Does PA Face Economic Doom Loop?

Member Group : Jerry Shenk

Today, public sector unions number four of the six biggest contributors to national political campaigns, and they exert the same or, in some cases, even more influence in some states, including in Pennsylvania.

Having acquired influence by effectively bribing the politicians who approve their pay and benefits, public sector unions have developed enough clout to place their real employers – taxpayers – in financial servitude. Unions condition officials to borrow and tax to pay ever-increasing union pay, benefits and, especially, pensions. Some public employees have retirement plans which rival those of corporate executives. But, unlike corporate officers, public employees aren’t required to produce anything or justify their benefits to shareholders.

Union-influenced Pennsylvania politicians have proposed tax increases on property, sales, income, gasoline and new taxes on extraction of natural resources to satisfy the mounting costs of union employees and retirees. Rationalizing and aligning their benefits with private sector counterparts are occasionally mentioned, but, so far, remain unresolved.

During budget impasses, endeavoring to cast enough doubt to evoke public sympathy and score cheap political points, union-owned Commonwealth officials always warn that "human services," benefits for the poor and disabled, will be the first things to suffer. Among other emotion-inducing schemes, officials who run for election and reelection on promises to "care for the disadvantaged" have threatened special education and public mental health programs without addressing public pensions.

Republicans sometimes exploit taxpayers, too, but, nationally, the four biggest public sector unions, SEIU, AFSCME, the American Federation of Teachers and the National Education Association, cumulatively, give 99 percent of their campaign donations to Democrats. In Pennsylvania, the unions, including the Pennsylvania Education Association, also give to a few Republicans – not all of them, just the right Republicans in leadership and among GOP-affiliated lobbyists. Some officials – Democrats and Republicans – place a higher priority on the interests of unions than on the workers, children, the needy and taxpayers in their districts.

Nationwide, today, there are more than nineteen million public employee pensioners. In Pennsylvania, teachers can retire in their fifties after only thirty years of classroom time, and, on (actuarial) average, collect $1.5 million or more in pension payouts plus health coverage. These generous plans contribute to the more than $8 trillion (nationwide) in cumulative unfunded public pension liabilities and municipal bond debt, much of which was created to satisfy pension costs.

In that context, Pennsylvania’s $56 billion in unfunded public pension liabilities appear insignificant. They’re not. Unfunded liabilities are existential threats to Pennsylvania’s future and the welfare of every Commonwealth community, family, current and future public employee pensioner.

Without reform, taxpayers will be coerced into paying for ever-increasing, unsustainable public employee pay and benefits. Without reform, public pensions are at risk. Without reform, homes will be lost; taxpaying citizens will leave; taxpayer head count will decline; the residual population will age; and Pennsylvania will enter a financial/demographic doom loop.

It’s complicated, so, to effect reform, Harrisburg needs more courageous, expert problem solvers and fewer political careerists or well-meaning, but untested career-seekers.