Another lefty organization calls for pension reform

Posted on March 24, 2012 by | 1 Comment

Too many progressives hear the word “union” and are mesmerized–believe without investigation that public-employee unions are invariably engines of democracy, progress and lefty values.

They’re wrong.

Public-employee unions are, as one of their leaders told me proudly, “single-issue investors” when it comes to political campaign contributions. That single issue is pay and benefits.

I’ve showed that public-employee unions support political candidates not on the basis of the candidates’ politics but on the basis of the candidates’ willingness to support rising pay and benefits for public employees. That’s how Councilmember Wendy Leece–our own Rick Santorum in a dress–earned organized labor’s supported in the last city election. She has validated their support, opposing any effort to reform Costa Mesa’s public-employee pension system.

Some clear-eyed progressives get this. I’ve written about Jeff Adachi, San Francisco’s Public Defender–a Democrat, a progressive and a critic of the pension system pushing his city toward insolvency. I’ve written about San Jose Mayor Chuck Reed–a Democrat locked in battle with his own city’s public-employee unions.

And then there’s “Pension Ponzis,” a fine piece from the Hannah Arendt Center for Politics and Humanities. Even if you believe that pensions paid to public employees are reasonable, the fact is they’re not sustainable, the center concludes. “For anyone who cares about government and wants government to succeed,” they write, “the pension problem must be addressed, for it threatens not only economic disaster, but political cynicism beyond even today’s wildest dreams.”

Arendt was a lefty, but there was nothing dogmatic in her politics. She was among the early, savage left critics of Soviet communism. In her 1951 work The Origins of Totalitarianism, she tracked the common, dysfunctional origins of Soviet commies and Hitler’s Nazi Party.

The center that bears her name, like Arendt herself, insists”that facts be held protected from the corrosive force of opinion.” Too many of my friends on the left–hypnotized by union propaganda, unthinking as soon as they hear the word “Republican”–would do well to re-read (or read for the first time) Arendt. But they should start with “Pension Ponzis” first.

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Truth Zombie II: A pension supporter writes!

Posted on February 29, 2012 by | 4 Comments

On Monday, I posted “Like a Zombie,” in which I called Costa Mesa City Employees Association president Helen Nenadal “by all accounts supremely gracious” while noting that attorneys for the city and the union agree on at least one thing: there are just canyon-wide disparities—gaps, lacunae, leaps in logic—between what Nenadal said when her union filed suit against the city in May and what she said in a January deposition with attorneys for the city. Those disparities (G/L/LIL) are so damaging to her own case that Nenadal’s union is now begging a Superior Court judge to trash her deposition.

The response from Nenadal’s supporters was swift, weird—and on Facebook.

It began on the Facebook page of city worker Billy Folsom, who tagged a photo of me, writing, “I’m just a Republican dumb biker flag waving Veteren loving long haired redneck NRA life member, but you Will Swaim are a complete tool.”

There was so much in Billy’s comment that warranted a response. I wanted to say that Billy is clearly a Republican—not because he says so, and not because of his NRA membership or flag waving. The proof is that, like many Republicans, Billy brags of his membership in a political party whose members hate liberalism everywhere but in the social programs that support their own way of life–what Billy calls his “dumb biker” lifestyle. Like Billy, many Republicans are just Democrats who hate liberalism when it serves other people. And, sure, I get snagged momentarily on the weird recognition that a Costa Mesa city worker is a Republican whose union blasts Republicans. 

I didn’t trouble Billy with any of that. Instead, I wrote him back: “I’m fighting to protect your pension from union leaders who don’t understand financials—and who apparently can’t keep their stories straight. You can thank me now.”

See, my point is that Costa Mesa’s union leaders have been successful in funding the political campaigns of elected officials who, when they win, return the favor by rubber-stamping pay and benefits increases the city can’t afford. Thanks to such arrangements, many local governments have already gone BK, taking social programs and pensions with them. Shakespeare might have said that union activists like Billy have been so skillful in looking after their own income that they’ve hoisted themselves by their own petard. You and I would say they’ve totally screwed themselves.

