Turning the Tide Against Public Union Excess

I would like to suggest a diabolical new weapon in the fight to save the fisc from the depredations of public unions and the politicians they bankroll.

What makes this weapon diabolical is its power to sow chaos in the ranks of both political parties, such chaos being essential to disrupt the status quo that led to today's budgetary war of all against all.

In the spirit of political inversion I invoke the words of the patron saint of progressives, a president who reigns supreme in his trampling of a constitution that once limited the power of government. "The process of collective bargaining, as usually understood, cannot be transplanted in the public service." Thus spoke Franklin Delano Roosevelt.

The weapon I propose is so powerful it can cut the heart out of any unfunded liability supporting the pension and healthcare promises lavished on many government employees. Ironically, this weapon is beloved by liberals as strongly as it is pledged against by conservatives.

In a word, taxes.

Reneging on pension and healthcare promises made to public union retirees is a tricky proposition, inviting breach of contract litigation that brings the third branch of government into the act. Many cities and municipalities will undoubtedly travel this road when they have nowhere to turn but bankruptcy court. But there is yet no bankruptcy process for state governments that would allow them to tear up unaffordable union contracts.

A legislatively enacted surtax on pension payouts made by state agencies to public retirees, however, is fair game. In our byzantine tax world a public pension surtax would fit comfortably alongside the many other taxes laid on such a variety of economic activities that the very breadth and complexity of the tax code drives certain conservatives into a frenzy.

So here we have it, a new tax that even the Tea Party can embrace! Forcing liberals to defend themselves against it and conservatives to wield it in the name of fiscal responsibility may do them both some good.

All manner of political mischief awaits the numerous ways such a tax can be constructed and proposed. For example, how about a fat cat surtax that kicks in on public pensions above $100,000 a year? Or a double dipper surtax that only applies to retirees collecting two state pensions? Or a marriage penalty surtax paid by public union retiree couples? Or a means-tested surtax, kicking in for public pensioners whose net worth or gross income exceeds certain thresholds? Or an early-retiree surtax that applies to public pension payouts made before the age of 65? Or a free-rider surtax on any public pension toward which the recipient had never contributed a dime?

The idea would be to get the camel's nose under the tent and then, like all creeping taxes, slide down the slippery slope as fast as the political process allows. The enactment strategy would be classic divide and conquer, exactly the kind of political approach progressives use to soak the rich or hobble unpopular industries. By peeling of the most egregious pensioners first, subjecting them to public scorn and political abandonment, the door gets cracked open a little wider for the next assault. Once the surtax becomes established state governments teetering on the brink of bankruptcy can always go back for more.

This approach might even work on the Federal level. Picture a national public pension surtax whose revenue got kicked back to the particular state agency making the payouts. Such a tax could be made the political price bankrupt states have to pay in return for bailouts. To grease the political skids public pension surtaxes could be set to trigger only for payouts made by those agencies whose unfunded liabilities exceed certain thresholds. This way retirees from fiscally prudent states wouldn't be penalized alongside the profligate. Who knows, this might even encourage states to keep their pension plans properly funded, perhaps bumping public employee contributions up a little closer to their private counterparts.

The beauty of a public pension surtax is that it forces tax loving liberals to make anti-tax arguments while enticing tax hating conservatives into admitting that, yes, a tax occasionally comes along that warms their hearts. Sharpen the issue enough and we may even be treated to the joy of watching politicians from both parties contradict themselves within a single sound bite.

What the government giveth it can also taketh away. When you live in a democratic free-for-all the direction the goodies flow is all a matter of votes.

Let's rumble.