Stossel Exposes Cali's Lavish Public Sector Pensions

February 27th, 2010 6:47 PM

The past several decades, Americans have seen the disaster unionism has wrought on Detroit's Big Three. The auto-makers, saddled with powerful unions, fell victim to a combination of labor inefficiency and premium worker pay that proved unsustainable.

And while much of the rest of the private sector long ago realized the sots, government apparently has not. So, for the first time in history, public employees comprise the largest segment of unions today.

Save for New Jersey or New York, the pending public pension crisis is nowhere more evident than in California. Currently the state is on the hook for $100-300 billion in unfunded pension and health care liabilities with no end in sight - on top of a projected $25 billion budget deficit.

The Fox Business Network's John Stossel recently brought on Matt Welch, editor-in-chief at Reason Magazine, Steve Greenhut of the Pacific Research Institute, and David Low, the president of a coalition of public employee unions in California to discuss California's taxpayer-funded public employee welfare state. 

Low defended the unions and attempted to shift the topic and blame to Wall Street: "The reality is state employees have taken 15-percent pay cuts in California, we've cut the budget by $30 billion out of a $70 billion budget," Low argued. "And the blame is not to be placed on the public employees but the fact is we're in a budget deficit because Wall Street abuses have caused so many stock losses that all of us have been hurt."

But Reason's Matt Welch pointed out California's contributions to pension funds have increased by 2000-percent the past ten years and touched upon the cronyism the Obama administration is becoming known for.

"When Arnold Schwarzenegger proposed cutting state employment by even two percent in the middle of a huge meltdown - maybe two percent - the president put it on a conference call and put on the other line a guy that has been in the White House more than any other person and that's Andy Stern out of SEIU," Welsh said "What is a labor person doing on the phone with Arnold Schwarzenegger?"

(The answer, according to Michael Barone, is that "Barack Obama is probably the most union-friendly president since Lyndon Johnson," and has used federal funding to state and local governments to "bolster public-sector unions.")

Greenhut added that, "The increase in unfunded pension liabilities, the debt that is being left for our grandkids before the huge drop was over $63 billion in California and $118 in retiree health care. And those numbers are going to going up and up and up."

Low argued the numbers are actually lower the past 30 years and argued a different tack. Referencing an unnamed actuarial study, he stated employees deserve extra breaks because the average lifespan is shorter for most police officers and firefighters.

But Greenhut had heard the argument before. "What happens is I'm always told is policemen and firefighters die 3-5 years after they retire, so I called CalPERS, the employee system and they gave me the data and they lived to an average of 82.6 years - the exact same age as ‘miscellaneous,'" he said. "That's all the other government employees - and they all live longer than the rest of us. That's why we have an unfunded liability problem!"