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One generation promised itself the next generation will pay them massive, undeserved pensions Defined-benefit pensions are a form of deferred compensation. St

One generation promised itself the next generation will pay them massive, undeserved pensions Defined-benefit pensions are a form of deferred compensation. State employees in the past accepted lower salaries in exchange for this future benefit. Taking away that pension now would be theft from these people.

zeypher 9y ago
Using a similar argument, paying yourself exorbitant over-market compensation while cooking the books to avoid accounting for the true (and unaffordable) cost to your funders and auditors (the public, for Gov't) is a form of embezzlement. I think the truth lies somewhere between here, but the obligations probably can't reasonably be met, and probably never could.
- ebbv 9y ago
  Those workers didn’t decide their own pay and benefits. And frankly they aren’t ridiculous. They are very reasonable and frankly a joke compared to the compensation of executives and bankers who bribe politicians to undermine and kill worker benefits.
  - delecti 9y ago
    Wealth inequality is certainly an issue, but it's not relevant to the issue being discussed. That there exists private sector executives whose salaries and benefits have more commas than most people can hope to make isn't relevant to pensions of an average worker.
- pessimizer 9y ago
  > paying yourself exorbitant over-market compensation It would be super-cool if the report was about this, but it's not. There's not a shred of evidence given that the compensation given to state workers was over-market.
  - bunderbunder 9y ago
    I don't know about over-market, but it certainly feels high in real terms. Divide the total pension liability by the number of households in the state, and you get something approaching $150,000 per household, or about 2.5x the state's median household income. That's a pretty big burden of debt to have sitting on the shoulders of every resident of the state. We've also got some pretty egregious cases to consider, which suggest that there aren't any guard rails around the pension system. The highest-paid pensioner in the state was able to retire at 55, and receives more than half a million annually. Plus the state's better-than-inflation 3% COLA.
    - Frondo 9y ago
      Back when I was a kid, public sector jobs were known to pay less than private sector jobs, but offer stability and a pension. They're also one of the few sectors of our working economy readily represented by unions. My take on this is not that the public sector somehow struck it rich, but that the rest of us--those of us in the private sector--have had the screws put to us for a long long time, and that's why the public sector now looks fat and happy. They didn't strike it rich, we struck it poor.
      - bunderbunder 9y ago
        I'm not even sure about that. This is all anecdotal, but, the going rate for public jobs in my city is still quite low, and this does seem to have an impact on the quality of candidates they receive. Since they can't attract candidates as effectively (frankly, that nice pension plan isn't nearly enough to make up for the crummy salary relative to what I can earn elsewhere), they aren't getting as many opportunities to hire really ambitious people. This has repercussions that play out in all sorts of ways, but, being a tech guy, the one I am most aware of is that acquaintances complain that the city often relies overmuch on low-tech and highly manual procedures for accomplishing basic tasks, because nobody is really motivated to streamline them. That results in lower per-employee productivity, which, in turn, increases the headcount requirements. Which, I'm guessing, increases overall labor costs relative to what they could be otherwise. So it's not that the state's salary and pension costs are high because employees are well-compensated, it's actually something of the opposite.
bunderbunder 9y ago
I think the paren't side of the argument also holds water, though: Paying these absurd pensions is something like a form of theft from future taxpayers. Most of the people who will have to pay for these pensions wouldn't have been of voting age when a lot of the deals were being made, so they really had zero say in the matter. I doubt that state employees from previous generations realized that they were agreeing to skim all this money money off of their children and grandchildren, but, nonetheless, here we are. It's a situation where it's going to be impossible to do justice to everyone. But it's going to be important to minimize the injustice. That is probably going to require some concessions on the parts of pensioners - if they don't take a scale back, it's just going to put Illinois on a downward spiral as its most economically productive citizens and businesses emigrate. That's a worse path. It will lead to pensioners suffering an even worse kick in the pocketbook, and create a lot of collateral damage for working people in the process.
