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San Francisco's bold ballot measure

Some time ago, I griped about Paul Krugman’s spurious habit of equating deficit hawkishness with political regressivity. What Krugman, like many others of his political stripe, fails to perceive is that some people are deficit hawks precisely because they want to preserve a generous public sector. The sustainability of high-quality public services depends on a private sector vigorous enough to pay its share of taxes -- and the cost-effectiveness, actual and perceived, of government interventions. In other words, nothing threatens the political consensus for progressive government more than the widespread impression -- and reality -- that public employee unions have captured government. Public-sector unions simultaneously bankroll the Democratic Party and bankrupt the government programs for which the Democratic Party stands. This cannot go on forever.

Now comes a progressive political entrepreneur willing to make that argument explicitly in the very heart of Blue America. San Francisco Public Defender Jeff Adachi is spearheading Proposition B, a city-wide ballot initiative that would force 11,000 public employees who currently pay nothing toward their pensions to contribute up to 10 percent of salary -- and to shoulder half the cost of their family’s health benefits. More than 77,000 S.F. citizens signed a petition to put this measure on the ballot, leaving the unions and their dependent politicians sputtering with rage. It has just survived a union court challenge, ensuring that voters will indeed have a chance to decide on it in November.

But Adachi’s logic is compelling. From a recent interview:

As Public Defender, my job is to provide legal representation for those who cannot afford an attorney. Our agency provides legal representation to about 25,000 people each year. We represent minorities and the very, very poor. In recent years, I have experienced firsthand the devastating impact of budget cuts on basic services and I began questioning why we were spending nearly a billion dollars on city employee pensions and health care costs when other basic services were being slashed or eliminated.

City worker pensions are very generous. A police or firefighter can retire at 55 years of age and get a check for 90% of his or her last year’s salary. Last year, one police officer earned $516,000 in a single year. He also retired that same year and will receive a $230,000 a year pension paid by taxpayers. That amounts to an $8 million dollar payout over his lifetime.

The costs of these pensions are going up. What a lot of people don’t understand about the way that government pensions work, is that if the pension fund loses money, the taxpayers have to make up the difference. Since the pension funds have been losing money over the past 5 years, taxpayers have had to pay more and more. Five years ago, SF was paying $175 million for retiree pensions. This year it’s nearly $500 million and is projected to be as high as $818 million within five years. At the same time, we are facing a $483 million deficit next year. So it’s eating up all of the money for other services that all San Franciscans rely upon.

This comes at a time when we have had to slash vital programs. This year was the first year we cancelled summer school for 10,000 kids in the public schools because we didn’t have $4 million to pay for it, yet we spent 100 times that amount to pay retiree pensions. Our parks budget was cut in half, and after-school programs for kids were cut severely. We are spending nearly 20 times more on city employee benefits than we are fixing our potholed streets.

Among all the other races in November, I'll be watching the fate of Proposition B closely. Whether it wins or loses, I don’t think we've heard the last of this issue, or of intra-Democratic arguments over the party’s Faustian bargain with public sector unions. How long, politically, can the party of government afford to be known as the party of government employees?

By Charles Lane  | August 31, 2010; 12:00 PM ET
Categories:  Lane  | Tags:  Charles Lane  
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Comments

Adachi is a pioneer in San Francisco and a hero for being the only elected official in SF with the guts to take on the City's labor unions. Meanwhile the Mayor pays lip service to pension reform (passing a measure in June that does not generate pension cost savings for 20 years). San Francisco has a structural deficit of $800 million driven by City employee benefit costs and its elected officials sit around twiddling their thumbs...

Posted by: cjroses | August 31, 2010 2:28 PM | Report abuse

I griped about Paul Krugman’s spurious habit of equating deficit hawkishness with political regressivity.

Lane is falsifying Krugman's objections. Krugman is pointing out that deficit "hawkishness" disappears when the money is for something that
the hawk desires--such as tax cuts for the rich.
These need not be paid for. On the other hand,
extending unemployment benefits for people who can't get a job because there are 6 job seekers for every job cannot happen.

