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Blue San Francisco Plans To Stiff The Unions

Scott Walker move over; San Francisco is the latest front line in the battle against abusive public sector unions.

The bluest city in the bluest state in the union has woken up and smelled the latte; generations of extortionate collusion between shamelessly greedy and shortsighted union leaders and unforgivably opportunistic and irresponsible politicians have left the Blue Paradise on the Bay with a pension bill that it simply can’t pay.  As tells it,

San Francisco’s public pension system took a beating during the recession, which has left it carrying a hefty unfunded liability for its 26,000 current and 28,000 retired employees. The city’s pension obligation is growing by $100 million a year, leaving less funding for police and fire protection, park maintenance and health services for the needy.Unable to keep up, San Francisco is among several California cities asking voters to help tackle the public pension problem—which is now one of the biggest causes of municipal budget shortfalls.

Several things about this story deserve a closer look; one is that Blueville by the Bay has more retired workers than current employees.  Unless San Francisco has been on a hitherto unnoticed frenzy of cost cutting and layoffs, this means that the city has long had a grotestquely out of line pension system that permits people to retire much earlier than they should.  A more reasonably retiree ratio would be something like one to four; a one to one ratio means that the city is paying as many people to rest as it is to work.  The technical term for this in accounting circles is “blind folly”.  It is often written in Greek: ατη and it is well known as the stage that comes between hubris and nemesis while a tragedy unfolds.

San Francisco may be the Athens of the West, but it is not the only California city that is taking ballot measures to the voters as a way of reducing unsustainable pension obligations.  San Diego and San Jose are also planning ballot measures; the unconscionable collusion between greedy union leaders and ambitious politicians threatens to ruin cities up and down the coast.

California’s shortsighted unions and politicians have left their successors in a horrible position: do you slash pensions that old people rely on, or do you cut government services like police, fire protection and education?  Taxpayers generally favor the first alternative; it is hard to persuade hardworking immigrants struggling to raise kids that they should send their kids to bad schools on dirty, unsafe streets to save the money necessary honor abusive contracts made by past generations of labor and political bosses.

The courts, however, take a different view.  Contracts are contracts and cannot lightly be broken.  Union lawyers are appealing ballot initiatives and pension changes in the courts; often, they win.

Via Meadia thinks that contracts ought normally to be honored, but some agreements are so unrealistic that they are unenforceable.  If the unions fight too aggressively in the courts, the cities can always go bankrupt.

Meanwhile, the public unions in California are isolating themselves politically.  Insisting on “geezers first, kids last” public policy is neither decent nor honorable nor wise.  The political and economic failures of the Baby Boom generation are nowhere more obvious than in California.  The Boomers inherited a golden state of promise and dynamism; as they begin to retire they are leaving it a debt ridden hulk — and the wrecking crew wants fat pensions for a job well done.

Many will have to make do with less than they’d expected; a generation that failed to make California rich enough to afford generous pensions will not be able to collect.

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  • Roger Olson

    The US is finding out and will find even more out in the next few years that all this talk of ” I earned it, an entitled to this”, is going to hit the fan as the country goes bankrupt. It is not right to load down the kids and grandkids with a mountain of debt.

  • forrest

    It’s like these protesters should occupy the union halls and government buildings if they want to get to the root of the problem.

  • rmark

    Is San Francisco’s school age population growing? if not, then more budget money should be available for pension payments.

  • PTL

    Just the beginning. Bankruptcy courts are going to be busy for a long time to come. They
    will have to set up a court division just for
    government entities.

  • Jordan

    “The political and economic failures of the Baby Boom generation are nowhere more obvious than in California. The Boomers inherited a golden state of promise and dynamism; as they begin to retire they are leaving it a debt ridden hulk — and the wrecking crew wants fat pensions for a job well done.”

    Yup, the worst generation. Hope they get used to the scorn heaped upon them.

  • cavan edwards

    A simple and effective way of loosening the public union’s grip is to not allow “dues Check,” where the employer (San Francisco) becomes the dues collector for the unions.

  • Shannon Love

    All things said, I don’t really have much sympathy for retired union “geezers” who now find their pensions threatened.

    They like to portray themselves as hapless victims of fate and evil politicians but they themselves fought hard and long over many decades to force the pensions down the throats of the electorate. It was the unions themselves that elected the very politicians they now attempt to blame.

    In ever election and in every negotiation, some knowledgable person warned them that the pensions were unsustainable but their greed blinded them and they ignored the warnings. Now they have to suffer the consequences.

  • Marty

    Good column, except I don’t know where you get the idea that a mature city with a mature pension fund should have 4 workers for each retiree.

