For decades the state of Illinois has underfunded the public employee pension funds to protect politicians from having to raise taxes.
And they were certainly not going to raise taxes on their sponsors in the Civic Committee.
“You’ve stolen from our pension funds for years,” a teacher yelled at State Representative Elaine Nekritz at a pension forum I spoke at with her in Aurora.
“We didn’t steal it,” laughed Nekritz. “We never paid it in the first place.”
Josh Baro writes in the New York Times online:
The Federal Highway Trust Fund is expected to run out of money in August. So, naturally, Congress is debating a temporary fix that involves letting corporations underfund their pension systems.
Of course, we could replenish the fund by raising the federal gasoline tax, which is its primary source of financing. That’s what Senator Bob Corker, Republican of Tennessee, and Senator Christopher S. Murphy, Democrat of Connecticut, want to do. But increasing gas taxes is unpopular, so Congress hasn’t done so since 1993, which means that the tax on gas has actually fallen 39 percent over the last 21 years after you adjust for inflation. Instead, Congress has used a series of gimmicks and shifts to keep the fund solvent as highway construction costs have risen.
Raising the gas tax and indexing it to inflation would be a fine way to fix the perennial shortfall in the fund without increasing the deficit. But there is another perfectly valid option: replenishing the fund by borrowing money. Interest rates are low, investors are clamoring to lend money to the United States and federal debt is projected to be a stable share of the economy over the next 10 years. This is a good time to borrow money and to spend the proceeds on useful highway construction.
Yet instead, Congress is debating whether it should — again — let corporations underfund their pension plans, and generate a one-time boost in tax revenue. And Congress would use that revenue to fund a few months of a continuing spending program that it does not have a plan to make permanently solvent, while exposing pension beneficiaries and taxpayers to risk if a corporation goes bankrupt after underfunding its pension plan.
Of course we teachers and other public sector members of the state’s pension funds know that in Illinois mile after mile of the state’s highways and other infrastructure have always been paid for with money that should have gone into our pension funds.