The New Financial Class War?

Leo Kolivakis's picture

Via Pension Pulse.

this week, I read an interesting comment by Damien Hoffman, Are
Private and Public Employees Headed for War?

American Enterprise
President Arthur C. Brooks might be an emerging leader of
the intellectual side of the Tea Party movement (Cf. the emotional
side). He raises an interesting point I have been hearing a
lot lately by people in states with massive public pension
liabilities: “The disparity [between public and private sector
benefits] is so large and so unfair, a day of reckoning is coming.”


I was recently visiting family in New Jersey, all they could discuss
was their animosity toward police officers retiring in their 40′s with full
pensions, teachers receiving 4% a year raises despite the economic
recession, and politicians who keep signing contracts for more
unsustainable and unfundable public sector compensation programs. Given
the anger coupled with their very reasonable insights, I could easily
see how this issue will reach an ugly head.


However, one thing
Brooks and many private sector employees fail to also consider are the ~10 million private pensioned people lobbying hard
for a government bailout
. And I don’t think anyone has yet
forgotten the Trillions in liabilities we are all sharing for the private
finance sector bailout in 2008 and 2009.


Thus, I don’t think
this is a public versus private sector issue as much as an issue of
people incorrectly believing that 1) there are guarantees in
capitalism, and 2) taxpayers can sustain irrational retirement benefits
for public sector retirees.

There are NO
Guarantees in Capitalism

I repeat: there are no
guarantees in capitalism. If the US is to recreate one of the greatest
economies in the world, we must end the practice of aiding businesses
and programs which would otherwise go bankrupt without government
subsidy. Once guarantees are offered to a privileged group of people, a
society ends up in the current tit-for-tat gameplay currently reaching
elevated heights in the US.


Of course, there must be exceptions
for certain programs which provide legitimate social value for the
statistically small percentage of people who genuinely need it. But
insofar as guaranteeing survival in the private marketplace or
irrational retirement benefits in the public sector, the government
must end these practices now before we follow the same path as ancient


The death spiral is as such:


First, public sector
employees see private sector companies receiving generous taxpayer aid
for all types of unfair reasons. Then, the private sector sees public
workers retiring after 15-20 years with full pensions at insane rates
based on trickery (e.g., padded time sheets with unnecessary overtime),
paid-up medical with zero to infinitesimal worker contributions, and
other outrageous benefits which seem like they were added to the public
budgets during a real life trip through Tim Burton’s Alice in


After that, the private sector lashes back
because there’s no justice in using tax dollars to provide one set of
workers with a better standard of living than another set of equally
deserving workers. This game goes back and forth until the parents step
in and quash the childish nonsense.

Cannot Sustain Irrational Public Sector Benefits

addition to getting back to Adam Smith’s authentic version of
capitalism — not crony capitalism or corporate socialism — the public
sector must recognize that 1 + 1 = 2. Therefore, public budgets must be
based on realistic tax burdens. No one I know debates whether we need
teachers or police officers. However, they do question whether a 40-year
old police officer really needs so much tax payer support as to have a
Hummer, live in the wealthiest neighborhood in town, etc.


there is a major problem with military officers marrying friends
simply so the tax payer will send benefits to the new “spouses”. Anyone
who has spent any time around the military knows there is a huge
cancer of scams such as this being perpetrated against the taxpayers.
Rather than nickel and dime our nation’s protectors, let’s take care of
the honest ones more generously while rooting out those who are
stealing from the system.

Those Are Fighting

Arthur C. Brooks’ new book The
Battle: How the Fight between Free Enterprise and Big Government Will
Shape America’s Future
is gaining a head of steam.
If the anger continues to spread on both sides, I would agree that our
nation’s workers are on a path to war.

While I
share many concerns raised in this article, let me also present the
flip side of this capitalistic view of retirement benefits that you will
never see in mainstream media.

