutting goverment revenues or by disembowling whatever workforce quality we have, then where will we be? Fending for ourselves, while the fat cats hide behind their walls?

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