    I am in Chicago and we have similar numbers, which are in general the product of having pensions “max out” at about 30-35 years of service and people able to retire around 55. All other things being equal (which of course they never are), that is matching 30-year careers with 20-35 year retirements, throw in survivor benefits and you get about a 1:1 ratio.

    The way to get at that, if you can do it politcally and legally, is to rework the pension formula so maxing out takes about 40 years and normal (unreduced) retirement happens around 65 or so. Now you have 40-year careers matching 20-year retirements and eventually will get a ratio of approx. 2 workers per retiree, ignoring survivors who get benefits (and lower the ratio).

    HOWEVER, do you really want 65-year old firemen and policemen? Most people do not, and police and fire can be half of a city’s workforce, or close to it. As you back off the retirement age and benefit accrual rate for cops and firemen, that 2:1 ratio goes down.

    In reality, for a mature city a ratio of employees to employee-annuitants around 1.5:1 is probably reasonable. Add in survivors and you might be around 1.3:1.

    To be at 4:1 you would be looking at people working from about 20 to 75 (50-55 year career and 10 year retirement, plus survivors). The only way you realistically get numbers like 4:1 is if the workforce is rapidly expanding, or you have a new pension plan with not many retirees, yet. But that is not sustainable and will eventually correct toward a more stable ratio like about 1.5:1, give or take.

  • Allan E.

    Public sector employes. Notice I did not say workers. Anyone who has watched four or more public sector employes do the job that would take only one private sector worker to do knows why. Deserve all the grief they are about to receive.

  • raf

    Maybe they should raise taxes on pensions paid based on work within the city. A sort of “payroll” tax for nonworkers. A rate of 50% might work. This may not even require a referendum.

  • Steve Adams

    ‘Contracts are contracts and cannot lightly be broken’ Yep, but in public institutions this needs to be balanced with the inability of past voters to forever bind the hands of the future voters. The present doesn’t have the right to enslave the future.

  • cas127

    “Via Meadia thinks that contracts ought normally to be honored, but some agreements are so unrealistic that they are unenforceable.”

    There are *plenty* of legal concepts for cutting off the dead hand of a corrupt past:

    1) “Ultra Vires” – Public pension “contracts” void from inception, as it was beyond the legal capacity of elected/unelected officials to enrich themselves politically/financially by trading taxpayer $ for votes/personal pension $.

    Result: Public pension “contracts” – void.

    2) “Rational Review” of new taxes targeting “unearned income” of public pension retirees.

    Basically, prior legislatures cannot bind future legislatures.

    So any new taxes targeting the inflated pension incomes of public sector employees is legal.

    There may be a contract right to pension payouts – but there is no right to prevent them from being taxed away.

    After all they are “unearned incomes” wholly unrelated to *any* work presently performed.

    As for inevitable legal challenges: as decades of invidious tax discrimination have taught us – tax statutes are subject to the laughably low bar of “rational review” by the courts.

    If a legislature “could have” a remotely “rational” basis for taxing away public pensions (how about fighting political corruption?) then this Constitutionally laughable (but sickeningly long-standing) low standard applies.

    It will be a joy to see the political class skewered on its own worthless “standard”.

    And on and on, through fiduciary violations to anti-corruption statutes.

    All the nation lacks is a legislative or judicial authority with the honor or honesty to enforce the “rules” promulgated under its own banner – *when applied to itself*.

    But as our present state demonstrates, such political or judicial entities are extremely unlikely to be found.

    And that is why civil war is extremely likely to come.

    The 80% of America laboring to enrich the ruling public sector 20% will not accept the status quo.

  • buzz

    “HOWEVER, do you really want 65-year old firemen and policemen?” Why not? There are a lot of admin and supervisor jobs that don’t involve running into fires and chasing criminals? Wouldn’t there be a benefit of holding onto 30 years of experience? If they didn’t want to stay until full retirement they could still leave at 50 or 55 on partial retirement. They would still have to go out and get another job, just like the rest of us at that age.

  • Steve W from Ford

    We blackmailed your politicians into giving us these pensions and now they are OURS!!! HANDS OFF or we can do the same to you!

    Slogan for the No campaign when pigs fly and truth reigns.

  • Kenny

    1. Jordan at post 5 writes of the Baby Boom generation, “Yup, the worst generation. Hope they get used to the scorn heaped upon them.”

    I think it will in ways that might seem unimaginable.

    The fear I have is that soon seniors will become the new pariahs in society. This is for several reason with the most significant being the debt mess that they have created. The $14 trillion in federal debt alone is back breaking, but when the state debt and all the unfunded government liabilities are accounted for, the hate will flow.