- ebbv 9y ago
  They’re not absurd pensions. They’re nothing compared to what many, many executives even of failing companies get paid.
  - EpicEng 9y ago
    Ok, but I, the tax payer, am not footing that bill (yes, I'm sure we can find instances of bailouts and whatnot, but that's not the norm.) Private companies can do whatever they like in this regard, I don't really care at a practical level. I care when I'm paying the bill.
    - deleted 9y ago
      [deleted]
    - dsfyu404ed 9y ago
      This. I am ok with the state paving roads. I am not ok in the state paving roads in gold brick. I am ok with the state buying cop cars and work trucks. I am not ok with the state subsidizing top of the line pursuit models for departments that don't have highway to patrol and spec'ing out top trim trucks for the DOT. The same goes for employee benefits. Something is ok. Luxury is not. If there is a reasonably comparison between employee pensions and private industry "executive compensation" should be a massive red flag. Being a civil servant should not be about the money.
JumpCrisscross 9y ago
> Taking away that pension now would be theft from these people There are four solutions to this problem: austerity (cutting spending and/or raising taxes), default (cutting benefits), borrowing and federal bail-out. At this point, the first postpones the second if borrowing or a bail-out aren’t options. (Borrowing explicitly postpones it.) Note that “default” doesn’t mean unilateral cutting. It is politically negotiated, and may involve the state giving pensioners something in exchange for reduced cash benefits.
- blackbagboys 9y ago
  Cutting spending and raising taxes are not both indistinguishable forms of “austerity”. In the U.S. political context, the former almost always means cutting essential services to the most precarious people in society and the burden of the latter is almost always born by those with the most resources to bear it. Attempting to elide the two together under one term fundamentally misrepresents the politics of the situation and makes two very different options sound equally unpalatable.
  - sct202 9y ago
    In Illinois, several recent taxes have been sales tax increases which are effectively regressive. Also a our state income tax is a flat percentage, and a temporary tax reduction expired so that increase is also hitting lower income residents at the same time that services are being cut.
testvox 9y ago
They also accepted lower tax rates by letting the government use their pension funds rather then raising taxes. Why should I pay higher taxes to fund their low tax era?
- jacobolus 9y ago
  The 'they' who accepted lower taxes is rich businesspeople etc., the 'they' who will lose their retirement is career schoolteachers etc.
  - toomuchtodo 9y ago
    And even today we continue to overspend with reduced tax rates. Somebody has to take the punch bowl away and make us pay what’s come due.
    - pulisse 9y ago
      Somebody has to take the punch bowl away and make us pay what’s come due. Why is it public-sector retirees in particular who must pay that price? Again, they have moral and legal claims on their pensions, and they (largely low and moderate income households) are not the primary beneficiaries of decades of low taxes that left state pensions underfunded.
      - deleted 9y ago
        [deleted]
      - smsm42 9y ago
        > Why is it public-sector retirees in particular who must pay that price? Because they have voted in the politicians who perpetrated the fraud, and gladly bought into it. Public sector unions are one of the largest political donors.
        toomuchtodo 9y ago
        Public sector retirees are not the only people who voted for these politicians.
deleted 9y ago
[deleted]
fricat1ve 9y ago
>State employees in the past accepted lower salaries in exchange for this future benefit. Well that was not the case with California's 1999 pension reform, where pensions were retroactively increased by 50% overnight.[0] That kind of money doesn't just appear out of nowhere. Many of these cases were transparent scams and the people involved knew it. [0] http://www.sandiegouniontribune.com/opinion/sd-calpers-mendacity-never-ended-20160919-story.html http://www.sandiegouniontribune.com/opinion/sd-calpers-menda...
ashooner 9y ago
"State employees in the past accepted lower salaries in exchange for this future benefit." Isn't this the public sector equivalent of letting a startup pay you in equity? While it may have been characterized as more secure than personal investment, agreeing to this compensation scheme doesn't remove the burden of risk, particularly when the 'startup' offering to pay you later is state government.
- pulisse 9y ago