Billy didn’t thank me. Instead, he wrote:

Will Swaim, what you did was trash on a person who voluntarily represents the employes of a once great city. A person that is a total layperson with no formal legal or negotiation training whose duties were to run Association meetings of our board and be a liaison between the employees and management and throw a Christmas party and award a couple of scholarships to kids. A person who really cares about the community with 30+ years of service to the community and a most decent mother and friend. She had to endure an onslaught of questions from one of the highest priced legal firms whose sole purpose is to confuse you, make you look bad and try to get you to say the wrong thing. She wasn’t even familiar with what a deposition was until she sat down at the table. Now you can cuddle up to people that have other people do their dirty work for them and then not pay them unless it’s with tax dollars and you may feel all warm inside but I’ll take my demonized middle class working people any day. If you want to save pensions use your talent to get the right wing obstructionists who sole purpose is to have our economy fail so they can gain power to quit being so greedy.*

So, let’s be clear: A friend of Helen Nenadal’s (a friend!) says we shouldn’t hold her responsible for filing a lawsuit she doesn’t understand, a lawsuit that has cost the city something north of $700k to defend. Forgive her, that friend says: her major responsibilities were to run board meetings, throw a holiday party, and conduct charitable work.

Poor Helen Nenadal. I called her “gracious.”

______________________________

* It’s in my nature to dilate for a moment on the illogic of most of what’s in here—like the fact that the city is, he says, only “once-great,” which, if true, owes something to the fact that employee pay and benefits account for so much of Costa Mesa’s spending that the city can no longer afford the wide range of services progressives fought for. At one point in the last year, the city’s cash flow was so lean that the city couldn’t afford fertilizer for its sports fields. Only the delicate sensibilities of some readers bars me from noting with greater freedom that it’s fair to say that, at that point, the city couldn’t afford feces.

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San Francisco public defender: pension reform is a progressive cause

Posted on February 28, 2012 by | 1 Comment

I popped into San Francisco the other day, its windswept sky deep cerulean, the streets and sidewalks a high-voltage chiaroscuro, the coffee at Trieste Café like something in a barrel depending from the neck of a bear-sized dog that finds you buried in the Alps.

I had hoped to drop in on Jeff Adachi, for 10 years that city’s public defender, and now one of California’s most important politicians: a progressive Democrat who is fighting for pension reform in one of the nation’s most liberal cities. We spoke later by phone.

“What got me focused on the issue of pensions was that I saw, year after year, basic services slashed at the same time our pension costs were going through the roof,” Adachi says. “In San Francisco, four years ago, we saw annual pension costs under $175 million; now they’re close to $500 million, and we’re paying for that through drastic cuts in many of the city’s progressive institutions and services.” In four more years, he says, “that number will grow to $800 million.” The city owes another $4.6 billion in unfunded healthcare liabilities for current and retired workers.

He doesn’t oppose pensions in general. “The idea of a pension, I think, is a good idea, and the reforms I’ve proposed would protect the system from total failure.” Without reform, he says, San Francisco will end up the worst of both worlds—with neither social services nor the pensions promised retired workers.

Adachi’s reform proposals are indeed modest, depending as they do primarily on a requirement that employees pay into the system. “I saw it as way to preserve the system by insuring it was properly funded,” he says. “Otherwise, they’re going to run out. We saw that in Vallejo, which went bankrupt three years ago.”

With that sort of evidence widely available, why has it been so difficult to reform the system? “Labor unions have steadfastly taken the position that pension reform is not a progressive issue,” he says. Then, too, there’s been the successful political tactic, popular among those unions and the lawmakers they support, of “simply pushing pension costs into the future. Now, of course, they’re coming home to roost.”

Labor has been especially hard on Adachi. Last summer, when the public defender showed up at the funeral of a city firefighter, union members, offended by his pension reform proposal, asked him to leave. When he was asked a second time, he obliged.

