When you see a headline like "Public Unions Take On Boss to Win Big Pensions," you know what you're going to get– more scaremongering about runaway public employee pensions. The New York Times delivers, with a lengthy front-page piece by Charles Duhigg that mostly takes the side of the Republican lawmakers trying to cut benefits in the name of fiscal discipline.
The article is largely based around Jim Righeimer, a conservative activist turned city council member in Costa Mesa, California, whose become something of a national star on the right. He can rattle off the anecdotes about sky-high pensions:
The city was on the road to insolvency, he warned, because public employee unions had pressured politicians into handing over generous salaries and pensions. The police chief received $298,000 a year in total compensation, Mr. Righeimer noted. The deputy fire chief had retired with a pension of more than $182,000 a year.
How typical is a $182K pension? The Times doesn't really explain, but they do suggest that this particular town's situation is typical for the state– which is in terrible shape:
Costa Mesa, population 110,000, is California in miniature. For years, public employee unions across the state have often used their influence – sometimes behind the scenes but occasionally with public, hardball campaigns — to push for improved worker pay and benefits.
The Times could have mentioned that not everyone agrees with Righeimer's alarmist view. According to one report (Bloomberg, 4/8/11) the city's budget officer says the pension estimates being used do not include union givebacks or changes in the state pension contribution rates. And it's worth pointing out that at one point the city stopped making pension fund contributions ten years ago, when the system was overfunded.
You have to go a ways in the Times before getting a dissenting view:
Public employee unions, in their defense, say politicians have unfairly made them into simplistic bogeymen, responsible for problems that have myriad causes. Not all government workers receive generous pensions, they note. A public worker enrolled in the state's largest pension fund who retired in 2008 with more than 30 years of service received a pension of $66,828 a year, on average, and a retiree with 20 to 25 years of service received around $34,872. Public workers who retire with fewer years on the job receive even less.
So you lead with anecdotes about six-figure pensions– and then give readers some sense of a more typical retirement later on.
As we've pointed out before, there are serious debates about the scale of the pension problems across the country; many see the shortfall estimates as overly pessimistic. But The Times seems to have picked its side:
But no matter what steps are taken, the cost of public pensions will most likely preoccupy many states for years. In California, New Jersey and Illinois, lawmakers may eventually need to increase taxes more than 17 percent or cut government services to pay public retirees' benefits, according to a nonpartisan study. In some states, no matter how much the economy rebounds, pension funds may not be able to meet their obligations without significant government support.
In some states, including California, a study found that pension fund managers needed to earn a 12 percent return each year for the next three decades to meet obligations. Such prolonged returns are far higher than historical norms. (Calpers, in a statement, said it expected to earn double-digit returns this year, and disagreed with the 12 percent estimate.)
It's not clear what studies they're referring to, but it should be pointed out that not every analyst takes such a pessimistic view. The Times does report–deep into the piece–that the main California pension plan reports that they're doing fairly well:
Calpers says its retirement fund is healthy, having earned back more than $70 billion of the value lost since 2007…. 'The costs of Calpers pensions for the state represents 2.2 percent of total general fund expenditures,' the agency wrote. 'To suggest that pension costs are the cause of layoffs, degradation of our schools or the California economy would be irresponsible.'
So in the Times' voice, pension shortfalls are going to "preoccupy" states, and might require massive tax increases. Dissenters may exist– but they're not likely to convince the New York Times.
The piece closes at the Costa Mesa city council, with an ominous sounding show of force:
In the audience sat three local firemen wearing Costa Mesa Fire Department T-shirts, all of whom declined to give their names.
'I'm not here on anything official,' one said. 'We just like the council to know that we're watching them.'