  While it may have been characterized as more secure than personal investment, agreeing to this compensation scheme doesn't remove the burden of risk Owing a defined-benefit pension is a legal obligation to provide a future revenue stream. It's more like a bond than a stock, and debt generally has priority over equity.
  - smsm42 9y ago
    Companies default on bonds all the time. That's one of the reasons bonds carry interest - partially to compensate the bondholder for the opportunity costs of not having the money spent on bond and partially to compensate for the risk of the default. Would you buy a bond from a company that is consistently increasing spending 6x their revenue? Would you do it if their plan for covering the difference is "we'll just take more money from you when we need to"?
    - chaboud 9y ago
      And employees who took their government’s and their employer’s word (and contract) for it are somehow he ones to blame? It’s no small thing to suggest that people should view the legal obligations of their governments with skepticism. That we should anticipate, and account for the risk of, government default in our employment plans. Politicians who didn’t want to raise taxes (to increase pay, to attract workers) made promises of deferred compensation (which have to be higher to offset now vs. future). Voters bought it, -hook, line, and sinker-, and the entire state bought public services on credit. I have a hard time pinning that on the guy doing largely unskilled work for the last 30 years of his life. He may be left holding the bag, but I’m not going to leave him with the blame.
koolba 9y ago
> Defined-benefit pensions are a form of deferred compensation. Defined benefit plans are at best a deferred time bomb and at worst a deferred time bomb with a short fuse. > State employees in the past accepted lower salaries in exchange for this future benefit. So? If they were that concerned about the future benefits they should have received a defined contribution plan that pours the money into an employee controlled sinking fund. Nothing stops the State from declaring bankruptcy and reneging on its end of this deal. It may sound callous but if the alternative is raising taxes to the point that nobody is left in Illinois, is that really an alternative? Sometimes you have to amputate an arm to save the patient. > Taking away that pension now would be theft from these people. Agreeing to these outrageous pensions with no way to pay for them is theft from all current and future tax payers. This is a scamola run by politicians to buy votes from public sector unions and it needs to end.
- closeparen 9y ago
  Yes, bankruptcy is a well established option for people who have bought things they can’t pay for. Part of the deal is losing your own assets. Residents signed up for these debts; residents must have their own retirement savings and property seized to pay for them. You’ve established that there’s no problem seizing already-earned compensation when the going gets tough, so why not yours?
  - koolba 9y ago
    > Yes, bankruptcy is a well established option for people who have bought things they can’t pay for. Part of the deal is losing your own assets. Residents signed up for these debts; residents must have their own retirement savings and property seized to pay for them. You’ve established that there’s no problem seizing already-earned compensation when the going gets tough, so why not yours? Residents didn't directly sign up for these debts. A series of corrupt Democrat politicians who used theses pensions to buy union votes are responsible. While I admit the thought of their personal assets being seized to pay off these obligations does make me smile, I also don't think that'd be legal. Similarly, it's not the personal assets of the rest of the citizens of Illinois that would be at stake here. There may be an argument for the sale of public assets, owned by the State itself, to cover some part of this in a bankruptcy hearing but I'd imagine there is going to be significant legal challenges to that as well. The optics of literally selling our children's public inheritance to pay off these corrupt deals is not going to play well with the electorate. The counterparty for these pensions is not the individual residents of the State. It's the State itself, and possibly a subordinate institution. Sinking funds for current employees of those institutions are fair game. Similarly, the rest of the country is not responsible for these debts either.
smsm42 9y ago
> Taking away that pension now would be theft from these people. The trick here is there's nothing to "take away". These benefits exist only as promises - there's no funding for them. If I promise to you if you work for me for a decade I will give you a trillion dollars, and then turns out I don't actually have the trillion dollars, the theft - or, more precisely, the fraud - doesn't happen when the lack of the trillion dollars is revealed. It happened when I promised you the trillion dollars without having it. The theft from these people has already happened - that's what people fail to realize.
