Pension Cuts Could Damage Economy: ReportCategories: National Developments,New England Developments
International Business Times, by David Sirota, July 30, 2014
When it comes to the politics of public employee pensions, New Jersey is a political microcosm. Republican Gov. Chris Christie has portrayed pension benefits as devastating burdens that must be addressed through big cuts to benefits. At the same time, he has depicted a record $4 billion of new tax breaks and subsidies to corporations as a positive investment in economic development.
In many states and cities across the country, it is much the same story. Pensions for government employees are depicted as liabilities requiring some mix of painful choices — either tax increases to finance higher contributions, or cuts to retiree benefits. Unlike taxpayer-financed corporate subsidies, those pensions are rarely depicted as a form of economic stimulus. Yet a new study released today argues that they should be. In New Jersey, the study says for example, pension money helps support 96,763 jobs.
In the analysis of about what it calls “Pensionomics,” the National Institute on Retirement Security (NIRS) documents how the $3 trillion state and local public pension system supports more than 28 million Americans and paid out $228 billion in benefits in 2012 (the most recent year for which the data is available). According to the report, that works out to an average annual benefit of $25,354 — or a little more than 150 percent of the federal poverty line for a retired couple.