Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.
Reforming Public Pensions for the Common Good
Michael J. Gerson
June 8, 2012
By Michael J. Gerson
This is a transcript of a radio address broadcast on KDCR radio in Sioux Center, Iowa.
The recent recall election in Wisconsin attracted attention, campaign money and partisan bitterness from across the country. Having taken a series of controversial measures to limit the influence of public sector unions, Governor Scott Walker was challenged—then reconfirmed in office by a comfortable margin. This has led to some triumphalism on the political right and some recriminations on the political left.
But while these events were unfolding, there was a quieter revolution taking place on the west coast, in the cities of San Diego and San Jose.
Many California cities face a common problem. The cost of pensions and health benefits for public employees has been rising dramatically, while local economies and tax revenues have grown at a much slower rate. And the Great Recession has complicated the problem.
In San Diego, for example, the cost of city pensions has gone up more than 300 percent in the last decade, while revenue has increased about 20 percent. More than a fifth of San Jose’s general fund is now take up by pension commitments to public workers, and this means cutting spending for things likes roads, libraries and public safety. Four new libraries and a police station were built in San Jose but never opened, because the city could not afford to operate them.
It was the Democratic mayor who proposed serious public pension reform, in order to preserve public services. The measure passed by more than 70 percent. A similar reform was also overwhelmingly approved by voters in San Diego.
This represents the main public policy challenge at every level of American government: the accumulation of unaffordable public obligations. The state of Illinois, for example, has promised tens of billions of dollars in health benefits to public employees that it can’t afford. Nationally, there is a trillion dollar gap between the pension pledges of state governments and the money they have set aside to meet those pledges, a massive, growing amount of money that can never be used for public services.
At the national level, the problem is not identical, but just as serious. The challenge is not benefits for government workers, but unfunded, unsustainable health entitlement obligations to the elderly.
This is a nationwide fiscal crisis, but also a moral issue. For decades, political leaders at every level have made promises they could not afford and did not fund—a self-interested disregard for prudence and responsibility. New taxes may be part of the answer. But attempting to solve the whole problem with new revenues would be economically ruinous. And is it fair, for example, to expect the people of San Jose to pay higher taxes—not to fund libraries, homeless shelters and police stations—but to support the benefits of middle class public workers?
Every level of American government—local, state and federal—is now being tested. Can public officials return public obligations to sustainable levels? Can they confront interest groups in pursuing the common good? Will the voting public support difficult but necessary reforms?
There are some signs of seriousness in places such as San Jose and Wisconsin. But in Washington, DC, those signs remain rare. That will need to change—and sooner than many think.
—Michael J. Gerson is nationally syndicated columnist who appears twice weekly in The Washington Post and is the author of Heroic Conservatism (2007) and the co-author of City of Man: Religion and Politics in a New Era (2010).
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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”