Re CalPERS will stand up for workers (Another View, Oct. 9): CalPERS CEO Anne Stausboll writes, If pensions are reduced in bankruptcies, the only losers are public employees. This statement shows a callous disregard for others.
Local governments entering bankruptcy typically owe the most money to their public pension fund. So, to paraphrase Willie Sutton, to cut debts in bankruptcy you have to go where the debt is.
Stausboll argues that public employee pensions deserve special protection from cuts. Why should public employees be treated better than other creditors such as mom-and-pop vendors or moderate-income workers who entrusted their savings with an investment firm that bought bonds?
The purpose of municipal bankruptcy is to reduce debts in a fair manner so the city can provide public services again. Stausboll does not explain why fairness dictates that public employees be protected while other creditors get hammered.
Lawrence J. McQuillan, Oakland
|Lawrence J. McQuillan is Senior Fellow and Director of the Center on Entrepreneurial Innovation at the Independent Institute, and author of the Independent book, California Dreaming: Lessons on How to Solve America's Public Pension Crisis.|
In California Dreaming, Lawrence J. McQuillan pulls back the curtains covering this unfunded liability crisis. He describes the true extent of the problem, explains the critical factors that are driving public pension debt sky-high, and exposes the perverse incentives of lawmakers and pension officials that reward them for not fixing the problem and letting it escalate.