The American Interest
Analysis by Walter Russell Mead & Staff
Unions Attack Young in Illinois Pension Fight

Politicians in Illinois have been wrangling for months over how to solve their state’s public pension crisis. Numerous proposals have been put forth and discussed, but unsurprisingly none of them have received much love from the state’s public-worker unions. Today, a union group known as the We Are One coalition blasted the current proposal supported by Governor Pat Quinn in no uncertain terms. The Chicago Tribune reports:

“The legislation was designed to essentially coerce state employees into accepting a significant cut in cost of living adjustments,” the unions said, calling it a “no-win choice” for workers. “In effect, the Quinn plan is a political ploy, not a meaningful resolution of the funding challenges faced by the state’s pension systems.”

A more recent plan offered by a bipartisan group of lawmakers “also contains significant problems,” the unions said, including cuts in cost-of-living increases and increased retirement ages. “In the end, an unconstitutional pension change would be nullified by the court, and the legislature would have, once again, merely kicked the can down the road,” the group said.

Instead, the unions proposed a plan of their own. If Illinois raises taxes on corporations, TV, and digital downloads and agrees to write a rule into the state constitution guaranteeing that all pension benefits will be paid in full, state unions will agree to contribute an extra two percent towards their pensions. The stance seems to undercut the unions’ claim that courts will overturn legislation limiting union pension benefits; why seek a constitutional amendment guaranteeing these benefits if you’re sure you already have constitutional protection that the court will enforce?

Most of these proposals are standard union boilerplate, but the taxes on cable TV and digital downloads stand out as particularly regressive. Normally, labor fights sales taxes because they are regressive; because poor people spend a higher percentage of their income on consumption goods (the rich save and invest), the poor end up paying a higher percentage of their income on sales taxes than the rich do.

But when it comes to union benefits, it’s clear that public union leaders only care about the money and will happily squeeze the poor as hard as they can.

But what’s even more disturbing is the generational inequity in these plans. A tax on digital downloads falls more heavily on the millennials than on the geezers. It’s a transfer of assets from the young to the old at a time when our policy should be doing just the opposite. Rather than trimming pensions down to a manageable size, unions would prefer to raise taxes on the impecunious young (many of whom, ironically, are political supporters of unions).

Regressive, youth-punishing taxes to support a generation that promised itself a retirement that it could never afford: that is where the public unions and their allies want social policy to go. And the fact that the other taxes they want will hurt Illinois’s ability to attract and retain business investment will also hit the young to help the old: young people actually need the jobs that the geezers want to drive away.

The war against the young: this is where the blue model takes you if you follow it too zealously for too long.

Published on December 20, 2012 9:00 am