[MD] US democracy at work?

[Dan Glover]

Hello everyone

On Sun, Feb 27, 2011 at 3:04 PM, Horse <horse at darkstar.uk.net> wrote:
> Hi All
>
> We have a similar problem in the UK to the ones mentioned here, in that the
> cost of the public sector pensions and benefits have been increasing
> enormously over the last few years.
> I generally tend to have sympathy with those that are receiving these
> benefits as that was part of the package that was agreed when contracts were
> signed or agreed to. It's not their problem if, 40 years or so down the
> line, the cupboards are bare.

Hi Horse

In a way I agree... it is not their fault that the costs have
increased enormously. It is their problem, however, otherwise there
wouldn't be such large demonstrations going on in Wisconsin at the
moment. I think I read that it is the largest protests since the
Vietnam war years. The costs are unsustainable though. So either
everyone else is going to have to pay higher and higher taxes, or else
the benefit packages are going to have to be amended to reflect the
times.

>Horse:
> As a quick aside, I have no idea how it works on your side of the pond but
> over here everyone pays into a general fund and is guaranteed a state
> pension at a certain age - normally 65 - upon retiring. It's not that good
> so the majority opt for an additional pension into which they pay so much
> and the company they work for pays so much - that's pretty standard for most
> companies. It's not a legal requirement but it is standard practice and part
> of the majority of remunerative packages both public and private.

Dan:

Here, we have a general social security fund that all non-public
employees and employers pay into, and which guarantees a minimal
income upon retirement. The government is gradually raising the full
retirement age. My father was able to retire at 65 and receive full
benefits. I will have to work until I am 66 years and 8 months before
I am able to receive full benefits. My children will probably have to
work until 70.

In addition, there are many programs which offer tax incentives to
save for retirement, both for individuals and companies.
Unfortunately, most employees fail to take full advantage of these
programs. I remember the last "real" job I had offered what is known
as a 401k program whereby my employer matched my own contribution 100%
up to 5% of my income before taxes. Asking around, I was amazed to
find that I was one of the few people actually taking full advantage.
I mean, it was basically free money!

I guess people tend to live for today, trusting that tomorrow will
take care of itself. Maybe that's why we're having the problems we're
facing now.

Horse:
> In the case of government workers you have a similar situation - workers pay
> amount X every month and the employer (i.e. government, local or national)
> pays amount Y every month and when you hit 65 you get various benefits.

Dan:
Here, not all public employees are covered by the general social
security fund. The laws were modified in the 1990s to include public
employees not covered by public pensions. Here in Illinois (and in
Wisconsin as well), the government (re: taxpayers) funds the
retirement pensions of public employees entirely. The Wisconsin
governor is proposing changes that will result in state employees
paying a portion of their pensions, as well as a portion of their
health care.

Social security is nowhere as generous as the public pension funds.
Even social security is now running at a deficit with the recent
economic downturn. That is a growing problem as more and more people
retire and fewer and fewer are working and contributing.

Horse:
> One big problem is that the retiring age of 65 is a bit out of date - by
> about 100 years or so as around 100 years ago 66 was the average age that
> most folk (mainly men) attained before they popped their clogs and got
> buried. So you retired at 65, got your stuff in order and then dropped dead
> - more or less. And had a year or so, on average on the agreed benefit in
> order to do this. Many people now live a lot longer than that so the amount
> needed to pay all pensions has increased enormously over the last 30 - 40
> years or so. One of the problems of having a decent state health system I
> suppose!

Dan:
In doing some research, I've found that most of my ancestors (men
included) lived well into their 80s and 90s, even back in the 1700 and
1800s. I suspect though that they remained active and vital to the
community in ways that older folks today do not. I do agree that the
problem is a decent health care system that entails spending hundreds
of thousands of $$ a year to keep someone alive well past any sense of
quality of life.

>Horse:
> So government workers and government contracted to certain agreed conditions
> and rates of pay. The workers fulfilled their side of the bargain so now
> they expect the government to fulfill theirs. Entirely reasonable really -
> if you enter into a contract to fix someone's motorcycle or build something
> or whatever, and you do your job then you're going to be pretty pissed off
> if the other side tries to change the rules and not pay up. That's what
> contracts are about. If I was one of these folk I would expect my employer
> to fulfill their side of the bargain - it's not my problem if they're a bit
> short of cash. We had an agreement and it should be honoured.

Dan:

The thing is, it is your problem when there's no more cash in the
till. No one likes being handed the crappy end of the stick but the
hard fact is, a lot of people are going to have to take hold of it.
That, or the whole system is going to start crumbling.

Horse:
> It may be time for government to wake up and smell the coffee and realise
> that they need to change the conditions for any new contracts but any
> existing contracts should be honoured - as with any contract between 2
> parties where one side has carried out their duties as requested. It's
> difficult for government to do this without raising taxes or cutting
> services but a deal is a deal - whoever makes it.
> I can't see why there should be a problem with unions and collective
> bargaining or whatever - there should be no need for it if each side acts
> honourably and reasonably.

Dan:
If honouring existing contracts drive municipalities and states into
bankruptcy, who is being served? In the short term, retirees continue
to receive exorbitant sums. But in the long term, the cash cow dries
up completely. Isn't it better to revise things now and maybe they
won't get as much but they will still continue to get something?

>Horse:
> Perhaps those that are at the root of the problem, with respect to the
> current financial problems, need to be educated to play their part in the
> social structure within which they operate. You know, that old fashioned
> principle of paying your way. Just a thought.

Dan:
Agree.

Thank you,

Dan