Guns & Butter had another
outstanding interview with Michael Hudson on Europe's
Financial Class War Against Labor, Industry and Government

Financial Class War Against Labor, Industry and Government" with Dr.
Michael Hudson. Economic crisis in Europe created by predatory
lending; European Central Bank stranglehold on the Eurozone; the Euro;
foreign banks decimate Greece's social structure; Marx's industrial
capital versus fictitious capital; Latvia as a model for the rest of
Europe; Hudson's financial and fiscal plan for Latvia; the Cold War and
its ruinous effect on progressive economic thought.

the time to listen to Michael Hudson below. There are few people in
this world who understand the new financial class war more than him. I
don't agree with everything he says, but his analysis is devastatingly
brilliant. An absolute must listen interview.

and Butter - June 16, 2010 at 1:00pm" scale="showall" name="index">

Click to
listen (or download)



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Rantor's picture

Interesting interview, for a Marxist (spit) he has some valid criticisms about the EU.  It was always designed as a bureaucracy first and the idea of government came along later.  The EU bureacrats made sure their Parliament would not have sufficient authority to change anything, just give the appearance of voter participation.  I also agree with some of his thoughts about the banks and their rise to power.  Banks not allowed to go bankrupt is the ultimate smack in the face to the people being forced to bail them out.


Unfortunately, he is a Marxist (spit) and so his overriding paradigm, or dialectic, if you will, is flawed --- but that doesn't prevent him from seeing through the machinations of the EU...  now, as to the ultimate goals of this effort, I think he is wrong. 

The EU functionaries continue to believe that they can improve the lives of the EUropean Peoples and bring about peace through a coordinated, democratic socialist, centrally regulated bureaucracy.  While they have no example of this working elsewhere, and reign over the birthplaces of Smith, Hayek and Mises, men who have adequately explained why this won't work, yet fail to understand free market economics is the problem. 

anarkst's picture

I believe most people would be Marxists if they bothered to read him, but that aside, I believe Hudson is being quite practical.  Capitalism is what it is, and if checked properly, functions, well, it is quite efficient.  What we have seen over the past several decades is anything but an efficient system.  Hudson is quite right in his critique of financial capitalism's grab.  This should be obvious to all at this point in time.   

moneymutt's picture

agreed, govgt uncecked=Stalin, capitalism unchecked=oligarchies, monolopies, trusts

blindman's picture

"The man who believes that the secrets of the world are forever hidden lives in mystery and fear. Superstitiion will drag him down. The rain will erode the deeds of his life. But that man who sets himself the task of singling out the thread of order from the tapestry will by the decision alone have taken charge of the world and it is only by such taking charge that he will effect a way to dictate the terms of his own fate.

I dont see what that has to do with catchin birds.

The freedom of birds is an insult to me. I'd have them all in zoos.

That would be a hell of a zoo.

The judge smiled. Yes, he said. Even so."
Cormac McCarthy

Kreditanstalt's picture

This thread is getting depressing.  Not just because of Michael Hudson and his advocacy of print, print, print but because ZH's commenters have all turned into Michael Moore, Lou Dobbs or Paul Craig Roberts...

Let's all play victim!  Let's all set up the banks as the Evil Empire!  Let's conveniently forget about the idle, useless and extremely expensive and unproductive G-8 labour forces.  Even with interest rates at a micromanaged 0.25% they can't make a go of it...

Let's scream about "outsourcing".  Demand that they "bring those jobs back home" and force them (and their customers!) to pay U.S.-style wages.  Never mind the competition from the rest of the world: let's close the borders.  Let's set up tariffs against those evil Chinese...

Bunch of redistributionist printers, you guys... 

IF YOU BORROW, YOU PAY THE PIPER.  If a country goes that route, they are by definition living beyond their means, pulling demand forward and whether they borrow from one of the evil banks or not is irrelevant.

America priced itself out of the world market, chose to borrow endlessly to "pay" for it and now blames the lenders when it falls standards have to be earned with REAL production of REAL goods, at prices - and salaries - FOREIGNERS are prepared to pay.

The ZH socialist cheerleaders! 



Muir's picture

Well then, you're a Capitalist pig.


Nah, that would get you off too easy, way too easy.



Here's some of the gibberish what you posted earlier:


1. [you]"He seems to have a vindictive hatred of the banks...."

Don't you?

2. [you]"....when the fault lies with the populations and governments of those indebted countries."


The problem lies with ignorant populations, servile governments and unaccountable banks.



