'$1,400 bucks per household a year for 30 years' :: Political News and commentaries

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June 23, 2011

'$1,400 bucks per household a year for 30 years'

As we learn in a piece by Veronique de Rugy, $1,400 bucks per household a year for 30 years is the amount that a new paper by Professor Jonathan Rauh of the Kellogg School of Business and Robert Nova-Max of Rochester University shows that states will need to be able to pay in full the pensions of members of local and state public employee unions:

[...] Without policy changes, contributions to these systems would have to immediately increase by a factor of 2.5, reaching14.2% of the total own-revenue generated by state and local governments (taxes, fees and charges). This represents a tax increase of $1,398 per U.S. household per year, above and beyond revenue generated by expected economic growth. In thirteen states the necessary increases aremore than $1,500 per household per year, and in five states they are more than $2,000 per household per year. Shifting all new employees onto defined contribution plans and Social Security still leaves required increases at an average of $1,223 per household. Even with a hard freeze of all benefits at today's levels, contributions still have to rise by more than $800 per U.S. household to achieve full funding in 30 years.

As for how we got here, blame it on politicians (especially Democrats) and elections:

[...] Public sector unions function as a monopoly provider of labor within a bureaucratic-political realm. Public sector unionism introduces an unelected body into policy-making, thereby undermining the sovereignty of the state. Public sector employees are able to influence through political lobbying of their -- employer-sponsors or politicians, who may seek to enhance union employment as a means of expanding their constituency.

[...] In addition, however, public sector unions are also able to increase demand for their labor through the political, legislative, or regulatory process, thus increasing wages further than private sector unions are able to.

Read the whole thing.

And as for a little more detail on how we got to this point, Warner Todd Huston points out that all this has occurred because government unions have given millions to Democrats so that Democrats can write union-friendly laws and give union members outsized and unearned benefits with payscales higher than anyone's in the private sector. Then, when Democrats follow through with their union payoffs, unions give even more to the politicians for even more favors. It is a never-ending circle of favors and payoffs to each other in an incestuous system of which the voters have no influence. And as Huston goes on to aptly note, this destructive, anti-American cycle needs to be stopped. Remember, government unions never existed until about 1958. So they have not always been around. In fact, even the Left's patron saint, FDR, was wholly against government unions.