A few months later, San Franciscans went to the polls and crushed Adachi’s reform measure, supporting the union’s measure in what the San Francisco Chronicle called “a surprisingly easy victory.”

“The reality,” says Adachi, “is that if we don’t fix this problem, we’re going to see cuts in every social service.”

That makes pension reform a progressive issue. “If progressives don’t insure that that government finances are sound,” Adachi concludes, “we’ll see the dismantling of everything we’ve fought hard to implement.”

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Like a zombie! Union attempts to muzzle one of its own in CM pension war

Posted on February 27, 2012 by | Leave a comment

Truth is supposed to be the first casualty of war, but in Costa Mesa’s pension fight the truth is like a zombie that just won’t die and, so, feckless union leaders and their allies keep trying to kill it.

If this were a movie, you’d root for the zombie.

The union leadership’s latest target for truth suppression is Helen Nenadal, a woman whose deposition last month provides a devastating critique of the union’s legal campaign to kill the city’s attempt to outsource public work.

The irony is that Nenadal is not only a member of Costa Mesa City Employees Association (CMCEA), the union that represents those employees. She’s that union’s president.

Here’s the backstory: A year ago, the Costa Mesa City Council majority announced it would explore privatizing some city functions in order to roll back the costs associated with public-employee pay and benefits, especially rising pension expenses. Supported by the Orange County Employees Association (OCEA), the CMCEA filed suit to stop it.

Nenadal is a city of Costa Mesa facilities maintenance technician (that’s a handyman, to you and me). In her capacity as CMCEA president, she led the union’s legal charge against the city, asserting in a May complaint that the council’s outsourcing effort violates state law and the city’s contract—aka a memorandum of understanding, or MOU—with the union.

Then Nenadal raised the stakes. On August 1, she wrote to city CEO Tom Hatch that she had further evidence of the city’s perfidious intentions vis-à-vis its union employees: the city had violated an obscure council guideline—city policy 100-6—that requires the city to consult with union reps when considering the viability of any outsourcing project.

Raising the city’s putative violation of 100-6 is a double-edged sword for the union: you can’t really claim that outsourcing violates your contract with the city if that contract includes (as this one does) 100-6—a council policy that shows outsourcing’s not only perfectly legal, but that there’s a consultative mechanism in place to make it happen.

Why doesn’t the union’s May filing mention the violation? Why did it take Nenadal three more months to notify Hatch of the ostensible breach? Her deposition doesn’t provide an answer.

“Do you know why the CMCEA did not allege that the city violated policy 100-6 with regard to the preparation of the first set of RFPs?” the city attorney asks Nenadal. And she answers:

A: No.

Q: When did you first become aware of policy 100-6?

A: It’s always in our—it’s always part—it’s a council policy.

Q: No, I understand that. When did you personally become aware of that council policy?

A: In 1993.

Q: At the time you verified the [May] complaint in this case, were you personally aware of council policy number 100-6?

A: Yes, I was.

Q: Now, you say you wanted to wait until the RFP [request for proposal] process was actually done and issued . . . before informing the city that they had done it wrong, right?

A: Correct.

At least two possibilities present themselves: if Nenadal is telling the truth here, it seems possible she was hoping to catch city officials in a violation, to entrap them, you might say—to dig a hole, cover it with leaves, and let Tom Hatch & Co. blunder into it. But Nenadal’s (by all accounts) a supremely gracious person, so that hardly seems likely. Nor (for the same reason) does the alternative seem plausible: that Nenadal is lying—that, like everyone else in America, she’d been doing something more important on the day we passed city policy 100-6, and when she discovered it months after her union filed suit, she could hardly pretend that she’d forgotten (or never knew); that would make 100-6 seem invertebrate/lame/innocuous. Better, then, to say that you knew it all along.