- jrs235 9y ago
  Likewise, I can try to sue you for the trillion dollars you promised me but again, it doesn't exist and I'll never get it. You can declare bankruptcy and I can try to ask the court for some restitution in an amount the court believes you can support. The court will not, however, force you to be my slave and give me all your earnings from labor. Life ain't fair. Those promised the pensions got screwed. It sucks, I'm sorry... life isn't fair.
MR4D 9y ago
In some cases that may be true - in Illinois it is the other way around. Illinois has shown that it will willingly take from the people in order to pay current as well as deferred payments to government workers. Below is a link to an article and research that shows that Illinois was far above normal government pay. From the article below, I quote, "Not only do state workers in Illinois make more than the private-sector workers who pay their salaries, the average pay for state workers in Illinois is out of step with their peers in the other 49 state." ARTICLE: https://www.illinoispolicy.org/press-releases/state-government-workers-in-illinois-highest-paid-in-the-nation-illinois-policy-institute-report/ https://www.illinoispolicy.org/press-releases/state-governme... RESEARCH PAPER: https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2016/05/AFSCME_cadillac-benefits.pdf https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2016... My best guess is that Illinois will default (in some manner) on these pensions. The next recession, combined with net population drop, will doom the state's finances beyond repair if they aren't already too far gone. I'd also recommend looking through this to see how negligent their political leaders have been over the years: http://www.pewtrusts.org/en/search?q=illinois%20pension http://www.pewtrusts.org/en/search?q=illinois%20pension
gamblor956 9y ago
Actually, they accepted above-market salaries with above-market pay raises and above-market retirement benefits. There was literally no sacrifice involved. There are plenty of government unions that did bargain for lower salaries in exchange for higher retirement benefits, (for example, many teachers' unions did) but those unions won't be found in Illinois.
rayiner 9y ago
> State employees in the past accepted lower salaries in exchange for this future benefit. Except it's not true. Teachers in Illinois, for example, earn about $65,000 on average. In the U.K., which has high teacher salaries compared to the OECD, is around 28,000 pounds (roughly $42,000 at typical exchange rates). https://www.independent.co.uk/news/youngest-and-the-best-paid-report-shows-teachers-in-uk-earn-one-of-the-highest-salaries-8673616.html https://www.independent.co.uk/news/youngest-and-the-best-pai.... Same is true for police, etc.
- ceejayoz 9y ago
  Comparing US to UK raw salaries introduces a lot of other variables. State employees in the US have traditionally accepted lower salaries than other similarly skilled workers in the US in exchange for benefits.
  - rayiner 9y ago
    Workers who switch from teaching jobs to non-teaching jobs see their salaries typically go down. https://www.heritage.org/education/report/assessing-the-compensation-public-school-teachers https://www.heritage.org/education/report/assessing-the-comp.... Teachers only look relatively underpaid if you lump all college graduates together and look at average salaries. That number is heavily skewed, because many of our executives and professionals (bankers, doctors, lawyers, programmers) are paid multiples more than in Europe. That just means those people are paid too much, not that teachers are paid too little.
    - ceejayoz 9y ago
      > Workers who switch from teaching jobs to non-teaching jobs see their salaries typically go down. That's hardly shocking. My salary would go down if I switched from programming (which I've been doing for decades) to something else, too.
Shivetya 9y ago
however the idea that government workers accepted lower pay is wrong in most cases and a simple tactic where if repeated enough people start to believe it. let alone far too many of the pension systems allow workers to game the system and end up with more in retirement than in service. there are many systems where the last three years pay can be used as the basis for the pension and stacking overtime and hoarding vacation are common place means of spiking the returns. that is the abuse that bankrupts systems. the lower end government worker gets the shaft while the higher up politicians and police and fire rake in 100k retirements.
- jrs235 9y ago
  Exactly! It's the aggregated selfishness and greed of many individuals that ruins it for all. "No single raindrop believes it is responsible for the flood."

