With 45 states facing an estimated $125 billion budget shortfall in fiscal 2012, the pension plans of public sector employees are coming under intense scrutiny.
New Jersey's Chris Christie made pension reform a key plank of his 2009 campaign, and last year proposed cutting benefits for new hires and banned part-time employees from enrolling in the state's pension system.
The NJ Republican is at the vanguard of a movement among state and local officials to "take on" public employee unions. Gov. Christie's actions were controversial at the time and he's become a spokesman of sorts for the pension reform effort.
But Christie now appears tame after Wisconsin Governor Scott Walker (R) threatened to call out the National Guard if public employees strike in response to his attempts to restrict their collective bargaining rights. As with other governors, Walker is also asking public employees to contribute more to their pensions and health insurance benefits. (On Thursday, thousands of union members gathered at the capitol in Madison where Democrats effectively delayed a State Senate vote on Walker's plan by not showing up to vote.) �
Gov. Walker has excluded firefighters and policemen from his reform efforts, but other elected officials have not. In response to what it sees as a mis- and disinformation campaign, the International Association of Fire Fighters (IAFF) is "fighting back against politically motivated attacks on our members' pensions."
The union, which represents about 300,000 firefighters and paramedics nationwide, recently launched a "public education campaign" featuring a full-page ad in the USA Today last week with the tagline: "After a Career Saving Lives, Politicians Want to Take Our Life Savings."
I recently spoke with IAFF President Harold Schaitberger about the campaign. He says a "hysteria" is being created by anti-union elements and those responsible for the pension fund crisis in the first place: Wall Street and reckless politicians.
Fight Fire With Fire
"What is this all about? This is all about the money," Schaitberger says.
"What this is really about is for Wall Street to be able to get their hands on the $2.7 trillion that are in institutionally managed [pension] plans."
If public employee pensions are converted from defined benefit plans to defined contribution plans such as 401Ks, "they know it's the next cash cow for Wall Street," he says. "Individuals will be charged higher fees, they'll be churning their investments and won't really have the ability to measure performance and objectives by those who will now be allegedly helping them prepare for retirement."
Schaitberger also takes umbrage with politicians who failed to live up to their obligations and now blame the unions for pension shortfalls. "Too many states have robbed people of their retirement security, but they are blaming workers for the crime," the IAFF declares, citing N.J. as the worst offender:
Since 2001, the state of New Jersey has "never made more than 58.8% of the required annual pension contributions to the pension fund for police and fire fighters, and completely skipped making payments from 2001-03," according to the IAFF. (Editor's note: We have offered Gov. Christie an opportunity to appear and respond; the request is pending.)
Slash & Burn
Fiscally irresponsible politicians "are taking advantage of an economic crisis and using that as a tool, in a perverted way, to try to turn the clock back on what they have agreed to and what they negotiated," Schaitberger says. "We'll try to be responsible and bring forward solutions but we're not going to allow mayors and governors to slash, cut and burn the benefits and wages" of our members.
The accompanying video is culled from a wide-ranging conversation in which Schaitberger addressed several commonly held views about public employees; most notably the idea they have it easy compared to private sector counterparts.
"There is a lot of [economic] pain out there, including in our membership," he says. "A lot of firefighters have had to go home with a pink slip. This isn't some privileged sector many out there are trying to suggest."
To make his point, Schaitberger notes the average annual pension benefit for an IAFF member is less-than $40,000. "At Goldman Sachs alone, many single-year bonuses exceed the lifetime benefits an average firefighter will ever get," he says. "All of these retirements are working class, middle-class benefits that more importantly these firefighters and paramedics have earned. They put themselves in harms way...and they have given up along the way wages on the front end so that we could create sound retirements."
Some would call those who put themselves in danger in the service of others "heroes," and laud them for focusing on long-term benefits vs. short-term rewards.
On Wall Street there's another word for it: Suckers.
Aaron Task is the host of Tech Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com
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