Update: The GOP war on public employees

In a stunningly one-sided story last night, 60 Minutes gave GOP Gov. Chris Christie the floor to push his war against public employees and the GOP narrative that has taken hold of the country–the debt crisis in the states isn't a revenue problem, it's a spending problem. Media Matters has an excellent summation of the segment.

In 2,600 words about state deficits, you won't find the phrase "tax cuts." Instead, CBS adopts the Republican framing that deficits are all about spending — frequently with loaded phrasing like "gold-plated retirement and health care packages." And throughout the report, CBS allows Christie, New Jersey's Republican governor, to launch attacks on unions and make unsupported claims about budget problems, all without ever challenging his assertions and without including substantive disagreement from Christie critics.

On spending:

CBS quotes Christie declaring: "We have a benefit problem. … It's not an income problem from the state. It's a benefit problem. And so we gotta change those benefits." No contrary view is included.

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On his war with public employees and gutting of the state's pension system:

You'd never know from CBS' report that a big part of the reason that "Christie and his predecessors" failed to make required contributions to the pension fund is that they decided to use the money for tax cuts instead. (Like I said, the CBS report takes the GOP-friendly stance that deficits are all about spending, not revenue.)

It's a Grover Norquist wet dream, with 60 Minutes—which occupies the pinnacle of the "liberal media"— unquestioningly accepting the "spending problem" narrative. That's the narrative that won the day with passage of the tax cut deal. Which, in turn, is probably going to make the crisis in the states much worse.

Let's be clear: many states failed to fully fund their state employee pension fund obligations, being permitted to run a substantial contribution deficit on the promise the contribution deficit would be remedied in future years. Now these same states want retirees to take a substantial reduction in pension benefits and to loot their state pension funds to balance their state budgets which are in deficit due to fiscal mismanagement. State legislatures stole the money on the front end and now are looking to steal the money on the back end. It is theft, pure and simple.

But as I have explained previously, it gets worse. Secret GOP plan: Push states to declare bankruptcy and smash unions. Republicans are plotting to change the bankruptcy laws to allow states to file bankruptcy. Once a state defaults on its obligations and files bankruptcy, the state could use the United Airlines bankruptcy precedent (Judge Eugene Wedoff approved the airline management’s request to terminate four pension plans—for pilots, flight attendants, mechanics and other ground service workers. The $9.8 billion pension plan default was the largest in U.S. history) to terminate the state employee pension plans altogether.

The federal Pension Benefit Guaranty Corporation would have to take over the state employee pension funds, but that agency itself is barely solvent due to the tidal wave of corporate pension fund defaults during the Great Recession. The federal government essentially would bail out state pension funds, but under Pension Benefit Guaranty Corporation regulations, benefits are substantially limited. Beneficiaries will take a severe haircut.

This is important because many state employees do not pay into social security but pay only into the state employee pension plan. Retirees in this position would be forced to live on subsistence or in poverty through no fault of their own, but because of fiscal mismanagement by state legislatures. Promises made are supposed to be promises kept: it is both a contractual and a fiduciary obligation with a pension fund. But states could be permitted to renege on these promises if permitted to file bankruptcy.

AFSCME has issued this press release in response to the one-sided 60 Minutes report. AFSCME Response to One-Sided 60 Minutes Report on State and Local Budgets:

Washington, DC — Last night on 60 Minutes, Steve Kroft’s segment correctly noted that many of our state and local governments are struggling to close looming budget gaps. But his one-sided report failed to identify the root causes of this crisis, or barely recognize the sacrifices that public employees have made to help to address these deficits since our financial system nearly collapsed more than two years ago. During these difficult times, public employees have helped bring budgets back into balance by sacrificing pay and benefits. However, the 60 Minutes report relied too heavily on testimony by New Jersey Governor Chris Christie which falsely blamed public employees and unions for the fiscal challenges that have arisen because of the irresponsible behavior of Wall Street and Christie’s predecessors.

Gerald W. McEntee, President of the American Federation of State, County and Municipal Employees (AFSCME), had this to say:

“Chris Christie is more interested in scoring political points than solving state and local budget challenges and getting the economy moving. The fact is, hundreds of thousands of public employees, just like private sector employees, have been laid off and taken pay and benefit cuts – even as Wall Street executives lined their pockets with taxpayer money and took home huge bonuses. And as Steve Kroft’s report noted, much of the pension problem stems from the fact that politicians did not contribute to their pension funds.

“Contrary to what Christie would have Americans believe, public employee pensions are not the problem. The average pension for an AFSCME member is just $19,000, and eighty percent of this comes from investment returns and contributions by the employees themselves. The challenge can be met if state and local governments, began contributing just 1.5 percent more of their budgets toward their pension funds in the years ahead.

“The long term solution to state and local fiscal challenges is a robust economy – one that is creating jobs and replenishing tax revenue. Christie’s decision to scuttle 6,000 new jobs to build a needed tunnel between New Jersey and New York shows that he’s more interested in scoring political points than he is in solving the problem.

“Public employees stand ready to help state and local governments get through the economic storm. But to suggest that they have not sacrificed is a lie, and we will not allow politicians like Chris Christie to blame the economic crisis on working and middle class Americans.”

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UPDATE: From the AFL-CIO blog — NJ’s Christie Used ‘60 Minutes’ Platform to Attack Public Workers.