Or so James Spiotto would have you think. Spiotto, a partner with Chapman & Cutler who specializes in bankruptcies and workout deals, is recommending the formation of state-mandated Public Pension Funding Authorities. The New York Times delicately explained the role of these new authorities in that they
“would offer independent, quasi-judicial powers to sort out the facts of each [bankruptcy] case, then help severely troubled communities restructure their debts. The authority could determine, for example, whether a city had exhausted its ability to raise taxes, or whether ballooning pension obligations were preventing a city from providing essential services.”
However the New York Times’ tactful and diplomatic interpretation is entirely false.
Spiotto’s Authorities are not intended to weigh costs and revenues in order to create a pantry of solutions: rather their one and only mission are to determine how deep public-service employee pension cuts should be.
In Spiotto’s presentation, available online here, he states that “pension benefits have doomed the financial futures” of sovereign states across Europe and the US. No, Spiotto didn’t mention quasi-illegal securitized state-debt financing, property-valuation bubbles, or the slowing of economic growth throughout industrialized nations. Nope. Couldn’t be any of that.
Instead, Spiotto lays all of the blame squarely on public-service workers and their incapacity for “voluntary change” and their “emotional and political overtones” related to their pensions. Because, you know, it’s not like corporate CEO’s get emotional about protecting their retirement benefits, right?
Sure, I’ll be the first to say that pension issues, especially for small municipalities and states, need to be part of any debt workout deal. But shame on the NY Times for giving ink to Spiotto and his blatant pedaling of an un-democratic independent authority, staffed by his fellow bankruptcy attorneys, with the sole mission of disassembling the public-service sector.
Spiotto is mum on how much this new layer of proposed bureaucracy will cost taxpayers, or whether these new state employees will also receive pensions. But I’ve heard the private sector is more efficient, so I guess they could just hire private firms at $19 million per case.
Public-service employees are taxpaying residents of cities. Not only do they live and work in the city, they have dedicated their life to it. It’s time to stop demonizing and scape-goating them.