zeypher 9y ago

Using a similar argument, paying yourself exorbitant over-market compensation while cooking the books to avoid accounting for the true (and unaffordable) cost to your funders and auditors (the public, for Gov't) is a form of embezzlement. I think the truth lies somewhere between here, but the obligations probably can't reasonably be met, and probably never could.

ebbv 9y ago
Those workers didn’t decide their own pay and benefits. And frankly they aren’t ridiculous. They are very reasonable and frankly a joke compared to the compensation of executives and bankers who bribe politicians to undermine and kill worker benefits.
- delecti 9y ago
  Wealth inequality is certainly an issue, but it's not relevant to the issue being discussed. That there exists private sector executives whose salaries and benefits have more commas than most people can hope to make isn't relevant to pensions of an average worker.
pessimizer 9y ago
> paying yourself exorbitant over-market compensation It would be super-cool if the report was about this, but it's not. There's not a shred of evidence given that the compensation given to state workers was over-market.
- bunderbunder 9y ago
  I don't know about over-market, but it certainly feels high in real terms. Divide the total pension liability by the number of households in the state, and you get something approaching $150,000 per household, or about 2.5x the state's median household income. That's a pretty big burden of debt to have sitting on the shoulders of every resident of the state. We've also got some pretty egregious cases to consider, which suggest that there aren't any guard rails around the pension system. The highest-paid pensioner in the state was able to retire at 55, and receives more than half a million annually. Plus the state's better-than-inflation 3% COLA.
  - Frondo 9y ago
    Back when I was a kid, public sector jobs were known to pay less than private sector jobs, but offer stability and a pension. They're also one of the few sectors of our working economy readily represented by unions. My take on this is not that the public sector somehow struck it rich, but that the rest of us--those of us in the private sector--have had the screws put to us for a long long time, and that's why the public sector now looks fat and happy. They didn't strike it rich, we struck it poor.
    - bunderbunder 9y ago
      I'm not even sure about that. This is all anecdotal, but, the going rate for public jobs in my city is still quite low, and this does seem to have an impact on the quality of candidates they receive. Since they can't attract candidates as effectively (frankly, that nice pension plan isn't nearly enough to make up for the crummy salary relative to what I can earn elsewhere), they aren't getting as many opportunities to hire really ambitious people. This has repercussions that play out in all sorts of ways, but, being a tech guy, the one I am most aware of is that acquaintances complain that the city often relies overmuch on low-tech and highly manual procedures for accomplishing basic tasks, because nobody is really motivated to streamline them. That results in lower per-employee productivity, which, in turn, increases the headcount requirements. Which, I'm guessing, increases overall labor costs relative to what they could be otherwise. So it's not that the state's salary and pension costs are high because employees are well-compensated, it's actually something of the opposite.

bunderbunder 9y ago

I think the paren't side of the argument also holds water, though: Paying these absurd pensions is something like a form of theft from future taxpayers. Most of the people who will have to pay for these pensions wouldn't have been of voting age when a lot of the deals were being made, so they really had zero say in the matter. I doubt that state employees from previous generations realized that they were agreeing to skim all this money money off of their children and grandchildren, but, nonetheless, here we are. It's a situation where it's going to be impossible to do justice to everyone. But it's going to be important to minimize the injustice. That is probably going to require some concessions on the parts of pensioners - if they don't take a scale back, it's just going to put Illinois on a downward spiral as its most economically productive citizens and businesses emigrate. That's a worse path. It will lead to pensioners suffering an even worse kick in the pocketbook, and create a lot of collateral damage for working people in the process.

