Everyone, from elected leaders to pundits to financial experts to people on the street, has been talking about the pension crisis in Chicago, and the enormous, crushing debt the city faces. Just to maintain our current level of debt – not come anywhere near solving the problem – would take nearly half of the entire city budget, and that’s every year!
But what is astounding is the silence from those who are impacted the most, the leaders of the five major employee groups: teachers, policemen, firemen, municipal workers and laborers.
These labor leaders were eager to tout the court rulings supporting the interpretation that the Illinois Constitution guarantees those public employee pension benefits — period. But while the courts are opining and the unions are touting, the accrued liabilities are growing at the rate of 4.5 percent every year, and the plan assets are wasting away because benefit payments far exceed contributions and earnings.
There is no victory, nor is there a solution to save these funds anywhere to be found in the court decisions or subsequent actions of political leaders. Why are union leaders complacently playing the fiddle while Chicago burns around them?
In seven years the plans — their plans — will be virtually out of money. By then the benefits will have ballooned from the current $3.2 billion a year to $4.5 billion. How will the pensions be paid?
No matter what you think of the merit of these pensions, this abdication of leadership is breathtaking. There are 160,000 people expecting these pensions, and they are at severe risk.
So, why don’t these leaders say anything? Possibly they know that assets cannot be compelled, even through court order, to miraculously appear, nor can the city, which is virtually broke, be compelled to pay benefits when the money isn’t there.
Perhaps they plan to be comfortably retired when crunch time comes. Or maybe they hope that by keeping their heads in the sand, no one will ask them to compromise, to sacrifice some for the benefit of all, or to change a clearly broken system for future public employees. I’m not sure what to call it, but it certainly isn’t leadership.
Sensible leaders would understand that there is a profound disconnect between the promises made long ago by politicians and the ability to fund them. Sound leaders would appreciate the magnitude of the problem and refrain from tossing out rhetoric instead of practical solutions. Real leaders would recognize that a comprehensive settlement with mutual sacrifice must occur before a complete meltdown. Responsible leaders would be open to some kind of concessions coupled with a much more secure funding stream.
The labor movement is based upon collective bargaining and negotiation. None of that seems to be happening here. Where indeed are Chicago’s labor leaders in this crisis?
Ed Bachrach is chairman of the Center for Pension Integrity, a group working to promote solutions to the city and state’s pension crisis.