Commentary and Criticism about the National Education Association
We have absolutely no affiliation with the National Education Association and do not represent its views in any way, shape or form.
“…corrupt politicos promised the moon to public employees, and now the fiscal chickens of insolvency are coming home to roost. Public pension obligations are rising so fast that even repeated tax increases can't keep up.”
Charles Hugh Smith, Of Two Minds Blog We haven’t written about the sorry state of teacher pensions in a while, but when we read Smith’s Blog yesterday, we were inspired once again. We have been warning teachers at every opportunity not to rely on their expected retirement pensions. Our recommendation has always been for them to save as much money as possible outside of the system, so that they will actually be able to retire and live a lifestyle similar to what they enjoy now. TYPICAL TEACHER RESPONSE But almost without fail, every time we post an article dealing with pensions, we get blow-back from teachers claiming something along the lines of … “You are wrong - the state contractually owes us this money. How can you just give up and accept this? Our unions will not compromise – they will fight for our benefits to the bitter end.” Well the bitter end is fast approaching because the “Tax Donkeys” who pay our pensions are not going to accept it for much longer. Of course, the typical teacher response is: “But we pay into our pensions. It is our money. The taxpayers have nothing to do with it.” Unfortunately, this is not true. Leaving aside the contribution that the state makes to the pension program, if the money we contribute is invested and doesn’t increase in value to a proper level, there is no way that it will cover our monthly benefit in retirement. And if it doesn’t, then the taxpayers have to make up for the deficit. As Smith makes clear: “… pensions can't be paid with borrowed money like Social Security and Medicare; public pension obligations come out of local and state taxes, and as those obligations soar then public services must be slashed and taxes jacked up by annual double-digit increases.” ABOUT THOSE “TAX DONKEYS” The way we see it, the term “Tax Donkeys” has two connotations. First, it refers to taxpayers who are forced to bear the costs of government programs – donkeys are beasts of burden, after all. But more importantly, it also refers to taxpayer mobility. “… in the war between public pensioners and the Tax Donkeys, the pensioners can't switch pension programs, but the Tax Donkeys can move to lower-tax states.” Smith suggests that there will be a “… Great Migration of the Tax Donkeys from failing cities, counties and states to more frugal, well-managed and small business-friendly locales.” PREDICAMENT VS. PROBLEM - It is what it is ... In past blog posts we used the word predicament (rather than problem) to describe the current pension situation. It is important to understand the difference. Problems have solutions but predicaments don’t – they only have outcomes. Solutions make people happy: “Yea, we solved the problem!” Outcomes, not so much: “That really sucks – but it is what it is.” We can’t predict the specific outcome that will unfold for teachers, but none of the possibilities we envision will be pleasant. Teachers will have to:
Yes, they all really suck ... but it is what it is.
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October 2018
AuthorJonathan Smith - A New Jersey Public School Teacher who disagrees with the National Education Association. |