ebbv 9y ago
They’re not absurd pensions. They’re nothing compared to what many, many executives even of failing companies get paid.
- EpicEng 9y ago
  Ok, but I, the tax payer, am not footing that bill (yes, I'm sure we can find instances of bailouts and whatnot, but that's not the norm.) Private companies can do whatever they like in this regard, I don't really care at a practical level. I care when I'm paying the bill.
  - deleted 9y ago
    [deleted]
  - dsfyu404ed 9y ago
    This. I am ok with the state paving roads. I am not ok in the state paving roads in gold brick. I am ok with the state buying cop cars and work trucks. I am not ok with the state subsidizing top of the line pursuit models for departments that don't have highway to patrol and spec'ing out top trim trucks for the DOT. The same goes for employee benefits. Something is ok. Luxury is not. If there is a reasonably comparison between employee pensions and private industry "executive compensation" should be a massive red flag. Being a civil servant should not be about the money.

JumpCrisscross 9y ago

> Taking away that pension now would be theft from these people There are four solutions to this problem: austerity (cutting spending and/or raising taxes), default (cutting benefits), borrowing and federal bail-out. At this point, the first postpones the second if borrowing or a bail-out aren’t options. (Borrowing explicitly postpones it.) Note that “default” doesn’t mean unilateral cutting. It is politically negotiated, and may involve the state giving pensioners something in exchange for reduced cash benefits.

blackbagboys 9y ago
Cutting spending and raising taxes are not both indistinguishable forms of “austerity”. In the U.S. political context, the former almost always means cutting essential services to the most precarious people in society and the burden of the latter is almost always born by those with the most resources to bear it. Attempting to elide the two together under one term fundamentally misrepresents the politics of the situation and makes two very different options sound equally unpalatable.
- sct202 9y ago
  In Illinois, several recent taxes have been sales tax increases which are effectively regressive. Also a our state income tax is a flat percentage, and a temporary tax reduction expired so that increase is also hitting lower income residents at the same time that services are being cut.

testvox 9y ago

They also accepted lower tax rates by letting the government use their pension funds rather then raising taxes. Why should I pay higher taxes to fund their low tax era?

jacobolus 9y ago
The 'they' who accepted lower taxes is rich businesspeople etc., the 'they' who will lose their retirement is career schoolteachers etc.
- toomuchtodo 9y ago
  And even today we continue to overspend with reduced tax rates. Somebody has to take the punch bowl away and make us pay what’s come due.
  - pulisse 9y ago
    Somebody has to take the punch bowl away and make us pay what’s come due. Why is it public-sector retirees in particular who must pay that price? Again, they have moral and legal claims on their pensions, and they (largely low and moderate income households) are not the primary beneficiaries of decades of low taxes that left state pensions underfunded.
    - deleted 9y ago
      [deleted]
    - smsm42 9y ago
      > Why is it public-sector retirees in particular who must pay that price? Because they have voted in the politicians who perpetrated the fraud, and gladly bought into it. Public sector unions are one of the largest political donors.
      - toomuchtodo 9y ago
        Public sector retirees are not the only people who voted for these politicians.

deleted 9y ago

[deleted]

fricat1ve 9y ago

>State employees in the past accepted lower salaries in exchange for this future benefit. Well that was not the case with California's 1999 pension reform, where pensions were retroactively increased by 50% overnight.[0] That kind of money doesn't just appear out of nowhere. Many of these cases were transparent scams and the people involved knew it. [0] http://www.sandiegouniontribune.com/opinion/sd-calpers-mendacity-never-ended-20160919-story.html http://www.sandiegouniontribune.com/opinion/sd-calpers-menda...

ashooner 9y ago

"State employees in the past accepted lower salaries in exchange for this future benefit." Isn't this the public sector equivalent of letting a startup pay you in equity? While it may have been characterized as more secure than personal investment, agreeing to this compensation scheme doesn't remove the burden of risk, particularly when the 'startup' offering to pay you later is state government.