Whatever the truth, when Nenadal’s letter hit Tom Hatch’s desk in August, Hatch hit the reset button—this time with full union participation. In a key exchange with the city’s attorneys, Nenadal admits that the city has satisfied its obligations under the MOU and council policy 100-6:

“Do you have any basis in fact to say that for any of the second set of RFPs that have been issued, that the city did not comply with council policy 100-6 for any of those RFPs?” the city’s attorney asks her.

“Not to my knowledge,” she answers.

Q. All right. So as far as you know the city did what you asked them to do, follow council policy 100-6, for the issuance of all the second set of RFPs?

A. To my knowledge.

Q. Okay. To your knowledge that’s correct?

A. Yes.

Q. Okay. Do you believe that the city’s compliance with 100-6 fulfilled the city’s obligations under Section 14.1 of the MOU to make the association part of the discussions regarding contracting services?

A. Yes. CMCEA was part of the discussions of contracting out for the RFPs, yes.

The deposition suggests that Nenadal felt the room-temp rising as city attorneys focused the magnifying glass on her claim that the city attempted to keep the outsourcing process under wraps. In her August 1 letter to Hatch, Nenadal contended that the process of soliciting bids to outsource public work was done in secret. And in her deposition, she seems to stand by that claim—for a minute: “It was accurate,” she tells the city’s attorney. But when pressed, she acknowledges that, well, sure, everybody—the public, the union, and, oh, yes, the city employees actually participating on the outsourcing committees, and Nenadal herself—was following what was, by then, a very public process.

Q: It’s true, is it not, ma’am, that the public knew about this RFP process before you sent your letter to Mr. Hatch in August 2011?

A: I don’t know. I would assume. I don’t know.

Q: My question is, in August—on August 1, 2011, when you write to Mr. Hatch and accuse him that the proposed evaluation process is deliberately exclusionary because any process that’s occurred to date has taken place entirely out of view of both the public and the city-represented employees—it’s not true? It’s not—it’s not true, correct?

A: Yeah, I—no, I disagree on that.

Q: All right. And tell me why, ma’am? Why do you disagree that it was entirely out of view of both the public and the city-represented employees? How is that possible given the allegations in your complaint?

A: Because of the fact that they did not inform CMCEA. They informed—they gave the employee . . . .

Q: All right. Okay. All right. So that’s the distinction you were trying to make: there was not a formal written notification to CMCEA?

A: Correct.

Q: Okay. It wasn’t that the CMCEA didn’t know about it, it was that there was not something done formally in writing?

A: Correct.

So, Nenadal’s insistence that the process has been secret rests on a slender filament—paper-thin, you might say: never mind the almost-daily news stories and blogs reporting every micro-drama at City Hall; the union planning meetings that (insiders say) tracked councilmembers’ every eyebrow twitch, tie change, and overheard phone conversation; twice-monthly city council meetings in which choreographed public comment against the outsourcing extruded each meeting into something like Melville’s Moby Dick; high-profile stories in the Los Angeles Times, New York Times, Washington Post and New Yorker. Never mind all this: the city never sent the union an official letter requiring its participation in the outsourcing process.

That’s Nenadal’s story.

But what if the union was, in fact, formally invited—“formally in writing”—to participate in the outsourcing process far earlier than Nenadal’s August 1 letter to Hatch? Nenadal’s deposition suggests that’s precisely what happened.

During the deposition, city attorneys presented Nenadal with a March 25 letter from Costa Mesa CEO Tom Hatch to the union—his request for union participation in the outsourcing process, a request consistent with 100-6.

“Let’s look at the last page of Mr. Hatch’s letter,” the city attorney tells Nenadal. “He writes, ‘I appreciate your letter and look forward to working as cooperatively as possible with you and the CMCEA.’”

A: Okay.

Q: Did you or any—any—member of your organization respond to Mr. Hatch’s letter and say, yes, we would like to participate and work with you in the process of contracting out?

A: Again—I don’t—there’s been so many letters going through and forth. I’m not sure if there has been or not. I don’t know.