Oh, one last thing...


3. [you]"Cuts have to be made to living standards so that they are sustainable by productivity.  Want high living standards?  Work harder, be more productive and stop borrowing, eleiminate[sic] deficits.  Period."



Ehh...hmmmm.... how can I put this politely?

You are full of shit.


What productivity when the jobs were taken to Mexico and China?

How about stupid wars that were a "slam dunk?" Might this be a "misallocation of resources?"

How about doing just about everything possible to be dependant on oil from the Middle-East?


You've got to be an investment banker, only someone like that could say something so stupid.






Kreditanstalt's picture

Yeah, but at least I don't use words like f--k and s--t discussing things I don't agree with.

Sometimes the less you say, the more you say

blindman's picture

with all due respect.

s.h.i.t. . shipped high in transit.  a perfectly derisive term

indicating the odious nature of that being described or commented

upon. (transited?)  origin seems to do with mercantilism, capitalism

and f.u.c.k. knows what else.  perhaps outlawed by order of the king or supreme

justice ruling but,  beasts will be beasts and you have god to blame

if you like,  or you can blame your neighbor or the church or me.

or the rable, the little people, common folk or the average man

and associated syndrome.

question?  why is the average man considered statistically when it

comes to social policy yet individually when it comes to law

enforcement and the judicial system?    this must be my bad brain

kicking in. ??

blindman's picture


the problem is that the interest payment on loans go to the

private banks.  as long as this is the case they will own your

government (you and your family and your culture and your

mind) .....  do you see?  


 so what?  move on.  nothing to see here.........

anarkst's picture

"In addition to getting back to Adam Smith’s authentic version of capitalism — not crony capitalism or corporate socialism..."

You must mean the type of capitalism whereby individuals expect something for nothing, i.e., put their capital to work by "earning" other people's labor value through giving them the wonderful opportunity to "work" for a living.

blindman's picture

an effect of industrialization was to make

the human being, persons, obsolete to varying

degrees.  the individual has become a cog in the

big machine and many less are needed to produce

the marketable goods made industrially,  many more

are needed to consume the abundance of goods, meet the

"productive" capacity of the machine.   the result is 

dislocation of any rational market pricing.  price determination

increasingly becomes impossible and the basis of debt distribution

becomes obviously political as it always is in a fiat system.       


so the financial economy blindly tried exponential credit

extension, irrational proliferation of debt money ,the basis

of fractional reserve lending in a fiat money system.  this to

maintain the seat.  one leg, production.  second leg consumption.

but the production was demanded by the sector with no connection

to income or access to "rational" finance.  enter the explosion of

the financial sector to patch together a third leg.   liar loans to cds s.... 

compensation for labor reduced or eliminated to increase the

financial profits.  safety sacrificed, environmental concerns

eliminated due to exportation of production to "desperate"(desperately

needed by finance for their resources including free labor) emerging

markets.  all increasing potential financial gains.  gains in debt.

 now,here we are,

with the debt and securitized debt, deflating, unserviceable.

we can fight and kill one another, spirits running high, based

on some public/private lines or we can understand and redesign

a money system and culture based on principles consistent with

humanity and the physical universe and the truths we can know,

wisely discerned, of them .  and history has taught some great and

horrible  lessons.

who will be crushed and who will not?  does anyone need to be crushed

for the failed ponzi finance scam now that it has been exposed? 

there is a big difference between a haircut and a scalping.  many have been

scalped already and many are on the street being scalped.   homeless.

but not the architects of finance and their spokespersons.  they were and are

mightily "bailed out",  cost be damned.    


.  read it for yourself...

