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Wednesday, September 25, 2013

Train of Fools

The circus train has left the station and the lead clown, our own Governor Kitzrobber, is sitting like Captain Kangaroo to lead the merry band of fools on another journey to rape and pillage the pensions of PERS retirees (and future retirees).  It wasn't bad enough that SB 822 put the kibosh on over half the cost-of-living increases for about half of PERS retirees, but the latest feast day for fools (September 30th, this year), will now go after the other half of the PERS retirees - the poor ones.  

During the entire discussion of SB 822, the objective was to protect the poorest retirees from any cuts, and subject those who weren't the very poorest to a progressively lower COLA as benefits rose.  Thus, for the nearly 40% of PERS retirees making less than $20,000 per year, they could continue to get the measly 2% COLA spelled out in statute.  Once the benefit exceeded $20,000, brackets at $20,000, $40,000, and $60,000 per year kicked in and progressively lowered the marginal COLA received on each dollar in excess of the last bracket.  So, for people earning between $20,000 and $40,000, the COLA would be 2% on the first $20,000 and 1.5% on the amount over $20,000 and less than $40,000.  Basically, a worker at the top of the second margin, earning $40,000 per year would receive a 1.75% COLA until the benefit exceeded $40,000.  With each bracket the marginal COLA declined so that the marginal bracket at $60,000 would drop to 0.25% on excesses above $60,000.

On the surface, the original cuts from SB 822 look pretty small, but the compound effects of the cuts become dramatically larger the greater the amount of time.  The cumulative losses to retirees become staggeringly large at about 20 years post-retrement, with inflation adjusted benefits being reduced by nearly half at one's most vulnerable point in life.

All of that was draconian, but the newest proposal shephered by the Bhutanese Cowboy would make SB 822 look positively generous.  No longer does he even  pretend to protect the poorest PERS retirees.  Now, he's just slavering for money, however he can get it.  The new proposal, to be voted on next Monday (Feast Day For Fools), simply takes the existing SB 822 proposal and cuts it essentially in half.  Now, there is no modicum of protection for the poorest (see next paragraph); the first $60,000 gets 1.25% COLA, period.  After $60,000, the marginal rate drops to 0.15%.  In viewing spreadsheets comparing the impact of SB 822 (described in the previous two paragraphs), and the new proposal, the 20 year inflation adjusted benefit has been reduced by nearly 70%, with the hardest hits accruing to the lowest paid members.  This is not only greedy; it is downright cruel.  It is money-grubbing at its worst, and SAIF-like as its best.  PERS members and PERS retirees have now been fully trotted out, skinned, skewered, and stuck on a spit to roast for every sin ever committed by public education in this state.  

To mollify the poorest, the head legislative clowns, chief among them, Peter Buckley have offered the possibility of an adjustment - roughly equivalent to a tiny one-time payment - as a sop to the poorest.  The bad news is that it will be really tiny; the worse news is that it won't increase the benefit base.  That's cynical and evil as far as I am concerned.

I've been a life-long Democrat and have donated thousands of dollars to support various legislators in their election and re-election campaign.  But now, that support no longer exists.  Thus far, every House Democrat and every Senate Democrat supported SB 822.  There are a couple of really easy, low-hanging fruits in that basket and I can promise them - Devlin, Kotek, Buckley - not a penny of support, but active support for any Democratic opponent regardless of philosophy.  I don't really care any more.  The incumbents disgust me.  They cynically took money from labor and then turned around and stabbed organized labor and all public employees in the back, without a moment's regret.  They have completely lost our trust in their ability to protect working class, labor, and middle class families.  As for the Governor, the leader of the clown brigade and architect of this "grand bargain", he's done as far as I'm concerned.  To be honest, and not the least hyperbolic, I'd sooner vote for Dennis Richardson than John Kitzhaber.  Why?  Because Richardson doesn't even try to hide his contempt for public employees.  He's so disgusting that he could be more easily neutralized than the country-bumpkin from Roseburg.  Dr. John needs to go back to fishing, hunting, and seeking spiritual awakening in Bhutan.

Once more I will say to the critics of PERS.  You've been lied to, you've been misled.  Little that you read about PERS stands up to any critical scrutiny.  PERS has been incredibly transparent, more so than many of us wish, and the result of that transparency has been for the shrill critics to cherry pick facts and figures that describe very few people I know (and I probably know more PERS members than the average PERS member or Legislator).  PERS members and retirees did absolutely nothing wrong.  We entered into agreements with our employers to perform certain tasks in exchange for salary, benefits, and the deferred compensation of the pension system we had no choice in.  The number of ways the system can be gamed are few and far between and very few people even have a clue how to do it; it also requires the complicity of the employer to get away with (think about that for a minute).  Most of the stories involving people with very high incomes are of people who (a) had high paying jobs, (b) worked for very long periods of time, and (c ) took advantage of the variable annuity program where they were willing to forgo a guaranteed rate of return in exchange for market rates for as much as 75% of their portfolio.  There's no gaming there.  Those people could just as easily lost their shirts.  That they were willing to risk their own money completely should be rewarded, not criticized.  As for the COLA, it has been a promissory part of the PERS contract (yes, contract) since 1973.  It isn't anything new.  The COLA has NEVER been guaranteed to be paid out annually at 2%.  That was the ceiling on the COLA.  Many of us started our retirements in the early aughts and received either no COLA or a minimal COLA.  That's because the cost-of-living increase in the years we retired was minimal.  The new way guarantees a minimal payment regardless of the cost-of-living increases or decreases.  It completely decouples the thing called a COLA in statute with the statutory meaning of the word COLA.  