    And as the aged consume more resources for their medical care, the patience of the younger generation could be taxes to the limit.

    Adding to this is cultural/social thing. It was under the Baby Boomer’s watch that abortion came to America. Not only did this diminish population growth that could have helped SS and Medicare stay healthy, but it also set loose a logic that says if you thought it was alright to aborted a baby for your convenience, then we can euthanize you for ours.

    And since, again under the Baby Boomers, the U.S. has become more and more secularized, making it harder to combat that immoral argument than would otherwise be the case.

    And then there’s the number of seniors. Aside from family, the more seniors that are out and about, the less they’ll be liked. That’s because they’re old; they’re slow; they’re un-hip; they’re unattractive.

    Not a pretty picture.

    2. Allan E makes a critical distinction between government worker and government employee. Like Allan, I, too, find the phrase ‘government worker’ to be an oxymoron.

    3. And to show you how classless the government employees are, when they retire and get their Cadallic pensions, quite many of them skip off to a low tax, right-to-work state leaving the saps behind to deal with their mess.

  • Andrew

    Respectfully, the problem is worse than you think. California courts favor public sector pension rights more than other contract rights. For nearly 70 years, the courts have held that public sector pension rights are protected by the Contracts Clause of the U.S. and California constitutions. (Aside: Boomers destroyed everything, yes, but only because the “Greatest Generation” gave their bratty offspring the ammunition). Despite 30 years of fiscal emergencies, the courts continue to adhere to this ridiculous proposition.

    Ballot initiatives are necessary because retirees have a constitutional right to benefits earned during employment. Perhaps courts will listen to the citizens now.

  • cthulhu

    An important nuance to the situation is that the same “geezers first” crowd was loudly “kids first”….when they were or had kids. Now that they’re geezers, however….

  • Kevin M

    Governments skirt contracts all the time with mechanisms like “windfall profits taxes.”

    Maybe it is time to have a pension windfall tax, such as a 50% windfall tax on pension amounts over $50K/yr, levied on the payment so as to apply to those moving out of state.

  • Micha Elyi

    Answer: Replace defined benefit schemes with solid defined contribution plans. No more cost-unknown promises to be paid for by somebody else in the far (i.e. after I’m out of office) future. Instead, costs will be faced in the very year in which they are incurred. Problem solved.

    By the way, then-California governor Arnold Schwarzenegger tried to make that move but the state government employees unions threw a screaming fit and launched a no-holds-barred media propaganda campaign to block him.

  • Tim

    Let me get this straight. San Francisco pension fund gets screwed over by bankers so it’s short on funds. To make up for it the city is considering screwing over the police officers and firemen who were promised payment for their services. Haha, it’s their own fault. I will I was stupid or evil enough to be a conservative.

  • peter faulk

    Why not have all current union employees and future union contracts bear the cost of past union contracts? Make it so all union employees pay into their elders pension fund, fund it 100% then they are welcome to what’s left over. The free market will then force them out and we can go back to hiring custodial workers at less than 6 figures per year.

  • huxley

    Surely this situation has occurred before in other times and places. What has been done in the past?

    I imagine some plan to raise retirement age and cut benefits will have to phase in. If the money’s not there, the money’s not there.

  • cubanbob

    If the cities affected are allowed by their states to levy income taxes then the problem is easily solved. Tax the income at the source at 100% until the recipient reaches the new retirement age.

  • John

    Two words: Clawback Tax.

    A 100% tax on all government union pensions for recipients under the age of 67.

    It is a crime that my 72 year old mother is still working so some fat cop who spent his career sleeping in a squadcar behind the supermarket can retire at 50.

  • PV

    “It was under the Baby Boomer’s watch that abortion came to America.” Hardly. Roe vs Wade was in 1973 when the oldest boomer would have been 27 and the youngest would have been nine. Just being alive does not make it one’s “watch”.

  • Boyd

    “do you slash pensions that old people rely on, or do you cut government services like police, fire protection and education?”

    I love your writing but lets not get all Washington Monument on us here. There are likely plenty of things to cut without going straight to Police, Fire and education.

  • f1guyus

    What’s going to be really fun is when there’s only enough money coming in to pay the retirement and welfare benefits and the bondholders. I hope I live long enough to see that one. And how special is it that it is happening where there hasn’t been an elected Republican since the 80’s

  • Al

    Five words will fix it.

    Defined contributions not defined benefits.

