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Blue Model Blues
Republicans Helped Create the Pension Crisis

For two decades leading up the the Great Recession, state and local governments across the country, under continuous pressure from deep-pocketed public sector unions, moved to steadily increase already-generous pension benefits for government workers, appeasing a powerful constituency while hiding the implausibility of their promises with accounting gimmicks.

The economic crisis of 2009 rattled the foundations of this Ponzi scheme. Five municipalities—along with Puerto Rico—have been forced into bankruptcy, with more almost certain to follow, as the combined shortfall approaches three-and-a-half trillion dollars. In response, GOP lawmakers have led efforts to beat back public sector unions and bring pension benefits back in line with states’ ability to pay.

But who engineered this epic fiscal crisis in the first place? One might assume that it was tax-and-spend Democrats, eager to grow government and do the bidding of unions, math be damned. In fact, according to a new study by political scientists at Stanford and UC Berkeley that should blunt Republicans’ self-righteousness about their party’s allegedly superior fiscal prudence, the creation of unsustainable state and local retirement systems was a thoroughly bipartisan affair. It wasn’t until the Great Recession forced pensions to the top of the agenda that the parties’ stances began to meaningfully diverge:

Prior to 2009, Democrats voted almost universally in support of benefit increases—but so did Republicans. Specifically, Democrats supported benefit increases at a rate of 98%, and Republicans went along, supporting increases at a rate of 93%. After the scope of conflict expanded, Democratic support remained about the same (98.5%)—but Republican “yes” votes plummeted to 69%.

Why didn’t Republican lawmakers do more to protect the solvency of state pension systems in the 1990s and early 2000s, before disaster struck? The study notes that Republicans had little incentive to pick a fight with unions before conservative activists made belt-tightening a priority in the wake of the Great Recession. Moreover, Republican politicians relied on the votes of pensioners, who are older than the general population. Finally, the logic of defined-benefit pensions—make promises now, pay later—always encourages politicians to kick the can down the road.

Republican politics at the state level—at least when it comes to pensions—appears to have been driven less by limited government ideology and more by interest group maneuvering and self-interested political calculation. Both parties have powerful incentives to adhere to blue model thinking.

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  • Pete

    A bipartisan affair Sure — 80% Democrat doing, 20% Republican.

    And where was the mainstream [liberal] media???? It was there cheering the government unions on.

  • Andrew Allison

    Why would anybody expect that the typical GOP RINO would be any less willing than a Dem to bribe the “public service” unions. It’s about retaining office, regardless of the cost to the taxpayer. The problem is that elected office has been allowed to become a career rather than a duty.

  • Josephbleau

    Yes, and the Democrat Party got 99% of Union campaign funding, Cui Bono plus Occams Razor.

  • Arkeygeezer

    A study by Stanford and U.C. Berkely that Republicans are responsible for the pension crisis? How shocking!

  • Boritz

    ‘Republicans’ have largely forgotten what Republicans used to understand.

  • CosmotKat

    This represents nitpicking and dis-ingenuousness at it’s worst. Academic studies of this type are agenda driven intended to apportion political blame when a program associated with Democrats goes off the rails.

  • FriendlyGoat

    It’s not good politics to pick fights with police, fire departments and teachers while you push for high-end tax cuts. The nature of the Republican involvement in this is not a mystery.

  • Frank Natoli

    Wow. Republicans supported benefit increases at the same rate as Democrats?
    Curiously, the article does not indicate whether Republican supported benefit increases were of the same magnitude as Democrat, or whether Republican supported benefit increases resulted in the same level of insolvency as Democrat, or anything that actually quantifies the problem.
    Funny how leaving out all the details helps the “conclusion” that there’s no difference between the two parties!

  • Charlotte Aines

    Governor of Il during the 90s is a good example of this bipartisan problem, Jim Edgar

  • Cromulent

    There shouldn’t *be* any public unions. FDR & Reuther & Meany all warned us of this folly. But we shunned their moderate advice for extremism.

  • AMTbuff

    Presidential nominee Kasich was unavailable for comment on the political wisdom of confronting public employee unions.

    • AMTbuff

      Neither was Governor Schwarzenegger.

  • Mastro63

    The benefits of voting for increased pensions are immediate (getting elected), the negatives (local bankruptcy) are down the road. Note that the benefits go directly to the politician, the negatives are someone else’s problem.

    Few politicians would make a different choice.

  • mhjhnsn

    The idea of Republicans as more fiscally responsible than Democrats is, with a few notable exceptions, ludicrous. The main contrast has been “tax and spend Democrats” versus “borrow and spend Republicans.” Real program restraint is usually an election-loser, and is therefore little practiced, leaving mainly the choice of whether to pay out of (increased) current revenues, or shove the cost onto the next generation.

    The Repubs who tried to restrain program growth lost. Dems who tried to raise taxes to at least pay for their new programs, also lost. So you wound up with debt-financed program growth, and underfunding pensions, a form of debt that doesn’t require actually selling bonds, was a favored tool to keep personnel spending down and use the money for those other things.

    Every State and City has its own story, but that is the usual way they got in pension trouble.

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