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The Pension Tsunami

Well, it’s now official. The New York Times has a story this morning, front page, above the fold, entitled “Padded Pensions Add to New York Fiscal Woes.” So the bloated wages and benefits of public employees are now a certified political issue for the 2010 election. If they’re smart, Republicans will grab it and run with it for all they’re worth.

The Times story details some anecdotal doozies, such as the Yonkers policeman whose base pay in his final year was about $74,000. He retired at age 44 and now, at the ripe old age of 47, is collecting a pension of $101,333 a year. Just to add insult to injury, his pension is exempt from state and local income taxes. The retired head of the New York State teachers’ pension fund has a pension of his own of $261,037 from that state job. He collects it even though he now has another state job as president of the State University of New York at Albany, earning $280,000.

But beyond the isolated horror stories, the problem is systemic and not just for pensions, as the Times makes it clear:

By tradition, public employees have said they accepted lower salaries in exchange for better benefits, but the Census data show this has not been true for a number of years. In 2008 the median pay for a worker in the private sector was $39,877, compared with $45,124 for a state or local employee.

Mortimer Zuckerman, of U.S. News and World Report, has a piece in the Wall Street Journal explaining the basic cause of this gathering financial tsunami and why it is a golden opportunity for the Republicans, who owe the public-employees’ unions no favors:

Public unions organize voting campaigns for politicians who, on election, repay their benefactors by approving salaries and benefits for the public sector, irrespective of whether they are sustainable. And what is happening in California is happening in slower motion in the rest of the country. It’s no doubt one of the reasons the Pew Research Center this year reported that support for labor unions generally has plummeted “amid growing public skepticism about unions’ power and purpose.”


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