pulisse 9y ago
While it may have been characterized as more secure than personal investment, agreeing to this compensation scheme doesn't remove the burden of risk Owing a defined-benefit pension is a legal obligation to provide a future revenue stream. It's more like a bond than a stock, and debt generally has priority over equity.
- smsm42 9y ago
  Companies default on bonds all the time. That's one of the reasons bonds carry interest - partially to compensate the bondholder for the opportunity costs of not having the money spent on bond and partially to compensate for the risk of the default. Would you buy a bond from a company that is consistently increasing spending 6x their revenue? Would you do it if their plan for covering the difference is "we'll just take more money from you when we need to"?
  - chaboud 9y ago
    And employees who took their government’s and their employer’s word (and contract) for it are somehow he ones to blame? It’s no small thing to suggest that people should view the legal obligations of their governments with skepticism. That we should anticipate, and account for the risk of, government default in our employment plans. Politicians who didn’t want to raise taxes (to increase pay, to attract workers) made promises of deferred compensation (which have to be higher to offset now vs. future). Voters bought it, -hook, line, and sinker-, and the entire state bought public services on credit. I have a hard time pinning that on the guy doing largely unskilled work for the last 30 years of his life. He may be left holding the bag, but I’m not going to leave him with the blame.

koolba 9y ago

> Defined-benefit pensions are a form of deferred compensation. Defined benefit plans are at best a deferred time bomb and at worst a deferred time bomb with a short fuse. > State employees in the past accepted lower salaries in exchange for this future benefit. So? If they were that concerned about the future benefits they should have received a defined contribution plan that pours the money into an employee controlled sinking fund. Nothing stops the State from declaring bankruptcy and reneging on its end of this deal. It may sound callous but if the alternative is raising taxes to the point that nobody is left in Illinois, is that really an alternative? Sometimes you have to amputate an arm to save the patient. > Taking away that pension now would be theft from these people. Agreeing to these outrageous pensions with no way to pay for them is theft from all current and future tax payers. This is a scamola run by politicians to buy votes from public sector unions and it needs to end.

closeparen 9y ago
Yes, bankruptcy is a well established option for people who have bought things they can’t pay for. Part of the deal is losing your own assets. Residents signed up for these debts; residents must have their own retirement savings and property seized to pay for them. You’ve established that there’s no problem seizing already-earned compensation when the going gets tough, so why not yours?
- koolba 9y ago
  > Yes, bankruptcy is a well established option for people who have bought things they can’t pay for. Part of the deal is losing your own assets. Residents signed up for these debts; residents must have their own retirement savings and property seized to pay for them. You’ve established that there’s no problem seizing already-earned compensation when the going gets tough, so why not yours? Residents didn't directly sign up for these debts. A series of corrupt Democrat politicians who used theses pensions to buy union votes are responsible. While I admit the thought of their personal assets being seized to pay off these obligations does make me smile, I also don't think that'd be legal. Similarly, it's not the personal assets of the rest of the citizens of Illinois that would be at stake here. There may be an argument for the sale of public assets, owned by the State itself, to cover some part of this in a bankruptcy hearing but I'd imagine there is going to be significant legal challenges to that as well. The optics of literally selling our children's public inheritance to pay off these corrupt deals is not going to play well with the electorate. The counterparty for these pensions is not the individual residents of the State. It's the State itself, and possibly a subordinate institution. Sinking funds for current employees of those institutions are fair game. Similarly, the rest of the country is not responsible for these debts either.

smsm42 9y ago

> Taking away that pension now would be theft from these people. The trick here is there's nothing to "take away". These benefits exist only as promises - there's no funding for them. If I promise to you if you work for me for a decade I will give you a trillion dollars, and then turns out I don't actually have the trillion dollars, the theft - or, more precisely, the fraud - doesn't happen when the lack of the trillion dollars is revealed. It happened when I promised you the trillion dollars without having it. The theft from these people has already happened - that's what people fail to realize.

jrs235 9y ago
Likewise, I can try to sue you for the trillion dollars you promised me but again, it doesn't exist and I'll never get it. You can declare bankruptcy and I can try to ask the court for some restitution in an amount the court believes you can support. The court will not, however, force you to be my slave and give me all your earnings from labor. Life ain't fair. Those promised the pensions got screwed. It sucks, I'm sorry... life isn't fair.