Some of Nenadal’s answers in the deposition are like that: anemic. Others in the January 20 deposition flatly contradict claims she made in filing suit against the city. In her suit, Nenadal said the city’s bid to outsource public work violated its MOU with the union; in the deposition, the city’s attorney asks if there’s anything in the MOU that limits the city’s freedom to outsource public work “with both public and private entities?” Nenadal responds, “Far as I know, no.”

The transcript of her deposition is to ink and paper what Mel Gibson’s Apocalypto is to film—brutal, one-sided, funny in all the wrong ways. It’s so completely destructive of the union’s case that city attorneys rushed it to Tam Nomoto Shumann, the Superior Court judge hearing the CMCEA suit, and asked her to dismiss the case immediately.

The OCEA apparently understands all this—really gets that Nenadal put her pedal appendage in the union’s oral cavity, and pretty much killed its claim. That’s why union attorneys are now begging Judge Nomoto Shumann to ignore the facilities maintenance technician behind the curtain, and are working assiduously to bury her damning transcript through a series of legal challenges. They’ve told the judge that Nenadal’s deposition ought to be thrown out because, well, it doesn’t fit the facts as the union’s attorneys would like to present them. It is, as the union characterizes it, “as categorical a contradiction of [her earlier testimony] as could be imagined” and should, therefore, be disappeared like bunnies in a top hat in a bad magic show.

The judge hasn’t made a decision on the city’s request for a summary judgment and the union’s counter effort to bury the Nenadal deposition. But what’s clear is terrifying if you’re a facilities maintenance technician: the union that attempted to transform a city worker’s March 17 suicide into a political execution has now turned its formidable powers on one of its own, poor Helen Nenadal.

Just in case we were left with the illusion that the union leadership has any interest in helping city residents—that union leaders understand the depth of the pension crisis inundating cities, counties and states across the nation—there was this grim coda: “In fact,” the city attorney asked Nenadal, “the only interest of the CMCEA is to promote the interest of its members, correct?”

“Absolutely,” she answered.

“Do you have any understanding as to whose responsibility it is to look out for the people of Costa Mesa to represent their interest?” the attorney asked.

Nenadal’s monosyllabic response speaks volumes: “No.”

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Cops edge out firefighters for membership in Costa Mesa $100k Pension Club

Posted on February 1, 2012 by | 1 Comment

Costa Mesa’s cops put 28 retirees in the city’s $100k Pension Club, edging out the city’s firefighters by just one member, according to documents reviewed by Republic of Costa Mesa.

As the name suggests, membership in the $100k PC is determined  by annual pension income following retirement from the City of Costa Mesa. Republic of Costa Mesa reported earlier this week that 65 city retirees comprise the PC’s current membership, up a dramatic 50 percent over last year.

Though city administrative staff placed a distant third–accounting for just 10 retirees over $100k–they can take comfort in their first-place finish in the highly competitive Average Income Competition. Boosted by the strong performance of former city manager Allan Roeder, City Hall retirees earned an average of $129,215 per year. The city’s retired firefighters ($126,984 per retiree per year) outpaced retired police ($123,687).

Critics suggested that Roeder’s City Hall allies had an unfair team advantage, pointing out his key role in the negotiations that produced the pension deals. But Roeder, who receives $190,610.52 per year in retirement, didn’t finish first–or even second or third–in the Individual Pension Competition. Those honors went to retired deputy fire chiefs Keith Jones ($196,010.04) and Gregg Steward ($192,581.28).

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Congratulations to Costa Mesa pension winners!

Posted on January 29, 2012 by | 2 Comments

Sixty-five City Hall retirees are pulling down annual pensions of more than $100,000, according to California Public Employees Retirement System (CalPERS) documents released to the website Fix Pensions First.

The total annual cost of the 65 pensions: $8,183,946.24.

News that membership in Costa Mesa’s $100k Club had risen by 50 percent in just one year came a week after CalPERS announced that its 2011 investments earned just 1.1 percent, far off the agency’s projected gain of 7.75 percent.

