Retirees’ Pensions: to Gobble Tax Dollars? There Another Source?
|December 5, 2013||Posted by Staff under Editorials|
These two 2013 excerpts on public pension reform — the first about the problem, the second about the solution — are from (1) USA Today, Nov 18, by their Editorial Board and (2) the Toronto Star, Nov 4, by Frank deJong, head of EarthShare Canada.
Rein In Reckless Public Pensions
Excessive retiree benefits — which account for 20% of San Jose’s $1.1 billion budget, for instance — drain governments of the money needed for education, housing, parks and public safety.
Estimates for the total shortfall of public pensions start at about $700 billion. In 2011, the Congressional Budget Office said that $2 trillion to $3 trillion was more accurate. Even a long bull market won’t make the problem go away.
Detroit is Exhibit A for municipal irresponsibility. It negotiated generous pensions, even overpaid in some cases, as the city began its long descent into bankruptcy. Illinois tops most lists of states in trouble.
Fueling taxpayers’ anger is that they are financing benefits no longer available to most private-sector workers. Some state and local government workers can retire in their 50s, after 33 years of service, and continue drawing the same income.
Weighing in on pension reform
An Ontario pension plan, as suggested by Premier Kathleen Wynne, is warranted. Too many seniors in this province don’t receive sufficient private or public pension benefits.
However, instead of raising taxes on incomes, sales or business (dead-weight taxes that damage the economy), the new pension plan should be financed by capturing some of the unearned income that accrues to Ontario’s monopoly-owned assets like land and resources — wealth that economists call “economic rent.”
Economic rent is revenue with no corresponding cost of production. It is wealth belongs to all citizens by birthright, which makes it an ideal way to finance a pension plan.
Our seniors, who spent their working lives building Ontario, should receive a “senior’s dividend” — their share of the public wealth generated by the commons.