Nestled in the heart of ultra-wealthy Silicon Valley, California’s third-largest city is burning. What a Washington Post report calls “gold-plated pensions” for public workers are devastating San Jose, creating public eyesores like shuttered libraries, deserted recreational centers, and streets desperately in need of repair. Mayor Chuck Reed (D), quoted by the WaPo below, identifies a problem we’ve warned about for a long time here at TAI: As the cost of the blue model puts pressure on state and municipal finances, Democrats can no longer honestly claim to represent both the public employee producers of government services and the people, especially low-income families, who rely on such services:
“This is one of the dichotomies of California: I am cutting services to my low- and moderate-income people . . . to pay really generous benefits for public employees who make a good living and have an even better retirement,” he said in an interview in his office overlooking downtown.In San Jose and across the nation, state and local officials are increasingly confronting a vision of startling injustice: Poor and middle-class taxpayers — who often have no retirement savings — are paying higher taxes so public employees can retire in relative comfort.
It doesn’t take much imagination to see where the blue model is heading in the long run. The poor and middle-class are paying more in taxes even as services are being cut. And a growing portion of those tax dollars is going to fund pensions that pay out 90 percent of a public employee’s final salary level in retirement. According to the report, pension costs account for a full quarter of San Jose’s fiscal pie, quadruple what it did only ten years ago.And we still can’t even call public employees the clear victors in this ugly contest. In San Jose, the number of current public employees has been cut by almost thirty percent. In other words, public employee union members are paying dues to secure benefits that could eventually force cities to fire them.For this reason and others, the blue civil war is seeing many more Spotsylvanias than Gettysburgs: battles in which the bodies pile up quickly without any clear winner to show for it. Both public employees and poor residents are long-run losers in this system that union leaders and their allied legislators have imprudently designed. This is the case in Detroit and Chicago as much as it is in San Jose.Make no mistake: the blue civil war is raging amongst the leadership ranks of the political class, every bit as much as it is at the level of individual citizens. Mayor Reed is fighting an uphill battle to ease constitutional restrictions on pension reform, measures which unions and some fellow Democrats vehemently oppose. A similar battle is being fought in Illinois, Rhode Island, and Chicago.Is retirement security for public workers more important than social services for the poor? Are pensions and job security for teachers more important than a poor child’s access to a good education? These are the kinds of questions that will continue to pit Democratic legislators and voters against each other.