  • Bill M

    The choice is not necessarily between pensions and needed services like police and fire protection. How much does San Francisco pay illegal aliens in welfare? Why is this huge expense off the table in negotiating a smaller city budget? Same for all welfare payments. Pay the people who worked first, then dole out whatever remains to the freeloaders. Don’t talk about cutting police as long as there is a single freeloader sucking on the public teat.

  • crypticguise

    The Public Unions will NEVER be reasonable. The ONLY ultimate solution to the problem of the profligate municipalities and their criminal politicians is to declare BANKRUPTCY.

    One day soon, the Politicians will suddenly realize that BANKRUPTCY is their only choice. There is NO MONEY, folks!

  • John Richard Clinton Maenpaa

    Watching Faux News on pot is a really bad idea… Notice how it’s the EU member states who have made it their business to protect the fabulously wealthy from taxation that are in trouble. You don’t hear about punitive austerity measures in Germany or Norway, do you? Not any more than you hear about them in Massachusetts (The state with the highest GDP growth in the country) or Vermont. In fact, to keep from laying off any teachers, Vermont raised it’s sales tax from 3% to 5%. Of course, Faux News immediately started bellowing, “Vermont raised taxes on it’s citizens by 60%, so even when they tell the truth(sort of), they lie. Speaking of Germany, their workforce is 85% unionized (public AND private sector), and yet they have the world’s second largest trade SURPLUS, and they have become the banker to their slightly dimmer tax-averse neighbors to the south and west. Sound familiar? It should; red states are all debtor states. For instance, here in drought-ridden Texas, governor Perry had to seek cash from Uncle Sam to fight brush fires 35 times before summer even began, and yet despite all the federal handouts for firefighting and various sundry, he still managed to run up $27b in debt AND win re-election on balancing the budget, because that’s what life at the heart of the Faux News nation is all about…
    P S Unemployment here is at it’s highest in 24 years, and yet he’s on the campaign trail boasting of jobe creation in the “Texas Miracle”… Like I said, watching Faux News on pot is a really bad idea…

  • John Richard Clinton Maenpaa

    Faux News: Rich people paying rich people to tell middle class people to blame poor people and each other… AWESOME!

  • b

    @Marty “HOWEVER, do you really want 65-year old firemen and policemen?”

    Hi Marty, you raise a good point but let’s consider how such a situation would be handled in the private sector. One option is to reassign the employee to a set of duties compatible with his physical and mental abilities–maybe at a lower salary. If there aren’t enough of these alternative positions available, and the employee is not able to perform the basic responsibilities of the job, then that employee is let go.

    So if we have a 60 year old cop who simply can’t hack it anymore but yet cannot be reassigned to administrative or “desk” duties then indeed he should retire from the force and go get a different job that he can handle, or just stay out of work–just like us poor slobs in the real world.

    BUT his police pension should not start until he is 65 (or whatever). We simply cannot afford to have people work for 25 or 30 years and then suck off the public teat for 30 or 40 years (plus their surviving spouse doing the same) starting at their maxed out tippy-top salary level with automatic 3% COLAs. It’s insane and unfair, and what’s more fiscally impossible.

    Anecdote alert! Heck in my state there are some firefighters at 5% COLAs. 5%! Or in other words retire at $100K/yr and 30 years later take home ~$430K/yr.

  • SukieTawdry

    The downward slide began with Jerry Brown who, among other moonbatty moves, signed the executive order permitting public employee unions to form. We haven’t been the same since. Brown’s not stupid; he knew exactly what he was doing and why. Somehow it’s fitting that he should be governor now as we’re reaping the full force of the whirlwind he sowed.

  • jakee308

    Ah, here we go. Because BB’s are retiring now, it’s all their fault that everything is out of whack.

    Like they’ve been in control for the last 40 years? Really? Really?

    This corruption started before BB’s were born and were perpetuated by the so called “greatest Generation” more like the “Greediest Generation” It was they who voted for all the benefits and programs that folks are upset about NOW.

    No one had a problem with all this stuff until less than 10 years ago. And we wouldn’t be in such trouble if the Congress and the Democrats hadn’t lifted the restraint on Banks Investing and on forcing Banks to make shaky loans.

    Along with greedy middle class folks who bought and sold houses like baseball cards and bankers who bundled bad mortgages and claimed they were “investments”.

    Theirs plenty of blame to pass around so don’t single out BB’s. Try looking in the mirror next time and point your fingers as many of YOU were involved either actively or too busy too pay attention to what was being done.

  • Marty


    Yes, some desk jobs but not enough. Yes, they can not get a pension until 67 but face mandatory retirement at 58 or 60 and have to deal with the gap, but you’re gonna pay for that policy one way or another–higher sapalries to attract capable people, a supplemental pesnion tier like a contributory 401(k)… something, and maybe better than what lots of places have now, but it won’t be free and probably won’t be cheap.