The Collapsing Western Way of Life The greatest threat to the Western Way of Life is the Western Way of Life itself.

by John Kozy

Global Research, June 18, 2010


"Today that pride and satisfaction accrues only to hobbyists, such as quilters, but never to industrial workers. The Industrial Revolution degraded human life to the status of coal. People became fuel for machines. Bought cheap, people are used until unneeded and then discarded like slag. Individuality, talent, imagination, originality—the best attributes of human beings—are suppressed to the point of extinction. The Industrial Revolution sucked the humanity out of the human race; people became things.  ....."

comment:  some people, maybe many or most, think this way and communicate

accordingly.   think drones, or thinking drones.  zombies if you will,  you know?




anyway... one thing..

if i sit and read a book and eat one small meal a day and play a

banjo, get some exercise and sleep late i don't do much for the gdp.

but if i borrow tons of money, eat out 4 times a day, buy lots of crap

that i throw into the waste "stream" and have many medications and

multiple operations the gdp is enhanced wonderfully.  so it is a question

of quality not quantity that is important.  something you lose when you

drop the socio from economics.  ? 

and please don't complain about teachers earning a living in the face

of global currency annihilation due to fraud in the financial/political/judicial

"leadership" sector.  (complain about the shit they teach, fine/o.k.).  

it just sounds ridiculous.   

Madcow's picture

I agree with those who see more of a generation-war than a class-war. 

The interests of the boomers is squarely against the interest of gen-y.  

If the collapse happens quickly and decisively, gen-y has a chance to re-build and the boomers get wiped out.

If governments try to stretch the collapse out over 20-30 years, it may forestall asset vapor, but it sentences gen-y to a long and painful economic death.

Silversinner's picture

Listen to this man.Completly talking out of his ass.Just get the gouverment and banks of our backs.

Two wrongs(left/right) wont make it right.Libertarian is the way to go.Freedommmm!!!!!!!!!!!!!!!!!!!!!!!

Pooh-Bah's picture

Marketfox.  Your plan sounds great.  No debt would eliminate inflation.

blindman's picture

it would also eliminate all currency.  that would be cool.

PBRmeASAP's picture

Solution is quite simple, and we are doing it in the USA:

Slowly end the obscene Public Pension Benefits: Check- we're doing that.

Slowly raise obscenely-low taxes on the rich: Check- we're doing that.

Slowly raise the retirement Age to match increases in Life-spans: Check- we're doing that.

Offset declines in velocity of money/ Money Multiplier/ reductions in Local Spending with non-inflationary QE: Check- we're doing that.

Long-term budgets problems will be solved slowly, neatly and easily.

Problem solved!

Peak-Oil, now that'll be a bit more difficult


sgt_doom's picture

My prediction (actually this prediction originates with others, having predicted correctly everything else, so I'm copying them):

Predatory capitalism goes down by the end of Year 2012.

Held og lykke!

Pegasus Muse's picture

“However, they do question whether a 40-year old police officer really needs so much tax payer support as to have a Hummer, live in the wealthiest neighborhood in town, etc.”

Maybe where you live.  This isn’t happening in my area.  Entry level police barely earn a living wage.  If they have a family they are most likely on some form of public assistance to help make ends meet.  A senior police officer can aspire to live in a middle class neighborhood with a modest retirement income if he lives to make retirement age.  As an aside, I am amazed how fat-ass, couch potatoes, bitchers and whiners who haven’t looked for a job while drawing unemployment for 99 weeks are the first to comment on how “unfair” 20 year retirements are while completely ignoring the stress, the daily risk to life and limb, and the incredibly difficult working conditions police and fire fighters are exposed to throughout their careers.  (And, no, I have never worked in either profession.)


Moreover, there is a major problem with military officers marrying friends simply so the tax payer will send benefits to the new “spouses”. Anyone who has spent any time around the military knows there is a huge cancer of scams such as this being perpetrated against the taxpayers. Rather than nickel and dime our nation’s protectors, let’s take care of the honest ones more generously while rooting out those who are stealing from the system.

As someone who has served in the military I’ve got to say WTF?  Where did you come up that unadulterated BS?  Got any evidence to prove your claim of a “huge cancer of scams”?  Show it.  Name the specific benefits you are referring to here.  My background and experience tells me you either made this crap up or took it from someone who did.  

Have you ever served in the military?    

thrashaholic's picture

"Got any evidence to prove your claim of a “huge cancer of scams”? Show it."

