Death and Taxes

[Moxley Confidential] While the public wasn't listening to Steven Greenhut, the certainties of life changed

The November 2009 publishing of Plunder: How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation sparked a backlash against author Steven Greenhut. While the book won spirited praise, critics on called it an “unethical portrayal of government service and union representation,” “standard bull,” a “scapegoat theory” and “extreme libertarian drivel.” One commenter opined that Greenhut “is obviously destined for a 5150 facility, [where hopefully] those evil government employees running the asylum treat him better than he has them!” In Orange County, the folks at TheLiberalOC blog coined the phrase “Greenhut gas.”

Whether or not you’re a Greenhut fan, the events of this summer in Southern California have made his long-held concerns the centerpiece of a growing national debate. The questions we face are startling:

• Should the city manager of Bell, a 2.6-square-mile city in Los Angeles County, make $800,000 per year and be guaranteed 12 percent annual raises in the midst of a terrible economy and high private unemployment?

Greenhut: Union plundering is "obliterating public services"
Greenhut: Union plundering is "obliterating public services"

• Should Orange County’s convicted felon ex-sheriff continue to collect at least $217,000 in pension every year until death?

• Should police officers in OC be allowed to retire at the age of 50 and collect 90 percent of their top salary (plus regular cost-of-living raises) for the rest of their lives?

• Should cops and other government retirees be allowed to continue to double-dip—retire from one agency, collect full pension benefits, and then join another government agency to collect another salary and pension?

• Should the public accept that eight in 10 California Highway Patrol officers claim a “disabling injury” to take early retirement perks that include shielding half of their retirement from taxes?

• Should a public pension-investment lobbyist collect “consulting fees” as high as $53 million for a single transaction?

• Should taxpayers have been forced to give a retired OC sanitation-district employee $244,359 in annual pension pay?

• Is it right that Orange County citizens are on the hook to pay more than $3.7 billion in unfunded retirement benefits for county workers? Or that California taxpayers are strapped with a half-trillion-dollar liability for state-government employee pensions?

For Greenhut—who last year left his position as senior editorial writer for The Orange County Register to become director of the Pacific Research Institute’s Journalism Center in Sacramento—the answer to each of the preceding questions is a resounding no.

“The public increasingly understands the level of plundering that has gone on, as public employees have used their union power to gain an unsustainable level of pay and especially benefits,” he says. “People are starting to understand that this is an issue of fairness. It’s not fair to create a society in which those who are supposed to serve the public get to live much better than the rest of us.”

Such talk infuriates TheLiberalOC’s Dan Chmielewski. In June, he cited a George Skelton Los Angeles Times column that blamed California’s financial woes not on employee unions, but on a “lack of discipline on both spending and tax cutting in the past,” “an outdated and unreliable tax system too susceptible to economic booms and busts” and “a dysfunctional state budgeting process.” Skelton also noted public-employee pensions are a small portion, about 11 percent, of California’s annual budget woes.

Concluded Chmielewski, “This sort of blows the premise of Greenhut’s book out of the water, doesn’t it?”

Absolutely not, says Greenhut.

“[The state-employee pension fund] engages in a process called smoothing, or spreading out the debt as far into the future as possible to mask the problem and avoid reforms,” he says. “Chmielewski’s argument is the equivalent of a consumer running up tens of thousands of dollars of credit-card debt, and then pretending there’s no problem because he can afford the monthly minimum payment.”

But Greenhut is quick to avoid making the debate over pension reform a left-versus-right battle. He believes the issue should bring together conservatives worried about mounting government debt with progressives. In his view, the protective stance Chmielewski and his liberal allies are taking on pensions is ultimately disastrous for progressive social goals aimed at low-income citizens, children, the elderly living in poverty and the homeless.

“Municipalities are faced with cuts in public services as benefits for retirees obliterate public services,” Greenhut says.

Orange County Republican Supervisor John Moorlach supports Greenhut’s contention. In a Sunday guest editorial in the Register, Moorlach wrote that people who think rising unfunded pension liabilities “aren’t taking municipalities to their knees” have stuck “their heads in the sand.”

“The voters have seen public sector greed (thank you, city of Bell), and they have had enough,” wrote Moorlach, who says it’s time for a voter referendum against “Rolls-Royce” public pension plans. (TheLiberalOC calls the supervisor “Chicken Little Moorlach . . . who has no problem making facts up.”)

But Greenhut has found encouragement in some liberal quarters, and he cites Governor Arnold Schwarzenegger adviser David Crane.

“Crane said that one cannot be a true progressive without embracing pension reform because of the harm pension liabilities are causing to the programs progressives claim to value,” Greenhut says.

So has national media coverage of the pension and pay scandals increased Greenhut’s hope for reform?

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