That collision–of poor investment returns and rising pension costs–have created a cash-flow crisis for many California cities and the state itself. When CalPERS’ returns can’t cover pension costs, participants (including cities, counties, the California state university system) have to pay the difference. In 2000, Costa Mesa paid CalPERS $5 million to cover the delta; in 2011, CalPERS asked the city to pay a little over $18 million.

You’d think such numbers would make it impossible for union leaders to maintain their central political claim–that the council majority has cooked the city’s books in order to generate a kind of hologramic financial crisis. You’d be wrong. Orange County Employees Association spokesperson Jennifer Muir continues to assert that “the Costa Mesa City Council majority has been hiding money to create a manufactured budget crisis”—despite the fact that her organization’s handpicked auditor looked over the city’s book and denies the claim. Just a few months ago, pro-union blogger Geoff West echoed that claim: Councilman Jim Righeimer’s “fabricates a fiscal crisis and cooks up the ‘outsourcing’ fiasco.”

But evidence mounts that the crisis is real. And now union members and allies are beginning to acknowledge the need to compromise. “Some of us think they [union leaders] could have handled this differently, that saying there’s no problem was just dumb. There’s obviously a problem,” a union member told Republic of Costa Mesa.

Even Geoff West has–remarkably–changed course. “There is NO doubt in my mind,” he wrote in November,

that our current pensions situation has our city in a tough spot. The word “unsustainable” keeps being tossed around and, much as I’d like to throw it right back in the faces of those who use it as an oratorical cudgel, I can’t. I believe that something MUST be done to address the ongoing costs of our public employee pensions . . . .

When West reveals the capacity to learn, we may shudder, seeing in his about-face evidence of the End Times. We can take solace in the fact that the union leadership will find some way to re-read CalPERS’ numbers. They’ll point (perhaps) to the fact that among California’s Top 10 pension earners, not one is from Costa Mesa. They’ll see Bruce Malkenhorst, a former Vernon city official whose pension is a remarkable $530,268.24 per year. They’ll see an ex-sanitation official whose pension is nearly $300k. They’ll see these men and others and say, “We could be worse.”

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Costa Mesa union leaders talk utopia, but their money’s on private equity

Posted on January 18, 2012 by | Leave a comment

I’ve already argued that local union leaders talk like members of the Occupy Wall Street movement but act like a guy who’s working on membership in Gambler’s Anonymous–that they sell the union movement as an engine of social justice while investing on Wall Street like Jim “Mad Money” Cramer.

Now they’re apparently doubling down on the gamble.

Hoping to make up for years of bad bets, the California Public Employees Retirement System (CalPERS), “increased its private equity target from 10 to 14 percent of the portfolio,” Public CEO reported today.

Private equity firms are among the riskiest of risky investments; that accounts for their occasionally high returns. The business model is pure capitalism: investors pool their cash, identify undervalued companies, purchase those companies, create efficiencies, and then flip the new-and-improved companies–i.e., sell them to someone else for more than they paid.

PE firms have become the financial topic of the day because Republican presidential candidate Mitt Romney founded and ran one–Bain Capital, a company that made money even when it destroyed the businesses in which it invested. In the case of Worldwide Grinding Systems, a Kansas City steel mill, even Bain’s “efficiencies” led to catastrophe: “Less than a decade” after Bain purchased it in 1993, “the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they’d been promised, and their pension benefits were cut by as much as $400 a month,” Reuters reports. “What’s more, a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.”

Even such conservatives as Newt Gingrich and Rick “The Killer” Perry have decided that that’s too much capitalism. Suddenly joining the progressive call for greater regulation of Wall Street, they’ve attacked private equity as “vulture capitalism.”

Local union leaders have launched similar rhetorical attacks on the pernicious influence of Wall Street in local politics, denouncing the Costa Mesa council majority for its effort to cut the costs associated with paying inflated, unsustainable pensions to city employees. Robert Gibson, president of the union representing many City Hall employees, characterizes the Costa Mesa pension fight as one that pits  a council majority working on behalf of “multinational, multibillion-dollar corporations” against workers with “families.”