I know probably 10 active duty soldiers currently. Of those 10, at least 4 are married to women for the sole purpose of giving them "free" medical coverage and housing. Half of them are pill poppers. No offense to you (or my brother who is in the Navy, though he'd agree), but the military, the Army especially, is filled with the bottom of the societal barrel. The lazy, uneducated, and addicted who have nothing else to offer society but to go kill brown people for the elite. You'll have to excuse me if I don't feel like paying for them, or their oxy-eating "wives" anymore. Hell, I know women who only date military for the sole purpose of having a chance at a "free ride" on the taxpayer dime.


My anecdotal evidence, for what it's worth.

WaterWings's picture

Good stuff. Thanks, Leo.

Vendetta's picture

the private sector workers have been getting hammered by trade and monetary policies for decades, now that that group is getting wiped out due to outsourcing and what not, its hammering the public sector.  Its the ol case of what comes around goes around.  Everyone should be shitting in their chinese or indian slave wage made underwear.  Trade policies are supposed to be about importing what cannot be produced in a country and exporting what other country's cannot produce... not wage arbitage that it is all about today.

sgt_doom's picture

thanks, labor arbitrage is all it's about, and squeezing as much blood money from workers - everywhere - as possible.

Pooh-Bah's picture

Exportbank, well said.

DavidRicardo's picture

Anyone who thinks the economics of Adam Smith has any logical content, knows nothing about economics and needs to be ignored.


Leo, why are you still alive?  You're SUCH scum.

AnAnonymous's picture

Adam Smith has one logical point, one that can be quantified and measured and was the causes to him advocating colonization.

Every other point can be debatted at length.

trav7777's picture


The economics of Adam Smith ran the world for hundreds of years.  Real Bills Doctrine was genius.  It self-expressed before Smith even wrote about it.

All those who came after him have been banker scumbag apologists.

Leo Kolivakis's picture

Alive & kicking pal...crawl back under the rock you came from.

moneymutt's picture

I think this a tale of two sectors of US workers that have diverged. Once private employees made more in take-home salary and pretty comparable, if somewhat less benefits to govt employees. Over past 20-30 years TWO things have happened, private worker real wages have gone down, they have lost many benes, going from most private employers offering employer paid pensions 30 years ago to private employers, at the most, matching contributions of a private employee. Meanwhile, private employees salaries have gone way up and the defined benefit packages are out of this a private employee saving millions, investing extremely well thru this market crash would not be able to remotely touch the life time pay out of a fed govt, military, fire/police/teacher that retires at 55, or younger.

So of course, private employees, self-employed do not want their tax dollars to pay above market prices for govt employees, and certainly do not want their tax load INCREASED to pay for govt employee way about market rate pay/benes. But overall difference is also due to the fact private employees have fallen so much. Thirty years ago, a private employee in US with a high school education could easily get a good paying manufacturing job, with good benefits, including a nice retirement pension at 60-65. Now only a govt employee can get that.

Truth is, some of this is corrected already in that new govt employees are more realistically paid with benes that match private employees better, what we are seeing now is the older workers that excessively milked system cash out during tough economic times, at outrageously above market benes.

But of course, the money the gov wastes on bailing out big, insider, crony private businesses will not likely get cut, but these govt workers salaries will.

Also, I predict military excesses will be last to be touched. I think military folks in combat, permanently damaged from that do not get compensated enough, especially national guard, but there are plenty of military personnel that see no combat and make huge money and benes compared to private employees. And its not just a dangerous yukky job thing that you need to pay so much for, women working in convenience stores is a very dangerous job, mining is a very dangerous job, farming is very dangerous, roofing is very hard job that wears out your body fast etc...and none of these jobs have to pay anywhere near what police, military pay to get employees.


trav7777's picture

Cab drivers have among the most dangerous jobs.


The private sector has all been OUTSOURCED.  This is how the top 1% share bar graph keeps getting exponentially taller while the others fall.

There are those on this thread and elsewhere who will demand their pound of FLESH to repay this debt accrued on all our behalf, plus interest.  People will be selling their ORGANS to repay banks the money lent to them, plus interest, that the bank never itself possessed in the first place.

tom's picture

kinda funny how chattering class marxists like leo so easily convince themselves they have common interests with labor

ZackAttack's picture

Well, see, in a Marxist society, man oppresses man.


In capitalism, it's competely the other way around.

