Tuesday, June 22, 2010

Cutting Retirement Benefits May Be a Foolish Way to Reduce Government Deficits

Dean Baker criticizes the Federal deficit hawks fixation on cutting Social Security benefits. Well done! The Federal deficit problem is more of a long-term issue while the states face short-term deficit problems given their typical restriction of annually balancing budgets. Mary Williams Walsh notes, however, that state governments are also proposing to reduce retirement benefits:

Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits … But there is a catch: Nearly all of the cuts so far apply only to workers not yet hired. Though heralded as breakthrough reforms by state officials, the cuts phase in so slowly they are unlikely to save the weakest funds and keep them from running out of money. Some new rules may even hasten the demise of the funds they were meant to protect.

Ms. Walsh notes that Colorado has tried to cut benefits for current workers and those already retired but the state is being sued over this breach of promise.


Jack said...

"Ms. Walsh notes that Colorado has tried to cut benefits for current workers and those already retired but the state is being sued over this breach of promise."

Again I ask, why is it that only the poor schmuck who works for a moderate wage is asked to take a bit less, whether in retirement or in current pay. Cut benefits, reduce work days via "furloughs".
One way or another moderate income is deemed to be too much while too much income is deemed to be inviolable. Seems ass backwards to me that all these efforts are being made or suggested so that the One Percenters don't have to dip into their pockekts and pay some back to the economy that benefits them so generously.

rosserjb@jmu.edu said...

This gang of anti-social security characters is at it again. Whenever somebody forms one of these deficit-cutting commissions, somehow they come pouring out of the woodwork where they have been festering to go after social security above all other things. It is just nonsense, and if they dare propose cuts, I sure as hell hope that the Congress slaps them down, and hard.

Jack said...

Let's not forget that these masters of the art of obfuscation were appointed to this Commission by the man who promised us, "change you can believe in." A reduction in eventual retirement benefits in any form must be the change he was talking about. And the believe in part must have referred to his shoving it down our throats.

I suggest going to Dean Baker's original article at the Guardian Online and emailing the article to your elective representatives with the reminder that Baker is more qualified than the Commission members on the subject of Social Security, and that your vote and those of your friends and relations depends on those representatives actually representing your best interests.

Bruce Webb said...

The real irony is that all benefit cut proposals on the table will get a really shitty 10 Year CBO score. All of the savings come 20-30 years plus. Until the last couple years nobody understood CBO scores and of course they still don't, but have been taught to treat them as controlling. How does the Catfood Commission sell cuts in SS that don't register as 10 Year savings on the CBO score.

Anonymous said...

Dave Orlowski can swim 2.4 miles. He can bike 112 miles. He can run 26.2 miles.

In fact, the 54-year-old athlete can do all of these one right after the other - several times a year. He completed six Ironman triathlons last year, has done three so far this year and hopes to compete in yet another one in Klagenfurt, Austria, on July 4.

Orlowski can also play a round of golf, as he did recently at a fund-raiser for the Make-A-Wish Foundation of Wisconsin.

But this is something the guy won't do:

He won't work for the Milwaukee Police Department.

That's because the former homicide detective has been declared "permanently and totally incapacitated for duty."

As an injured ex-cop, Orlowski has been paid nearly $500,000 in tax-free pension checks by the city since 1999. He is currently receiving $53,063 a year from the city Employees' Retirement System, plus full health benefits.

Jack said...

Maybe Dave fell on his head while chasing a suspect. Maybe he can't think straight. Maybe he's in great mental and physical condition. That's for the Milwaukee retirement system to determine. That any one or several or a group of workers may benefit in some way that seems extreme is not the issue. There are far more instances of enormously wealthy individuals and incredibly profitable corporations being excused from taxation for arcane and absurd rationales. Screwing with the current earnings and the eventual retirement benefits of a whole group of workers at middle class level of wealth is not a fair approach to resolving budget deficits.