MR4D 9y ago

In some cases that may be true - in Illinois it is the other way around. Illinois has shown that it will willingly take from the people in order to pay current as well as deferred payments to government workers. Below is a link to an article and research that shows that Illinois was far above normal government pay. From the article below, I quote, "Not only do state workers in Illinois make more than the private-sector workers who pay their salaries, the average pay for state workers in Illinois is out of step with their peers in the other 49 state." ARTICLE: https://www.illinoispolicy.org/press-releases/state-government-workers-in-illinois-highest-paid-in-the-nation-illinois-policy-institute-report/ https://www.illinoispolicy.org/press-releases/state-governme... RESEARCH PAPER: https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2016/05/AFSCME_cadillac-benefits.pdf https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2016... My best guess is that Illinois will default (in some manner) on these pensions. The next recession, combined with net population drop, will doom the state's finances beyond repair if they aren't already too far gone. I'd also recommend looking through this to see how negligent their political leaders have been over the years: http://www.pewtrusts.org/en/search?q=illinois%20pension http://www.pewtrusts.org/en/search?q=illinois%20pension

gamblor956 9y ago

Actually, they accepted above-market salaries with above-market pay raises and above-market retirement benefits. There was literally no sacrifice involved. There are plenty of government unions that did bargain for lower salaries in exchange for higher retirement benefits, (for example, many teachers' unions did) but those unions won't be found in Illinois.

rayiner 9y ago

> State employees in the past accepted lower salaries in exchange for this future benefit. Except it's not true. Teachers in Illinois, for example, earn about $65,000 on average. In the U.K., which has high teacher salaries compared to the OECD, is around 28,000 pounds (roughly $42,000 at typical exchange rates). https://www.independent.co.uk/news/youngest-and-the-best-paid-report-shows-teachers-in-uk-earn-one-of-the-highest-salaries-8673616.html https://www.independent.co.uk/news/youngest-and-the-best-pai.... Same is true for police, etc.

ceejayoz 9y ago
Comparing US to UK raw salaries introduces a lot of other variables. State employees in the US have traditionally accepted lower salaries than other similarly skilled workers in the US in exchange for benefits.
- rayiner 9y ago
  Workers who switch from teaching jobs to non-teaching jobs see their salaries typically go down. https://www.heritage.org/education/report/assessing-the-compensation-public-school-teachers https://www.heritage.org/education/report/assessing-the-comp.... Teachers only look relatively underpaid if you lump all college graduates together and look at average salaries. That number is heavily skewed, because many of our executives and professionals (bankers, doctors, lawyers, programmers) are paid multiples more than in Europe. That just means those people are paid too much, not that teachers are paid too little.
  - ceejayoz 9y ago
    > Workers who switch from teaching jobs to non-teaching jobs see their salaries typically go down. That's hardly shocking. My salary would go down if I switched from programming (which I've been doing for decades) to something else, too.

Shivetya 9y ago

however the idea that government workers accepted lower pay is wrong in most cases and a simple tactic where if repeated enough people start to believe it. let alone far too many of the pension systems allow workers to game the system and end up with more in retirement than in service. there are many systems where the last three years pay can be used as the basis for the pension and stacking overtime and hoarding vacation are common place means of spiking the returns. that is the abuse that bankrupts systems. the lower end government worker gets the shaft while the higher up politicians and police and fire rake in 100k retirements.

jrs235 9y ago
Exactly! It's the aggregated selfishness and greed of many individuals that ruins it for all. "No single raindrop believes it is responsible for the flood."