mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
Pension Crisis
Dallas Police Exodus: A Preview of Blue Model Collapse?

Dallas’s police and firefighters are quitting in droves, wagering that financial-market losses are about to render their promised pensions too good to be true.

With the city considering benefit cuts to help close a retirement-fund shortfall that grew by $1.2 billion last year, more than 200 workers have decided to retire or leave, about double the normal rate, said Mayor Pro Tem Erik Wilson, who sits on the Dallas Police and Fire Pension System’s board. That’s threatening to put further pressure on the fund as benefits come due, including lump-sum payouts to older employees who’ve been drawing a paycheck while earning a guaranteed 8 percent return on their pensions.

“I’ve had 40 to 50 officers in my office this week asking what they should do,” said James Parnell, 52, secretary-treasurer of the Dallas Police Association and 25-year veteran. “They’re very nervous about what is going to happen, they’re fearing a run on the money.”

This situation a reminder that blue model decay is not confined to leftwing cities and states, although it tends to be worse there. Rather, it is baked into the prevailing social system of the Western world, which is built around impossible-to-sustain retirement promises for workers.

As the Economist notes in a comprehensive survey of the looming crisis, private companies in the United States have been able to avert catastrophe by switching from defined-benefit to defined-contribution retirement plans. But “because the power of public-sector trade unions to resist lower benefits is greater than in much of the private sector,” there is no relief in sight for state and local governments, whose salary-for-life guarantees to retired workers now face a $3.4 trillion hole.

Some cities, like Detroit and San Bernardino, have been forced into bankruptcy by runaway pension costs, and others (perhaps even major ones, like Chicago) are likely to follow the next time a recession hits. But long before the bankruptcy lawyers take over City Hall, the collapse of the blue social model will degrade (and in some cases already has degraded) the quality of urban governance in more subtle ways: Hiking bond yields so cities can’t invest in long-term projects, squeezing budgets for infrastructure and education, and causing talented public servants to run for the hills.

Wonks and policymakers need to be thinking much harder about how to right the sinking ship beyond perpetually raising taxes to plug the leaks. This is not just a matter of arithmetic; it’s a matter of overhauling our social system so that states and localities can govern effectively in the twenty-first century.

Features Icon
Features
show comments
  • Fat_Man

    The pension problem, and being target practice for leftist agitators.

  • Jim__L

    Having a replacement birth rate would be a good solution here.

    Valorizing motherhood, as it has been in previous generations, would be a great way to make that a reality. If not, I suspect the current culture is destined to extinction in a decade or two.

    What would replace it? Well, that all depends on whether we can have a Renaissance of traditional American values (perhaps led by the sort of immigrants that push themselves to assimilate — the sort that always made America great) or whether it’s going to be the immigrants from countries with no respect for rule of law or other useful traditions.

    • Ofer Imanuel

      Good start, not enough of a solution. One thing the government can help is make day care cheaper (perhaps less regulations?).

      • Jim__L

        If you have a one-breadwinner household, daycare costs are no longer an issue.

        • Rodney

          I am inclined to agree with Ofer on this one. While some of us can afford single-breadwinner status, many cannot. My mother has run an in-home daycare for around three decades. In her state, an in-home daycare can maintain up to four kids without a license and up to seven with a license. She was licensed for a while and always had high ratings based on assessments by a state inspector until the regulatory agency decided that in-home daycare centers were bad and rewrote the regulations in favor of institutional daycare centers. I remember Mom showing me the ten steps of diapering, and compliance with this was mandatory and part of her annual assessment. Apparently, a mother of three kids is not smart enough to change a diaper without the instruction of an all-knowing bureaucrat. In addition, a rule was changed to require an adult to be sitting at the table whenever food was in front of the kids. If Mom forgot something, she couldn’t step into the kitchen to get it. If a baby napping in a baby bed stirred an needed something, she couldn’t get up to check on it although she would be dinged for not getting up and checking on it in a timely manner. In other words, the rules were changed to drive in-home daycares out of business with the effect of reducing supply.

          • Jim__L

            Forcing two-income households is a vicious cycle brought on by a scarcity premium on land, which is inevitable with “densification”. Any “extra income” a household gains by having a second income is gobbled up by rent (to say nothing of daycare), as they compete with ever-more households for scarce land.

            It’s the same thing as when student loans become more available, driving the price of education through the roof.

            Making a cultural shift back to suburbs and back to single-income households would similarly be a virtuous cycle — housing prices would fall, allowing more people to afford to be a single-income household. Kids would benefit dramatically from actually having mothers again.

  • Beauceron

    Well, I suppose the Left will simply argue that we shouldn’t be paying any pensions to racist murderers…

  • JR

    Hello???? HELLO??? Have they tried confiscatory levels of taxation above a certain randomly chosen level? Because I can tell you one thing with absolute certainty. There ain’t nothing wrong that can’t be fixed by transferring money from private sector to the public sector. Justice, peace on Earth and brotherhood amongst men always follow. Take it away, FG….

  • http://www.quora.com/Richard-Treitel/answers Richard T

    You guys aren’t thinking like Blue people.

    Tax the pensions payable to already-retired and soon-to-retire Dallas cops. Heavily. After all, it’s not the city’s fault, it’s THEIR fault, right? Huh? Huh? Right?

    • Jim__L

      Well, they believed the Blue Model promises, and they seem to be unwilling to share the pain that is being inflicted on those following in their footsteps.

      So… I have sympathy for them, but that sympathy has limits.

  • rpabate

    I highly recommend Philip K. Howard’s book “The Rule of Nobody”. His book discusses how government rules and regulations are destroying the country. Decisions can’t be made, accountability is a farce, and following the law often leads to absurd and sometimes outrageously expensive outcomes. Just another result of the blue model state.

  • FriendlyGoat

    ““They’re very nervous about what is going to happen, they’re fearing a run on the money.”
    Can anyone at TAI tell them why they shouldn’t be fearing a run on pension money?

    • Jim__L

      They certainly should, because Leftists have no concept of what happens when you hyper-spend on domestic concerns.

      Conservatives, on the other hand, know what happens when the majority realizes that it can vote itself money from the public coffers. Which is why we’re against it in the first place.

      • FriendlyGoat

        There was a time when conservative workers thought that arranging themselves a pension through the workplace was wise, prudent and a rock-solid conservative thing to be doing. Considering that this article is talking about cops—–cops, not communists—–please excuse me for not buying your spin.

  • Boritz

    The people who are bailing fom the sinking ship and the people who over promised them without accountability will all benefit from their rational behavior. Carry on

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service