image credit: aarp
Yesterday, Jazz Shaw at the blog Hot Air reported
(via the WaPo) on a development in Ohio:
In Cleveland,
the Iron Workers Local 17 union has
approved cuts to their pension plan to avoid having it become
insolvent. The cuts will affect different workers by varying amounts depending
on their individual circumstances, but everyone will be feeling the pinch.
. . .
The first
thing to remember is that we’re talking about a private sector labor union, not
one for government workers. The effects on retirees are going to be serious to
be sure, but what are the other options? The union made promises to the workers
which it wasn’t able to keep. This is a system which is much like any sort of
general entitlement program in that it always requires growth, or at least
stability. You have to have more people paying into the system than drawing out
of it and if the numbers contract, the math immediately ceases working. (It’s
the old question of how many people can ride in the cart as opposed to the
number who are pulling it.)
[Shaw] pointed out
the private sector aspect of this because the premise of the government
guaranteeing these pension funds was always dubious at best. How is it that the
taxpayers are on the hook for these shortfalls when the system becomes
insolvent? I realize that’s not a solution, but the problem wasn’t created by
the government in the first place and the taxpayers had no seat at the table
when the deals were originally negotiated. But that’s not stopping Ohio Senator
Sherrod Brown, who is still
pushing for a federal bailout of the plan.
The problem
gets even more complex when we look at state pension plans which are hung
around the necks of taxpayers.
Read the rest of the report here.
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