Time to eliminate public pensions

February 25, 2010

In light of MD's huge budget shortfall and Baltimore City's huge budget shortfall, should we be paying for a benefit that 80% of the private sector doesn't get? Baltimore City spends over $200 million dollars a year paying people who no longer do any work for the city, an amount of money almost twice the deficit of $120 million dollars.

Mayor Stephanie C. Rawlings-Blake said in her state of the city address that "this $120 million deficit is brutal and will hit all of our citizens hard." She compared the severity of this to the 1904 Baltimore fire and the 1968 riots. The choice is simple: cut benefits to city residents, raise taxes that are already the highest in the state by a factor of two, or cut benefits to those who no longer work for the city. It would seem the answer is obvious, as the first two options will hurt everyone and the last option will only hurt those who lose a benefit most of us don't get anyway.

When deciding whether or not public dollars should be spent on something, a good test is whether or not there is a public benefit. Be it police, fire, education, parks, trash, or roads, there is a public benefit/spillover effect that goes beyond the group directly receiving the money. Of course policemen and firemen benefit from the pay they receive, but so does public safety. Public pensions on the other hand fail this test as they benefit only the recipients and no one beyond the recipients. The only argument to pass the public benefit test is that they are required to get people to work for the city. That might be a valid argument under normal times, but under the high unemployment we have right now it is invalid. The fact is even if people did quit or strike as a result of eliminating public pensions, there are many unemployed or underemployed who would gladly fill those vacancies without the pensions. It is a textbook example of overpaying someone and in this case doing so at the expense of everyone who is not a government employee.

Additionally, there is a reverse socialism, or a reverse income redistribution component to most public pensions. We can debate whether it is right to take from the rich and give to the poor, but there should be no debate that the opposite is wrong, and pensions paid for out of the taxes of those who make less than the pension recipient do just that.

Josh Dowlut, Baltimore

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