Aside from this transparent hypocrisy, the other point Krugman makes is that stimulus should be applied at the level indicated when we are in what is known as a "liquidity trap" (too much money, not enough spending, output well below potential). Once again, "hawks" use the stimulus argument aplenty when the 2001, 2003 and 2004 Bush tax cuts were passed. Now, when we really truely need the stimulus, we can't "afford" it (note that of the 1.5 trillion dollar deficit, about a trillion is from underproduction relative to potential--if we spent, say two trillion in the next two years to get back one trillion in increased output, wouldn't that be worth it? This would get employment back to normal obviating the need to keep extending jobless benefits).

It should be noted that Krugman is all for long-term deficit control, but recall the Clinton administration put us in that position and the Bush administration spent the money on tax cuts for the rich.

Posted by: garbage1 | August 31, 2010 2:39 PM | Report abuse

By and large, this is a red herring. Opponents of unions always cite the unusual instance where someone gets a large payout. San Francisco's pension benefits may be out of whack (I don't know and don't have the time to research it), but that does not warrant an attack on unions or on government employee pensions in general. In the vast majority of cases, pensions are in line with those offered by the private sector, especially when you factor in the usually lower pay that a government employee receives.

Posted by: theStockman | August 31, 2010 2:47 PM | Report abuse

To be in line with private industry pensions, the amount should be zero, as most private industry employees get no pension at all...

Posted by: rds128 | August 31, 2010 3:01 PM | Report abuse

Mr. Lane has a memory that is convenient but nothing else. How strange that the plutocrats plunder our wealth with tax cuts for the privileged but when we need something for the masses there always seems to be all these good reasons why the answer is NO.

I wish I could say I was surprised.

Posted by: BigBambu | August 31, 2010 3:24 PM | Report abuse

Great article. It actually looks like San Franscico finally got something right.

Posted by: jkk1943 | August 31, 2010 3:27 PM | Report abuse

I challenge people to do much more. I challenge people to demand that we reduce government spending at all levels by half in the next 5 years.

Posted by: BradG | August 31, 2010 6:38 PM | Report abuse

"By and large, this is a red herring. Opponents of unions always cite the unusual instance where someone gets a large payout. San Francisco's pension benefits may be out of whack (I don't know and don't have the time to research it), but that does not warrant an attack on unions or on government employee pensions in general. In the vast majority of cases, pensions are in line with those offered by the private sector, especially when you factor in the usually lower pay that a government employee receives."

Actually your statement is 100% false. On average government employees recieve higher pay and better benefits than the average private sector employee doing the same job. The top end of the private sector is better but on average the government employee is far better off.

Posted by: BradG | August 31, 2010 6:40 PM | Report abuse


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Posted by: ssdfknwefo | August 31, 2010 9:49 PM | Report abuse

Mr. Lane, I don't know if you took the time to research all the details of this proposition. It includes teachers--who DO NOT have a city pension, and ALREADY pay 46% of their dependent care--to pay even more in monthly health care premiums. The proposition does NOTHING to ensure that this affects ONLY those top earners who enjoy the pensions you describe. (Adachi pays nothing for his pension, and makes around $190K/year.) It will also cause a teacher who makes $48,000/year and pays $950 month for 2 dependents (an astounding sum for employer-based care) to pay over $1,000 to insure her children. And there are many more examples of people this will affect that make even less. The proposition also does NOTHING to ensure the savings are used to fund cut programs or to fund pension shortfalls. In my own family, the extra $130 a month is a breaking point. If he wanted to go after pensions, then he should have carefully crafted a proposition that targets those unfairly benefiting, while protecting the vulnerable...he is a public defender, after all. But, he did not do so, which makes him just like the rest of the politicians--in it to make a name for himself, while ensuring he is well taken care of.

Posted by: abovethefray | September 1, 2010 4:32 PM | Report abuse

Also, this survey from UC states the average family premium paid by private sector employees in the Bay Area is half of what teachers pay--teachers PAY DOUBLE for family care than what this survey shows. Personally, I'm tired of the witch hunt. Reform pensions, but leave health care out of it.
www.irle.berkeley.edu/cwed/wp/healthbenefits10.pdf.

Posted by: abovethefray | September 1, 2010 4:43 PM | Report abuse

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