In fact, the union’s investments via CalPERS speak volumes about the leadership’s real goals–not social justice but a sharp investment. That’s got to produce in union members real feelings of awkwardness/weirdness/estrangement. As Reuters put it, “Public pension boards, dominated by public-sector labor union representatives, can be in the uncomfortable position of having a private equity partner accused of unfairly squeezing private-sector unions to boost profits.”

And not just squeezing their private-sector counterparts. In Costa Mesa’s pension fight, union leaders have set City Hall workers against the very residents they serve–the residents who pay the taxes that fund the pensions that CalPERS invests through men like Mitt Romney working in companies like Bain Capital.

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Beyond Costa Mesa: The pension fight has legs, walks upright

Posted on January 17, 2012 by | 2 Comments

Even as local union leaders tell you there’s no pension crisis in Costa Mesa, evidence mounts that it’s real (the pension crisis is)—and that Costa Mesa is merely a microcosm of a much larger, global problem.

You could go to Europe, where similar financial disasters have jeopardized national governments. Or consider wee Rhode Island: In a meeting there last week, “the mayors of nearly every city and town” in the state asked Gov. Lincoln Chafee “for greater authority to suspend automatic pension increases and make other changes to reduce rising pension costs.” A few days later, the Associated Press reports, the governor met with public employee union leaders who threatened a lawsuit if Chafee moves unilaterally to reform the pension system.

Like California, Rhode Island has problems. Last summer, Central Falls, RI, was placed in receivership. Local officials throughout the state, facing a massive $2 billion in unfunded pension liability, worry that they’re next.

Rhode Island’s AFL-CIO president has a solution: he recommends raising taxes on Rhode Island’s rich.

But that suggestion doesn’t take into account new technology that would allow high-income individuals to avoid that tax: legs.

Legs first became popular some 3.2 million years ago. Today, they’re developed in utero, and almost everybody has a pair. Indeed, the typical human baby is “able to stand holding on to something when he’s between six and 10 months,” the capital liquidity site babycentre.co.uk reports. ”From then on it’s a matter of gaining confidence and balance.”

Confidence, balance and a motive: Now widely available, legs allow anyone—even the rich—to avoid situations they find unpleasant.

Chafee may have had legs in mind when he observed that it might be easy to assess but difficult to collect higher taxes. The governor, “who has said he is open to considering tax increases this year, said an income tax hike could backfire if high earners leave the state,” the Associated Press reported.

“I’m open to all suggestions,” Chafee said, “but that’s a huge fear I have.”

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Math Murderers: In Costa Mesa pension war, union leaders fail basic finance quiz

Posted on December 30, 2011 by | 3 Comments

When Costa Mesa officials announced a few days ago that the city would finish 2011 in the black, city spokesman Bill Lobdell called it “pretty good news.”

Why only “pretty good”? And why did local union leaders react by completely losing their feces—declaring the surplus proof-positive of political corruption at City Hall?

To answer both questions, let’s begin with the December 22 Los Angeles Times story reporting the surplus. In “Far from a deficit, Costa Mesa is $3.8 million ahead,” writer Joseph Serna seems to imply that a city with a $3.8 million operating surplus can’t have financial problems. It’s ironic, he suggests, writing in his lede, “The Orange County city that received national attention when it moved toward laying off up to half its workforce and outsourcing municipal services to private contractors in order to trim its future pension cost is finishing the year $3.8 million in the black.”

Leaders of the Orange County Employees Association, the union representing many city employees, were seized by precisely the same confusion—hence the bowel-voiding, finger-pointing and just biblical clothes-rending. They quickly responded that the surplus shows Costa Mesa hasn’t got a money problem at all, and that (ergo) any effort to trim city expenses—particularly the cost of public-employee pensions—is a scam run by Republican ideologues who’ve fabricated a phony financial crisis in order to destroy the American working class.

