The pension theft mess: all you need to know

PEORIA, IL  -- The nationally known economist Dean Baker has written an excellent story on the pension issue in Detroit and Illinois. He and others have termed it 'pension theft.' 

Here is the relevant information on Illinois:

The story of Illinois pensions should be at least as infuriating (as Detroit). Unlike Detroit, the economy in Illinois is reasonably healthy. News reports often tout its unfunded liability of $100 billion without pointing out that this is an obligation that needs to be met over the next 30 years. During this period, Illinois' economy will exceed $18 trillion in output, putting the liability at roughly 0.6 percent of the state's future income. That is hardly trivial, but neither is it an unbearable burden.

The disturbing aspect about the Illinois situation is that the underfunding of the pension was a deliberate choice. For years the governor and Legislature approved budgets that did not make the required contribution to the pensions. (The city of Chicago, under Mayor Richard M. Daley, did the same thing.) This was a deliberate shafting of workers in which most of the state's leading political figures acquiesced.

Among those who deserve special vilification in this story are the bond-rating agencies (yes, the folks who rated all those subprime mortgage-backed securities as Aaa). During the years of the stock bubble in the 1990s, they analyzed pension funds using the assumption that the bubble would persist indefinitely. This meant that state and local governments had to make little or no contribution to their pensions.

Unfortunately, it was a habit that stuck. Even after the bubble burst, they continued to contribute little or nothing to their pensions....

But in 21st century America, contracts and the rule of law apparently don't mean anything, at least not if the people at the other end are ordinary workers. So, rather than inconvenience all those rich folks at the Chicago Board of Trade or other highly successful businesses with a larger tax bill, the plan is to stiff the firefighters, the schoolteachers, and the people who collected garbage for 30 years.

It may turn out to be the case that the rich and powerful can just rewrite the rules as they go along. But at least the people should know that theft is now in style when it's their property at stake.

 

So how did Peoria area legislators vote on pension theft?  Koehler and Unes voted 'no.'  Jehan Gordon-Booth, the coward, voted 'present.' Leitch and LahHood voted 'yes.' 

Sullivan and Hammond, who represent Macomb, both voted 'no,'realizing how this will affect a college town like Macomb by taking away disposable income from retirees, who support WIU and local charities with the funds.

For a complete list of how legislators in both houses voted click below:

 

State Representative

State Senator

 

    -- Elaine Hopkins

 

 

Comments

[Steve Waterworth]

Excellent article Elaine. The best.