"Public Pensions are Too Big"

This morning, a thrill ran down Joe Scarborough's leg as Chris Christie illustrated the "corrosive effects" of public unions by stating that in Newark, 68% of the cost of a police officer is in the form of "fringe benefits."

In the immortal words of Dick Cheney, "So what?"

Unions, like individual executives who negotiate their own compensation, bargain for compensation packages. The employer pays X number of dollars in exchange for the employee's work. Some dollars are in the form of direct compensation (i.e., a paycheck), others are in the form of benefits (health insurance, pensions/retirement matching funds, other perks -- although the other perks generally go to executives, not union members).

From the employer perspective, the number of dollars paid out is the same, regardless of the form of payment. Every dollar paid is tax-deductible as a cost of doing business. From the employee perspective, however, the form of compensation matters: paychecks are taxed, while retirement contributions and health insurance premiums are either not taxed or tax-deferred.

So among employees who have bargaining power -- whether executives or union members -- there is a distinct bias toward indirect compensation. This isn't a zero-sum game: The same number of dollars paid out by the employer is worth MORE to the employee, without being more costly to the employer.

By focusing on the fact that unions have been successful in bargaining for high levels of benefits for their members, Christie and his ilk have been been able to gin up envy among employees who don't have the same arrangment. But this envy is misplaced -- or at least the reason for it is misplaced. If the total compensation received by public union members and non-members is the same, who cares whether they receive it in the form of paychecks, health insurance premiums, or pension benefits? And in fact, it would take more public dollars to provide the same value to the employees in the form of paychecks.

If indeed public employees are receiving higher-value compensation packages than those who do comparable work in the private sector, then there is a reason for the envy. But even then, it's not harmful to the taxpayers unless the cost to the employer is greater than the employer cost for similarly-situated private employees. And neither of those questions is what anyone is talking about.

There is one other reason health insurance premiums and retirement contributions have become such a big issue in these economic hard times, and that is because when public officials agreed to certain contributions for these items, they did so on the basis of particular assumptions about what the future costs of those payments would be. Unfortunately, due to the greed of the insurance companies and the Wall-Street-induced collapse of the economy, the costs of keeping those promises have skyrocketed beyond what anyone thought they would be. And that brings us to the second myth:

"The State and Local Budget Crises Are the Fault of the Public Employees' Unions"

First, I refer everyone to the excellent monologue on this issue by Chris Hayes subbing for Rachel Maddow last night. Sorry, no video yet -- I couldn't get the right video to embed from the Maddow Blog, and what I'm looking for isn't on YouTube yet (the part with the graph is there, but not the rest of it). When I can find the right video, I'll update.

Ed Rendell, the WI Dem14, and others have been making some great points on this lately as well.

In my view, there are a few main points:

First and foremost: States and municipalities are having budget problems not because of union contracts, but because the economy sucks. That is the fault of the corporatists who are now trying to shift the blame to the unions, because said corporatists have no shame.

Second: To the extent that public employees have anything to do with the shortfalls, it is because health insurance premium subsidies and defined benefit pensions agreed to in earlier, rosier times are now coming back to bite the states and municipalities. Again, not the fault of unions. Health insurance companies are greedily sucking in ever greater and greater profits, and the investments that underlie defined benefit plans crashed along with the rest of the world economy.

But, the corporatists say, we wouldn't have made those promises in the first place if the unions weren't such rapacious monsters; it's time we stop letting them dictate such evil compensation structures to us. The response, of course, is: Fiddlesticks.

My white-collar, never-a-union-member-in-his-life, conservative father, who worked for a Fortune 500 company for his entire career, retired on a defined-benefit pension plan. I, whose benefits have been negotiated by public unions for about half of my career, do not have a defined-benefit retirement plan. I have a defined-contribution plan funded by both me and my employer.

There is no necessary connection between public unions and defined benefit plans, or between public employees and fully-employer-subsidized health insurance premiums. If those benefit structures are seen as harmful to the public, then the public officials who are at the bargaining table on behalf of the employers should stop agreeing to them, and people who don't like that compensation structure should argue against the compensation structure, not against the unions who bargained for it and gave up other forms of compensation in exchange.

The problem is that anti-worker advocates are using "public unions," or "collective bargaining" in general, as proxies for specific terms of some particular collective bargains. Like the old restrictions that prevented women from being firefighters on the theory that they couldn't handle the physical demands of the job, instead of -- here's an idea! -- implementing physical strength and endurance testing as prerequisites for hiring.

"This Isn't About Red or Blue -- It's About the Math"

This is a meme that may have been single-handedly started by Chris Christie (who, think what you may about him, is very skilled at making the conservative position sound reasonable).

I've been struggling with my weight for most of my adult life. I know that my struggle is due to my weaknesses: I love to eat, I hate to exercise, and I don't have enough self-discipline in either area. But however unsuccessful I may be in implementing what I know, I am keenly aware that both the number of calories I consume and the number of calories I expend are factors in my weight.

"The Math" says that these two quantities are out of balance in my life. So in order to lose weight, I need to consume fewer calories, OR expend more calories, OR do both.

Governor Christie is correct that "The Math" is non-partisan: if the expenditures exceed the revenue, a state or municipality will have a budget deficit.

However, the solutions one uses to address the situation are far from non-partisan. Just as the best, sanest, healthiest way to lose weight is to both eat reasonably and engage in an appropriate level of physical activity, the healthy way to deal with the current budget crisis, both nationally and locally, is to ensure that everyone is contributing to the solution.

Instead, the conservatives are demanding that the working class do more and more exercise, despite the fact that they are on the verge of complete physical collapse, but they refuse to demand even a few morsels of food from the richest among us to refill the empty larder.