Death and Taxes

The November 2009 publishing of Plunder: How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation sparked a backlash against author Steven Greenhut. While the book won spirited praise, critics on Amazon.com called it an “unethical portrayal of government service and union representation,” “standard bull,” a “scapegoat theory” and “extreme libertarian drivel.” One commenter opined that Greenhut “is obviously destined for a 5150 facility, [where hopefully] those evil government employees running the asylum treat him better than he has them!” In Orange County, the folks at TheLiberalOC blog coined the phrase “Greenhut gas.”

Whether or not you’re a Greenhut fan, the events of this summer in Southern California have made his long-held concerns the centerpiece of a growing national debate. The questions we face are startling:

• Should the city manager of Bell, a 2.6-square-mile city in Los Angeles County, make $800,000 per year and be guaranteed 12 percent annual raises in the midst of a terrible economy and high private unemployment?

• Should Orange County’s convicted felon ex-sheriff continue to collect at least $217,000 in pension every year until death?

• Should police officers in OC be allowed to retire at the age of 50 and collect 90 percent of their top salary (plus regular cost-of-living raises) for the rest of their lives?

• Should cops and other government retirees be allowed to continue to double-dip—retire from one agency, collect full pension benefits, and then join another government agency to collect another salary and pension?

• Should the public accept that eight in 10 California Highway Patrol officers claim a “disabling injury” to take early retirement perks that include shielding half of their retirement from taxes?

• Should a public pension-investment lobbyist collect “consulting fees” as high as $53 million for a single transaction?

• Should taxpayers have been forced to give a retired OC sanitation-district employee $244,359 in annual pension pay?

• Is it right that Orange County citizens are on the hook to pay more than $3.7 billion in unfunded retirement benefits for county workers? Or that California taxpayers are strapped with a half-trillion-dollar liability for state-government employee pensions?

For Greenhut—who last year left his position as senior editorial writer for The Orange County Register to become director of the Pacific Research Institute’s Journalism Center in Sacramento—the answer to each of the preceding questions is a resounding no.

“The public increasingly understands the level of plundering that has gone on, as public employees have used their union power to gain an unsustainable level of pay and especially benefits,” he says. “People are starting to understand that this is an issue of fairness. It’s not fair to create a society in which those who are supposed to serve the public get to live much better than the rest of us.”

Such talk infuriates TheLiberalOC’s Dan Chmielewski. In June, he cited a George Skelton Los Angeles Times column that blamed California’s financial woes not on employee unions, but on a “lack of discipline on both spending and tax cutting in the past,” “an outdated and unreliable tax system too susceptible to economic booms and busts” and “a dysfunctional state budgeting process.” Skelton also noted public-employee pensions are a small portion, about 11 percent, of California’s annual budget woes.

Concluded Chmielewski, “This sort of blows the premise of Greenhut’s book out of the water, doesn’t it?”

Absolutely not, says Greenhut.

“[The state-employee pension fund] engages in a process called smoothing, or spreading out the debt as far into the future as possible to mask the problem and avoid reforms,” he says. “Chmielewski’s argument is the equivalent of a consumer running up tens of thousands of dollars of credit-card debt, and then pretending there’s no problem because he can afford the monthly minimum payment.”

But Greenhut is quick to avoid making the debate over pension reform a left-versus-right battle. He believes the issue should bring together conservatives worried about mounting government debt with progressives. In his view, the protective stance Chmielewski and his liberal allies are taking on pensions is ultimately disastrous for progressive social goals aimed at low-income citizens, children, the elderly living in poverty and the homeless.

“Municipalities are faced with cuts in public services as benefits for retirees obliterate public services,” Greenhut says.

Orange County Republican Supervisor John Moorlach supports Greenhut’s contention. In a Sunday guest editorial in the Register, Moorlach wrote that people who think rising unfunded pension liabilities “aren’t taking municipalities to their knees” have stuck “their heads in the sand.”

“The voters have seen public sector greed (thank you, city of Bell), and they have had enough,” wrote Moorlach, who says it’s time for a voter referendum against “Rolls-Royce” public pension plans. (TheLiberalOC calls the supervisor “Chicken Little Moorlach . . . who has no problem making facts up.”)

But Greenhut has found encouragement in some liberal quarters, and he cites Governor Arnold Schwarzenegger adviser David Crane.

“Crane said that one cannot be a true progressive without embracing pension reform because of the harm pension liabilities are causing to the programs progressives claim to value,” Greenhut says.

So has national media coverage of the pension and pay scandals increased Greenhut’s hope for reform?

“The situation remains dire but not hopeless,” he says. “My biggest financial fear is that politicians will embrace just enough minor reform to claim victory, and then go on to business as usual without really fixing the long-standing pension debt or the imbalance in benefit levels between the public and private sector. However, I remain pessimistic about the prospects for more transparency and accountability and for a rethinking of the power that public officials exert over the populace. That debate is only just beginning.”

It’s a debate the folks at TheLiberalOC, recently named top local political blog at the OC Press Club, are eager to join in opposition. The battle is sure to remain intense because the blog’s Chris Prevatt (who is also a county union official) isn’t willing to concede that government pensions is a topic for public debate. He even says that specific retiree benefits—like the ones causing so much outrage—should be secret, and he has blasted inquisitive reporters.

“It is not the job of individual taxpayers to evaluate the performance of public employees,” says Prevatt, a 2004 delegate to the Democratic National Convention. “That is between the employee and their manager.”

“How arrogant to want to further shut down public records,” responds Greenhut, who can’t hide his contempt that union leaders want “a shield from accountability.”

From his view, “Taxpayers have every right and duty to be concerned. Actually, Prevatt’s ‘It’s none of your business; we know best’ attitude epitomizes the core thesis of my book. The public servants have become the public’s masters. It’s time for the public to remind the government-employee class that it is supposed to work for us.”

rs**********@oc******.com

 

This column appeared in print as “Death and Taxes . . . and Now Huge Government Pensions? While the public wasn’t listening to Steven Greenhut, the certainties of life changed.”