Too bad Americans in the military do not have a union behind them. If they did, they could join public sector workers like teachers, police, and firefighters whose unions bully taxpayers into funding their overgenerous pension and health benefits. Those considering a career in the armed forces now have to consider whether $500 billion in budget cuts will make military service an unwise choice. Meanwhile, state and local governments continue to recklessly dole out retirement packages that rack up pension debt.
Legislators and the president are doing their best to make military cuts look like a historic overhaul because they need to cover up last year’s failure to deal with federal spending and debt. Half a trillion dollars over ten years is pocket change compared to the numbers that were thrown at taxpayers during the debt ceiling debate. Just a few months ago we heard foolishly optimistic calls to cut outlays by trillions before the super committee imploded and left us with an idiot’s solution, sequestration (see: Washington Spending Standoff Headed for Historic Meltdown). Now reality has set in, nothing has been done, and lawmakers need to explain themselves in an election year.
The president’s announcement of a leaner and presumably meaner military raised the question of who gets hurt after months of hemming and hawing over budget cuts, including recommendations in a Defense Business Board report to change the military retirement system. Putting military retirement benefits on the line is nothing new. The same issues we heard about in the board’s report were raised by the Congressional Budget Office back in 1978.¹ The board called the current retirement system “unaffordable,” and warned that liabilities could grow to $2.8 trillion by 2034.² One solution, something that has been swept off the table by most state and local retirement systems, is a contribution-based plan similar to private sector 401(k)s.
State and local governments and public sector unions have saddled taxpayers with pension debt that continues to escalate. Democrats have forced us to bend over for unions more than once during the three years Barack Obama has been in the White House. We bailed out public sector workers in 2010 with the Teacher Jobs Bill, and would have done it again with the American Jobs Act if House Republicans had not been around to halt the pro-union spending spree. Billions in education funds have gone to states that grant college tuition breaks to illegal immigrants. State and local governments have amassed unfunded pension liabilities of $2-$3 trillion³ that easily rival military retirement costs, but they show far less willingness to consider benefit cuts. Until Washington engages in some harsh love and refuses to prop up states unable to pay their bills the problem will continue to get worse and someone will have to pay the tab.
Illinois is a poster child for pension debt. State retirement coffers could run dry as early as 2018.4 The best Springfield lawmakers could come up with to start the New Year was a bill that finally slapped away the hands of union bosses looking to cash in on public pensions. This makes for good headlines, certainly better than last year’s retroactive income tax hike (see: Live in Illinois? Get Out Now.) that was used to pay off pension obligations, but the bill does nothing to address the problem of unaffordable retirement benefits.
Washington has yet to show that it has the courage to force states to step up to the plate and deal with their debt. Instead, lawmakers advocate military cuts while enabling states like Illinois and California that dole out benefits while struggling to pay their bills. Will military personnel be targeted to share in the pain of state bailouts by freeing up funds with cuts to their compensation packages? Cutting off states cold turkey is not going to happen in an election year, but military cuts will play well with the president’s supporters.
If the military retirement system is changed service personnel should not shoulder the burden of cost-cutting while the president stumps for bailouts for union-backed public sector workers. New federal, state, and local employees, whether they are teachers, enlisted men and women, or firefighters should be shifted to 401(k) style plans. In the meantime we need to figure out how to pay the obligations already amassed.
Barack Obama is a big supporter of unions and public employees. He likes to talk about getting America’s fiscal house in shape. Getting our finances in order does not mean punishing those who serve in the military while enabling irresponsible state spending and greedy public sector unions with bailouts. Everyone must share in the pain of our government’s debt. Picking and choosing to suit political ambitions is what helped get us here in the first place.