All Aboard the Unfunded Pension Liability Express

Democratic congressional candidate Robert O’Leary committed an unpardonable sin during his unsuccessful campaign in Massachusetts’ 10th Congressional District race last fall: he spoke the truth about the growing crisis in our Social Security system, and his Democratic rival, now Congressman Bill Keating, pounded him every chance he got for “taking benefits away” from retired workers.

The irony, of course, is that Keating is one of the beneficiaries of a system that really is breaking the public’s financial back: unfunded pensions. As the now retired district attorney from Norfolk County, Keating – at the age of 55 – is now entitled to some $130,000 every year for the rest of his life, a pension paid by taxpayers and barely the tip of an iceberg we are all sailing toward.

I mention this not to replay the political battles we lost with O’Leary last fall, but to raise the issue when I don’t have a candidate to promote.

The unfunded pension system is literally a financial tsunami that is cresting just as Governor Patrick and the Legislature wrestle with the fiscal 2012 budget. Patrick is proposing to raise the retirement age for new state workers from 60 to 67, and while that might spell relief in 40 or so years, there is every indication that our children will suffocate from the sweetheart deals that promise a pension to state and municipal workers that few of us could hope for in our own futures.

Notwithstanding California’s massive budget debt, the Golden State has apparently managed its pension system with an eye toward the multitude of taxpayers who have to pay for this system.

According to Moody’s, Massachusetts has the uncomfortable distinction of carrying one of the worst double burdens of state budget debt and unfunded pension liabilities in the country.  That adds up to more than $50 billion in Massachusetts, or more than 14 percent of our total Gross Domestic Product (GDP).

The popular argument for these rich public pensions was always that state and municipal employees – particularly teachers – are not well paid so the pension and benefits package was a way of equalizing what they are not receiving in salaries. Teachers continue to be paid below their real societal value, but they are not alone in a system that allows current and retired workers to cash out early while taxpayers work harder and longer just to make their own ends meet.

The crux of the problem, of course, is that public employees vote in big numbers and they have successfully protected the system against the foolish articulations of candidates for public office who occasionally tell the truth about this system – and then pay for that mistake with an election loss. The issue became a bit of a hot potato for Keating who now earns $175,000 as a Congressman and could have legally collected his $130,000 public pension on top of that.

After the media hounded him during the campaign, he suddenly announced that while he is in Congress he will donate his pension to a non-profit organization in his district. That stopped the media and rival candidates from criticizing him, but it didn’t stop the $130,000 in public funds from being used (even if it’s for a non-profit organization).

And that was just one retired state politician among the thousands of retired state and municipal workers who are riding out this recession.

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One Response to All Aboard the Unfunded Pension Liability Express

  1. Charlie Pinto says:

    So O’Leary really was for moving up the social security retirement age? Good spin, guys. Too bad you lost.

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