Leo Kolivakis's picture

Well said..capitalism gives you the illusion of freedom. Truth is banksters control society through debt.

russki standart's picture

100% agree. Bankers create money out of nothing and lend it out, expecting interest and repayment of debt to be paid from real productive activity. No wonder we are in such a mess.

blindman's picture

and for their trouble of lending out of thin air they can lay

claim to real assets if and when they decide to stop the

q.e..  great scam.  fleece and then eat the sheeple, but save

the eating for when times get really tough. 

Muir's picture

Leo, your post implies a binary problem.

An either/or type dichotomy.

As I pointed out in other posts before this, I think this is flawed.

I can hate FED's backdoor bailout of the top .1% (one/tenth of one percent) of the very richest in the World and also hate huge pensions.

Leo Kolivakis's picture

I am definitely not a Marxist, but smart enough to recognize that Marx was a genius who understood the limits of capitalism better than anyone that ever lived. His criticism of capitalism is unparalleled, which is why all serious universities dedicate courses to his works.

russki standart's picture

No Leo, I beg to differ. Most 'serious' universities offer courses in Marxism because the professors teaching these courses actually believe. Marx's critique of Capitalism was rather good, but everything else he wrote was eventually discredited. Schumpeter, for example, did an outstanding job of invalidating Marx theory that eventually the state would wither away.. (you know, I can't believe I still remember this crap after 25+ years)

tom's picture

I'll grant that Marx was highly intelligent, and I'll grant that all serious universities dedicate courses to his works (because of their influence). The rest sounds very much like the adulation for Marx that would be expected of a typical chattering class Marxist. But it's not relevant to my point whether you are one or just sound like one. My point is that it's amusing that you imagine that you have shared interests with labor. Your relatively comfortable lifestyle is premised on the supply of imported cheap labor. When they stand up for their collective interests it will be directly against yours.



sgt_doom's picture

Well said, Leo, well said.

Of course I take major exception to the nonsensical title of Brooks' book (the Free Enterprise vs.  big government theme) -- it should be Big Business vs. Free Enterprise --- after all, they killed it quite some time ago.

PeterSchump's picture

More the devil's helper than a genius.  How many people have died as a result of his work?


Now get ready for the moral equivalence crowd to jump in.............and tu qouque for me too?

MarketFox's picture

One of the public private arguments is that in order to attract talented people in the public sector, must pay them...otherwise expect the public side to be subpar attracting only those who could not compete on the private side.


After does not want their public dependence ie schools to deny their children future gainful employment....




But here is the real test....distribution of wealth....It is clear that the majority of US wealth is held by IVY League grads....

Is this because they are smarter ? is because they have the right connections and family history....

Are there exceptions...yes...a token amount...

Same goes for Jews.....non Jews are discriminated against as well....there is no denying this....


So the bottom line is this....

An honest system is one whereby there is equal access to education by the willing.....

Education needs to be available to all....and there needs to be a good riddance call to the priviledged.....whereby merit becomes the determinant....


At the end of the is worth what one has to give....and the demand by others....



The solution for government costs is very simple....

Both the income and corporate taxes needs to be eliminated and replaced by a simple 15% consumption tax....5% goes to the Fed....and 10% goes to the states...

Absolutely no other taxes...and no further debt/credit cards...

Tax funds usage is voted by public internet proxy...and govt. jobs are by merit...


This removes the tax impediments to competitive prices...


Also there needs to be a total revamp of the legal largesse system....

This means $limits on legitimate law suits....


The elimination of legal largesse and the income/corporate taxes simply reduces prices.... 

ZackAttack's picture

I don't really care how he feels about pensions; I already dislike that Hoffman dude for his doublethink:  

Taxpayers will now be on the hook for “make-whole” payments on private sector investments and companies. And we’re not talking about payments that are needed to save us from the Great Depression.

So he thinks The Great AIG/TARP/Maiden Lane Scam was necessary and justifiable. Only a few sentences before, he makes the statement

Hell, there is no guarantee the Earth will exist tomorrow.

