“the U.S. Department of Labor has denied California $12 billion in transit funding, including grants from the recently signed infrastructure bill. The reason? A 1964 federal law requires the labor department to certify that the state agencies seeking any mass-transit grants are “protecting the interests of any affected employees,” The Fresno Bee reported.
So, the Biden administration is claiming that California—the state that provides its public employees with unparalleled pay and pension benefits, and provides collective-bargaining rights unheard of anywhere else—is being mean to its “affected” public employees because the state passed a 2013 law, authored by Democrats, that infinitesimally reined in pension benefits.
As SFist summarized, “Biden is withholding giant amounts of federal money from California public transit because the state’s public-employee pension system is apparently not paying people enough.””
“Retirement costs are also the main reason the Government Accountability Office declared, in a May 2020 report relying on data gathered before the pandemic hit, that the Postal Service’s current business model was “not financially sustainable.””
“All private pension systems must prefund future benefits. Indeed, this is a wise thing for businesses to do if they wish to remain solvent. The unique situation for the USPS is that those requirements also apply to its retiree health care benefit plan. Private sector companies aren’t required to do that because they could, theoretically, eliminate those benefits at any time. The USPS, however, would not be able to do that without an act of Congress—and so prefunding is not only financially sound, but politically prudent.
Despite those obvious long-term drawbacks, the American Postal Workers Union and at least 270 members of Congress support a plan to switch the USPS to a so-called “pay-as-you-go” pension system. If passed, the USPS Fairness Act would allow the USPS to use current workers’ contributions to pay benefits to current retirees, rather than requiring that those dollars go into an investment fund to cover the cost of the current workers’ eventual retirement.”
“instead of addressing structural issues in the current retirement system”
“it will certainly create bigger problems later on.”
“For years, states have been warned to stop making unrealistic promises about investment returns—a trick used to make shortfalls look smaller than they really are—and to fully fund their retirement systems instead of deferring payments to later years. Both strategies are widespread in state pension systems, and both have contributed to the mess that states now face. Policy makers have clung to the belief that reforms were unnecessary because future investment growth would close the funding gaps.
That idea should now be dispelled. Even a decade of growth wasn’t enough for many pensions to fully recover from the last recession—and that should have been a warning right there, if policy makers were paying attention.”