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Veronique de Rugy debunks myths about public sector pension liabilities

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From Reason magazine. (H/T Hyscience)

Bullet point summary:

Myth 1: Unfunded state pensions do not represent an immediate threat and are therefore not in crisis.
Fact 1: In the best case scenario, some state pension funds will run out as soon as 2017. And the longer the states wait to fully fund their pensions, the more drastic the financial consequences will be.

Myth 2: State debt accurately reflects state liabilities. And state default is not a concern because the federal government will bail the states out before they reach that point.
Fact 2: Many government pension liabilities are kept off the books, so most states and cities underestimate their actual debt.

Myth 3: State and local workers are not overpaid. And even if they are, changing their compensation won’t make a difference.
Fact 3: While this is a complex issue, the total compensation package for state workers does tend to exceed that of their private-sector counterparts.

Myth 4: The financial crisis, which caused a depreciation of pension assets, is the real culprit behind pension underfunding.
Fact 4: While the recession dealt a severe blow to state pensions, the problem of pension underfunding dates back to the early 2000s. Many states had already failed to cover the cost of promised benefits even before they felt the full weight of the Great Recession.

And conclusion:

Here’s the bottom line: We can argue endlessly over when the pension plans will run out of cash, or what the true value of the unfunded liabilities is. We can even debate what the true meaning of being broke. But there is one issue where there is no room for debate. Once the pension plans run out of money, the payments will have to come out of general funds, meaning out of the pockets of taxpayers. If the states want to avoid this, they must push through reforms as soon as possible. A good first step would be to switch to accounting methods that show the true market value of their liabilities. Once those methods are in place, lawmakers should consider moving away from defined benefit pensions.

What states like Wisconsin and Ohio are doing is completely necessary. This is a real crisis, and we need to act now to make sure that taxpayers are not squeezed when the money runs out.

News

Republicans introduce national right-to-work legislation

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Sen. James Demint

From the Hill.

Excerpt:

Eight Republican Senators introduced a bill Tuesday giving workers a choice as to whether to join labor unions, which they argue will boost the nation’s economy and provide an increase in wages.

Sen. Jim DeMint (R-S.C.), introduced the National Right to Work Act to “reduce workplace discrimination by protecting the free choice of individuals to form, join, or assist labor organizations, or to refrain from such activities,” according to a statement.

Seven other Republicans signed onto the effort: Sens. Tom Coburn (Okla.), Orrin Hatch (Utah), Mike Lee (Utah), Rand Paul (Ky.), James Risch (Idaho), Pat Toomey (Pa.) and David Vitter (La.).

“Facing a steady decline in membership, unions have turned to strong-arm political tactics to make forced unionization the default position of every American worker, even if they don’t want it,” Hatch said. “This is simply unacceptable. At the very least, it should be the policy of the U.S. government to ensure that no employee will be forced to join a union in order to get or keep their job.

“Republicans cited a recent poll they said shows that 80 percent of union members support having their policy and that “Right to Work” states outperform “forced-union” states in factors that affect worker well being.

From 2000 to 2008, about 4.7 million Americans moved from forced-union to right to work states and a recent study found that there is “a very strong and highly statistically significant relationship between right-to-work laws and economic growth,” and that from 1977 to 2007, right-to-work states experienced a 23 percent faster growth in per capita income than states with forced unionization.

“To see the negative impacts of forced unionization, look no further than the struggling businesses in states whose laws allow it,” Vitter said. “It can’t be a coincidence that right-to-work states have on balance grown in population over the last 10 years, arguably at the expense of heavy union-favoring states.”

DeMint blamed the problems faced by U.S. automakers on the unions.

“Forced-unionism helped lead to GM and Chrysler’s near bankruptcy and their requests for government bailouts as they struggled to compete in a global marketplace,” he said. “When American businesses suffer because of these anti-worker laws, jobs and investment are driven overseas.”

If you want to attract businesses, then you need to have pro-business laws. That’s where jobs come from – businesses.

Here’s an article about states who are trying to pass these laws to attract more employers.

Excerpt:

Currently 14 states beyond Indiana and Wisconsin are considering legislation that would limit union benefits and/or collective bargaining power. They are: Alaska, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Mexico, Ohio, Pennsylvania, Virginia, Washington (state) and West Virginia. In any number of these states, supporters have planned or held rallies against the measures. But public support might be less than deep. According to a Rasmussen Poll conducted late last week and released Monday, 48 percent of likely U.S. voters sided with Wisconsin Governor Walker whereas only 38 percent sided with his union opponents; the other 14 percent were undecided. And 50 percent of the respondents favored reducing their home state’s government payroll by one percent a year for 10 years either by reducing the work force or reducing their pay. Only 28 percent opposed such action.

This is how we are going to turn the recession around. Cut off the spending on left-wing special interests – NPR, PBS, ACORN, Planned Parenthood, Unions. They all will have to pay their own way, just like the grown-ups do.

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Ohio Republicans pass bill to cut bloated union salaries and benefits

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From the Wall Street Journal.

Excerpt:

Ohio state senators narrowly approved a bill that would prohibit public-employee unions representing 400,000 state employees from bargaining over health benefits, pensions and working conditions.

While national attention has focused for weeks on a similar battle in Wisconsin, the vote, by 17-16 in Ohio’s Republican-controlled Senate, virtually ensured that the Buckeye State will become the first to strip collective bargaining rights from public employees as a means of grappling with gaping budget deficits.

The bill now goes to the House, where the Republicans have a 59-40 majority. If approved, as expected, it will move for signature to Republican Ohio Gov. John Kasich, who supports the bill.

[…]Republican lawmakers say worker pay and benefit cuts are needed to offset projected budget shortfalls. “If we’re going to grow in Ohio, we cannot raise taxes,” Republican state Sen. Keith Faber said Wednesday.

[…]Union officials began a coordinated effort to try to block bills in Wisconsin and Ohio that would curtail collective bargaining rights for public workers, and right-to-work legislation introduced in 13 states, including New Hampshire and Missouri. Those bills would allow workers in the private-sector to opt out of paying dues or belonging to a union. Such legislation threatens the unions’ funding and their political clout heading into the 2012 elections.

In Wisconsin, Republican state senators passed a resolution fining the 14 Democrats who left the state Feb. 17 to prevent a vote on Republican Gov. Scott Walker’s bill restricting public employees’ collective-bargaining rights. The vote on the resolution didn’t require a quorum, unlike the budget bill that would curb bargaining.

The Wisconsin Democrats, who are in Illinois, will be fined $100 a day for their absence when the Senate is in session. Several of the Democrats went to Kenosha, Wis., Monday to meet with Republican Wisconsin Senate Majority Leader Scott Fitzgerald, said Fitzgerald spokesman Andrew Welhouse. But the fines seemed to set back efforts to break the impasse.

Remember that Indiana Republicans are proposing a right-to-work bill, which would allow workers to OPT OUT of paying union dues, which are just used to campaign for Democrats and leftists causes anyway. This bill would break the backs of the unions.

Buckeyes and Badgers and Hoosiers, oh my!