Frankly, go pound sand, Mr. Hoffman. Should have let financial parasites like you be consumed in the deluge.

mountainaires's picture

I'm skeptical of ANY argument from any quarter positing that people's retirement pay is too high. I hope thinking people will not be misled by that race to the bottom. Posting six-figure retirement benefits for a few senior bureaucrats is a taint too far, in my view. Most public servants--especially police officers--do not earn anywhere near that amount, and when they 'retire' from public service, they still have to work; they aren't really "retired." We should call this what it is; this is really a war for "resources" [jobs] and revenues [taxes]; put even more bluntly, these are arguments for redistribution.

Moreover, discussions about public v. private pensions always omit military retirement pay. Military retirement pay is "public" pension monies, albeit at a federal, not a state level. I wonder how this "war on public pensions" will affect military retirement pay. Retired rank officers with 25 years of service get 50% of base pay as a retirement pension, which ends up being approximately $50-60,000 per year [much less for enlisted ranks of course]. Is that too much, in the eyes of those who never served a day in the military? And, what about military health benefits included as a part of their retirement system, i.e., Tricare for Life as a supplement to Medicare at age 65? Most retired military work in the private sector following retirement from the military; will we see a new front in the 'public v private pensions' war involving military retirement pay now? Who wants to make the argument that serving your country results in too much pay/benefits after 25 years? Who wants to make the argument that police officers don't deserve the paltry retirement they get after 20 years? 



trav7777's picture

I will.  Fuck this.  We don't need this military.  Not one thing they are currently involved in has anything to do with defending us or "service" to us.

Nostradumbass's picture

50% after 25 years seems reasonable to me. Problem is that with the pensionable overtime and padding, 25 years will get many public employees 75% +... and that seems too generous to me. Aren't we supposed to be saving money aside from our pensions? After 25 - 30 years and a good salary/wage, should'nt a well paid person have a couple hundred thousand $ saved by then?

exportbank's picture

The problem isn't the pensions the problem is the math and ponzi nature of them. If pensions were fully funded over the working life of the employee then it makes no difference how large the benefit is (public or private). The problem however is that the vast majority of plans are underfunded and again this isn't a problem as long as there at 10 people working and paying into the system to cover the cost of that one retiree. We're now at 3 workers per retiree and some countries are heading even lower. When you have three people earning 40K supporting one retiree at 100K it's a problem that compounds rather quickly. If my pension (I'm not union so even I wouldn't get a private sector pension bailout) tanks - it's my problem. If a public sector pension tanks it's also my problem.

Circumspice's picture

And police pensions are hardly paltry. I left Cali recently, but in my city base pay for police officers and firefighters was $80,000 per year, and most did overtime, some netting over $200,000 per year. The pensions were 3% times years served times final pay. They were allowed to "spike" their pensions by cashing out all accrued PTO in the final year. Plus, they get an annual cost of living increase. So, fully vested pensions at 50 that were double or triple private sector salaries are totally conceivable. You could ask the ex-cop at my old neighborhood, retired at the ripe old age of 53, with his paid-for $600k condo and brand-new BMW.

Meanwhile, by any objective assessment CalSTRS, CalPERS and the UC Fund are around 50% underfunded, and any shortfall will have to be made up by taxpayers.

I know that not all public sector pay is crazy. My mom is a teacher who makes around $45,000 after 20 years of work and several teaching accolades. She plans to retire at 65, at which point her pension will be slightly over half of her final pay (averaged over four years) with no inflation adjustment. And the NC fund is close to fully funded, so this isn't at some hidden cost to the taxpayer.

And military pay is not crazy either. I have several friends in the military with different levels of seniority, and nothing I've heard from them is shocking. Besides, the pay charts are public, so if you know someone's rank and years of service you know how much they make.

This doesn't need to be a public vs private battle. Most people I know earn their living and don't benefit from government largesse. But there are some in both worlds who do, and the demands that public sector employees and their unions have placed on private sector folk in states like California, Illinois, Florida and New York are outrageous.

Dr. Sandi's picture

The reality is that no matter how deserving one might be, when the wealth is gone, the jar is empty. Deserving and undeserving alike will be sucking a dry teat.


mrhonkytonk1948's picture

Remember that Clint Eastwood line to Gene Hackman in "Unforgiven"? 

"Deserve's got nothing to do with it."