Legislators who vote for this latest attempt to blame PERS members for problems of the public schools will pay a heavy price for that vote.  I predict that some 150,000 or more PERS members and retirees might decide to either sit on their hands in 2014 and let the chips fall where they may, or may actively support opposition candidates.  This is an ugly place for the Ds to be.  Just remember that we already know what to expect from the Rs, so having them would produce no surprises.  What surprises us is the Ds contempt for its natural constituency.  It begs labor for endorsements and, more importantly, cash.  Now that they've spit in the eye of organized labor, I expect that money will be a little harder to come by.  What's worse, I expect, is that after all of this, the court is likely to overturn the legislation concerning the "COLA".  And so, you will have expended all of your political capital and then some, only to be hoist on your own petards when the court gets through with you.  Think about this simple question:  when does a COLA cease to be a COLA, by definition?  And, then, "PERS shall not pay a benefit to which a COLA does not attach", Strunk, 2005.  Good bye, and good luck.  You deserve your own fate.




Unknown said...

Well said, Marc. I agree completely. After years of donating to Democrats, working on campaigns through my union and voting 100% Democratic -- I am as disgusted as I can possible be. As of the 2013 legislative session I have stopped making any donations to any serving Oregon democrat. I will not phone bank or do walk-and-knocks for any of these scumbags ever again. While I can't imagine not voting, this may be the only option I am left with. I refuse to support in any way people who seem to be doing everything possible to put me into bankruptcy. Thank you for so well expressing my total disgust with Oregon Democrats.


janedoe said...

Marc, HERE HERE! Thank you for voicing what many of us feel.

Rivrdog said...

Right On, Professor! You might have added that under Dennis Richardson's prospective leadership, we can expect no further investment in "Green" Oregon, the film industry will stay in California and the lines in DMVs will go from an hour and a half to all day, to name a few results.

When the (D)onks kill the goose that lays the golden eggs, they will find that barter with their left-over rotten eggs brings not much lucre at all.

mpguy said...

You're absolutely right, Marc. Like you, I've given my last dollar and minute of time to Dem legislators who vote for this. We need people with the courage to stand up to this kind of cr**.

Rivrdog . . . Dennis Richardson isn't going to be Governor of Oregon. What we (with a big boost from organized labor) need to do is search out good primary opponents for Kitzdummy and the Dems who vote in favor of this "compromise."

It shouldn't be all that hard. There are lots of well qualified potential candidates out there. Over the course of the next few months, we need to identify them.

Thomas Andre said...

The court has said the PERS retirees will receive a COLA but we all know the DOJ lawyers will argue that the COLA amount was never set in stone. How can coalition lawyers respond?

mrfearless47 said...

Is a flat 1.25%, unconnected to the Bureau of Labor Statistics CPI-U index, and without any bank still a COLA? That would be a line of attack I would follow. When is an annual increase a COLA or simply an annual increase for no reason. I think they have uncoupled the CPI from the "COLA" (why I use it in quotes) to the point where it is no longer a "COLA", but simply an annual gratuity. It is a tricky dynamic, but I'd certain go there. Once you prove that the 1.25% does not meet the definition of a COLA, then Strunk comes into play.

Robert the Skeptic said...

I recall reading an article sometime this year about how the Democrats have essentially abandoned their core constituency. This may be the article, if not, it addresses the same issue:


I was a Reagan Republican working for US Bank; but my political leanings changed when, after 12 years, I was laid off. I then began my State service in DHS. But now I also no longer feel the Democratic party represents me either. I received a solicitation in the mail from the Dems recently; I gave my charitable contribution to the ACLU instead.

I want to sit on my hands, but then I see that the Oregon Republican Party chose, of all people, the nuttiest nut case in the state, Art Robinson, as their chair. Honestly, when I get my ballot, I have no clue how I am going to vote... if at all. Maybe the Dems need to sit one out; after all, what's the worst that can happen to us retirees if the Conservatives take the state back that "our" party already hasn't done?

Befuddled said...

One of the more amazing stories of this complete sell-out by the Dems is the fact that the roster of tax increases they want, generally progressive in nature (and therefore the only part of this the Oregonian is against), will very quickly be offset by the S Corporation pass-through legislation dreamed up by the Repubs (in fact by a legislator who owns one, underscoring the level of ethics on display here).

The short report by the Oregon Center for Public Policy should be required reading:

In any case, boy are the Dems over their heads here. What ademonstrably bad deal?

I'm with you Marc. Can't wait until the first fund-raising call comes.