    And no, I don’t want to count on a 66-year old fireman to carry my invalid wife down several flights of stairs or an external ladder from a burning building. Most people don’t.

    This thread is interesting, there’s a lot of real venom and hatred here, which is highly unusual on this blog. A lot of this problem was due to an unholy alliance between union leaders and politicians who shared an interest in misleading both the employees and the public, but most of the employees honestly assumed that the pensions they were being promised would be honored, and the public assumed that their taxes were actually paying for the public services they were getting The problem was that the union and political bosses agreed to not fund against the obligations they were accruing, and to stick the future with that problem.

    I am not suggesting that every pension has to be honored–some people are going to have to take a haircut, a pretty substantial one. But save the moral outrage for the union bosses and pols who cut the deal… pols who YOU elected, btb. The rank and file employees are going to wind up the biggest victims of all, not because they are evil, but because at this point there’s no choice.

  • Marty

    For those of you wanting clawback tax schemes to tax public pensions at confiscatory rates, all that does is get the pensioners to move out of the jurisdiction so your money becomes the economic base of some other community or state.

    Illinois does not tax any retirement income, and that is wrong, too—it should all be taxed the same.

    Beyond that, some of the commenters are getting at the main underlying problem–public sector unions that can negotiate over financial issues. FDR kept them out of the Wagner Act because he knew where that would lead, but in the 1960s and 1970s that sound thinking was reversed and such unions were authorized and quickly led to what FDR feared–unions crippling the government’s ability to function. And pensions, because the link between how obligations are incurred and paid is so obscure, became the perfect avenue for that corrupt partnership between Labor and politicians.

    Defined contribution would be a better system because it forces a more honest approach. Even better would be Walker-style labor reforms at all levels and places.

  • Buster Schenck

    To [heck] with the public-employee parasites and to [heck] with the “hardworking immigrant” parasites too. By “hardworking” you mean all the time spent rummaging around in a purse for a food-stamp card?

  • Buster Schenck

    “Hardworking immigrants.” [Faintly blasphemous exclamation expressing incredulity deleted[, what planet are you living on? Oh, I see you have the evil lying self-promoting [persons whose origins writer impugns] Andrew Sullivan, David Brooks, and Ezra Klein on your blogroll. Never mind.

  • Federale

    Interesting, Federal workers have no contract rights. Congress has sovereign authority to alter working and retirement conditions as well. The 10th Amendment gives States that same right.

  • M. Simon

    It was under the Baby Boomer’s watch that abortion came to America.

    That is rather a novel view. Abortion like drugs have always been a part of America. The only question is: above ground were it can be – to some extent – regulated or below ground where it cannot.

  • http://facebook. Kenia Armstrong

    When the banks, the military, and the former presidents,Johnson,Nixon,Carter,Reagan,Clinton,George H. Bush, and George W. Bush, with their cronies, taking billions & trillions of dollars, from Enron, to the Contra War in Nicaragua, to draining FEMA, and making Homeland Security to abuse the whole idea of accountability, to three wars, that weren’t run by the military, but “contractors”, for the purpose of taking any money that’s left and raising the national debt ceiling from 8 trillion to 11 trillion dollars. All of this bankrupted every state and local government. Wise-up people,the first step to taking away unions was GM, in the fifties, giving the unions the whole store, making a terrible product thereafter, and thirty years blaming everyone, including the oil barons. The worst was Reagan, firing the Air-Traffic Controller’s in the 80’s. Afterwards it has been a take the money and run attitude from Congress and Republicans, including Nafta under Pres. Clinton. All orchestrated by JP Morgan Chase, financing all the wars since World War I. Bomb them and set-up loans for the bombed out country. Dwight Eisenhower said it best,Watch out for the military!!!

  • richard40

    One present worker for each retiree, even the most idiotic should be able to see that is completely unsustainable. Its interesting the lefties are constantly lecturing us on how everything should be “sustainable”, but they dont seem to be concerned about fiscal sustainability.

  • Tim Kowal

    Actually, California courts don’t treat pensions like contracts. They treat them BETTER than contracts. If they were merely contracts, they would likely be void under he California Constitution, which provides at Article IV, section 17 and Article XI, section 10 that neither the Legislature nor any local government body may pay extra compensation for work already rendered. As I described elsewhere (, the courts have declined to apply these provisions to pensions, treating pensions as a class apart from contracts. (Bewilderingly, they never do explain, if pensions are not contracts, what exactly they are.)

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