Has anyone else noticed how progressives, when they’re defending big pensions for public workers, sound almost exactly like conservatives who are defending tax cuts for the rich?
There are two trickle-down theories, and here’s one thing they have in common: the belief that if you simply put money in the hands of the right people, benefits will somehow flow to the rest of us.
Here’s another thing both theories have in common: an absence of evidence that they work.
Recent economic history is littered with examples of how cutting taxes for the rich doesn’t benefit the rest of society (In fact, there’s a strong case to be made that the very wealthy create so many different kinds of unhealthy and unhappy distortions that we might all be better off economically if their taxes were raised).
The progressive argument for protecting high public-sector pensions (as ably made by Robert Cruickshank in an occasional exchange we’re having on various blogs) is a cousin of the conservative trickle down argument. That argument: by keeping pension benefits high, the public sector sets a standard that will help – presumably by some sort of magical osmosis – boost salaries and retirement benefits that the rest of us receive.
If only it were so. Here, too, the problem is recent economic history. Public pensions have been rising even as retirement benefits for private workers are in decline.
Meanwhile, the rising pension costs have begun to gobble up money that might be more productively used for infrastructure and public services that benefit society as a whole. As it happens, tax cuts for the rich – that other source of trickle down — also help starve public investment.
That’s why, at a time when we need more money for public services, it’s time to claw back cash from the rich and from pensions. Of course, politically, that’s impossible to do, especially in California. The law treats pension like contractual promises that can’t be broken, no matter the budget context. And this state’s system makes cutting taxes – which can be done by majority vote of the legislature – much easier than passing a budget or raising taxes, which requires a two-thirds vote.
The two trickle down theories have that in common. They are well protected politically.