PI Original Adam Doster Tuesday September 15th, 2009, 1:24pm

Sun-Times Misdiagnoses "Pension Crisis"

I've spent some time the past few days reviewing the Sun-Times package on the state's pension program, noting that the paper has used sensational headlines and ignored important context to dramatize the system's deficiencies. In their fourth and final piece of the series today...

I've spent some time the past few days reviewing the Sun-Times package on the state's pension program, noting that the paper has used sensational headlines and ignored important context to dramatize the system's deficiencies. In their fourth and final piece of the series today, the reporters go back to the same well.

Twice, the Sun-Times refers to the pension packages that state employees receive as "lucrative." They deploy the adjective first to rebuke a (legitimate) point raised by American Federation of State, County, and Municipal Employees Council 31 spokesperson Anders Lindall, who tells the paper that "those individuals [making $100,000 per year or more] represent just 1 percent of all public pension earners." Here is the other example:

At the same time, pension plans for government workers continued to provide lucrative benefits -- from the ability to retire at 50 to yearly pension increases of 3 percent for most retirees 60 and older.

Unfortunately, the paper does not provide its readers with any data to back up these claims. Why don't they? Because the statistics just don't bear out their overblown thesis.

Check out this graph we compiled using the raw data the Sun-Times obtained from the state, which is online and behind a small pay wall. Combining both pensioners and spouses that are granted state retirement money, a mere 3,987 (1 percent) have pensions greater than $100,000 per year. What's more, only 65,985 (17.47 percent) have pensions worth between $50,000 and $100,000. That leaves a whopping 307,672 (81.47) percent who take in less than $50,000 per year:

We were also curious how many pensioners make less than $25,000 per year, as the Sun-Times lowest is delineation is $50,000. Unfortunately, their search function crashes consistently after a certain number of clicks, making it impossible to search through the data to find the dividing point. But, the sample size of survirors is small enough that we could crunch those numbers. Of the 55,272 spouses in the paper's database, 54,698 earn less than $25,000 per year (90.6 percent), while a mere 574 earn more than $50,000 per year (1.02 percent). The remainder, 4,597 survivors, fall somewhere in the middle, bringing home between $25,000 and $50,000 (8.3 percent) annually:

Not once in the entire series are these facts mentioned. Indeed, the paper (and its editorial board) uses their "findings" to argue for a series of pension reforms designed to fix what they call "a pension crisis." Their ideas?

-Create a two-tier pension system (We've outlined the concerns about this approach before. The Sun-Times also writes that "a two-tier system would save the state money eventually but wouldn't address the current pension debt.)

-End the current guaranteed 3 percent annual increases (We dealt with the horrible math underlying this proposal yesterday.)

-Raise minimum retirement ages (This is reasonable enough, although forcing people to work 10 or 15 extra years when the vast majority will only earn about $20,000 per year after retirement -- for a total savings of $11.5 billion in state contributions, according to the Civic Federation --  is a bit callous.)

-Tax pension earnings (If structured progressively, as Mark Brown suggested this weekend, this could be a useful tool for curbing the 4,000 gratuitous pensions over $100,000, money which could then be used to pay down the state's pension debts. But it would be ludicrous to tax public pensions for everybody else when the state does not tax virtually any other form of retirement income.)

-End double-dipping (This is a worthy reform.)

-End the current union-perk loophole (This is also a worthy reform.)

The state of Illinois does have a pension crisis. But that crisis was caused by lawmakers, who skipped payments and used the pension system as a credit card instead of raising sustainable revenue to pay for worthy expenditures. Reforming the state's tax structure is the most fair and responsible method for closing the state's pension deficit. Cutting the size and scope of employee benefit packages is just not.

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