The Paducah Sun
Kentucky Gov. Matt Bevin took flak this week when he compared his attempts to save Kentucky’s teetering public employee pension funds to rescuing a person who is drowning. Panicked swimmers often fight their rescuers, Bevin said, such that, “You just need to knock ‘em out and drag ‘em to shore. It’s for their own good.”
The comments were quickly spun by Democrats and their media facilitators as the latest example of Bevin’s contempt for teachers and other public employees. Those groups violently oppose Bevin’s pension reform ideas, some of which presently hang in the balance at the Kentucky Supreme Court.
The problem with the critics’ complaint is that Bevin’s analogy is a good one. Kentucky’s pension shortfall exceeds $40 billion. It is the nation’s worst in the analysis of the Pew Charitable Trusts, which regularly grades state pension programs.
Bevin proposed freezing participation in the state’s current defined-benefit pension program so it would cover only current employees and retirees. Future hires would participate in a 401(k)-style plan instead. Bevin also proposed reducing and temporarily capping pension cost-of-living increases and extending vesting periods for workers to retire with full benefits.
Teachers and other state workers fought this tooth and nail. We have questioned the wisdom of that. We think freezing the existing program is the best shot teachers and other state workers have of actually getting what has been promised.
State workers who believe future politicians and courts won’t leave them high and dry need to look across the river to Illinois, which as of the start of this year owed thousands of state workers back pay dating to 2011. That was the year Illinois lawmakers approved raises for those workers. Illinois simply didn’t pay them. It couldn’t.
States cannot print money. And at some point raising taxes doesn’t increase revenue because people and businesses flee. Illinois presently leads the nation in this trend.
It is not just state workers who tend toward denial when it comes to these things. The American public shares this trait.
Conservative columnist John Stossel penned an article this week about the fate of Social Security and Medicare. He notes that Social Security went into the red for the first time this year, paying out more than it takes in. He says despite promises by the past three presidents to “safeguard” or “save” Social Security, nothing has been done.
Stossel says Social Security has operated for years as a pyramid scheme. Such schemes work as long as ever-more people pay in at the bottom. But when that trend reverses, as has now happened, they collapse.
The conservative Heritage Foundation has advocated reducing benefits to wealthy retirees and raising the retirement age to 70 to extend the life of Social Security. But seniors, many of whom know better, overwhelmingly oppose such measures. And as every politician knows, seniors vote in disproportionate numbers.
That leaves us with the reality that Social Security will run out of money in 15 years. Medicare runs out in eight, at which point by law benefits will automatically be cut.
Kentucky’s public pension funds are tumbling down a similar path. We suppose it is human nature that state workers and pensioners don’t want to hear that this can end badly for them. But it can and right now odds are good that it will.
Bevin to his credit, has at least tried to do something about it. His critics are free to kill the messenger, but by leaving it at that they merely seal their fates.