“This demonstrates that this council can’t be trusted and that this [cost-cutting] has been politically motivated the whole time,” OCEA spokeswoman Jennifer Muir told the Times. It’s proof, union official Chris Prevatt wrote me, that “the goal of people like [City] Councilmembers [Jim] Righeimer, [Steve] Messinger, [Eric] Bever, and [Mayor Gary] Monahan, along with their brethren in the [state] legislature, is to starve government until it no longer exists.”

Yes, of course: Conservatives in the Republican Party—the party that wants to listen in on your phone calls and watch you have sex; whose members want to check your prostrate on your way through John Wayne Airport; the people who celebrate TV hero Jack Bauer as a model for American diplomacy but who call for limits on Hollywood entertainment; who bailed out Wall Street in 2008; who launched senseless foreign wars and squandered $4 trillion and thousands of lives to fight them; who envision a 700-mile fence along the Mexican border and who doubled the number of patrol officers to stop itinerant farmworkers from, um, itinerating; who are practically hallucinating on religion/self-righteousness/hatred but don’t want anyone to get high; who applauded Texas Gov. Rick Perry for rubber-stamping the executions of 234 people, even as they claim (the conservative Republicans) that they follow a Jew who said “offer the wicked man no resistance”; and who will allow religious diversity so long as the menorah you spark up in the town square features seven perfect wax re-creations of the baby Jesus—yes, yes: that party is trying to turn America into a lawless frontier town.

But maybe union leaders understand numbers better than they understand political motives.

“It’s important to look back at the past year and remember that when this whole layoff scheme started, the city council said we’re on the brink of insolvency and have no money,” Muir told the Times. Now, she said, as the city closes the books on 2011, there’s this huge operating surplus—a surplus that means Costa Mesa should end its effort to trim the budget and should continue funding its unwieldy/apocalyptic/unsustainable municipal pension system. Speaking to the union-backed Voice of OC, Muir said, “The fact of the matter is, there’s plenty of money in the budget, and they’re admitting that there’s plenty of money in the budget.”

She was joined by other union officials. “The evidence is in and the budget for the city of Costa Mesa is not broken,” Prevatt wrote in the Republic of Costa Mesa comments section. “In fact the only thing broken is the theory on impending financial doom that is repeatedly spewed by Righeimer. You need look no further than the budget surplus of more than $3 million in the last fiscal year.”

So, a note to the union leadership: Of course, wealth is relative. But citing the city’s $3.8 million operating surplus as evidence that “there’s plenty of money in the budget” or proof that Costa Mesa’s budget “is not broken” is like declaring yourself rich because—though you just lost your job and you owe $400k on your Visa card—you’ve found $24 in your wallet: You’re not the kind of rich that’s going to get you laid in Newport Beach; you’re rich in more spiritual ways—like a monk who can buy a 40 of Budweiser and a one-month subscription to XXXhoboChix.com.

You’re broke, I’m saying.

To understand this, it helps to know the difference between a P&L and a balance sheet: Costa Mesa’s profit-and-loss statement—the one about which Joe Serna wrote on December 22—does indeed show an operating surplus. But Costa Mesa’s balance sheet shows liabilities of (hold, please) about $170 million in deferred capital projects (e.g., buildings, roads) and $255 million in unfunded employee benefits, including pensions. (It doesn’t include depreciation, which would add millions more in liabilities, but I can see you’re not really that into this.) Total liabilities: about half a billion dollars.

Weigh that nearly half a billion dollars against this year’s $3.8 million surplus, and you can begin to see the problem: either the union leadership can’t understand math or doesn’t want to. But it’s not all bleak: save $3.8 million per year for the next 112 years or so, and you’re all good.

Now, pass that 40-ouncer, please.

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The Eighteenth Brumaire of Nick Berardino

Posted on December 27, 2011 by | 7 Comments

The reviving of the dead in those revolutions served the purpose of glorifying the new struggles, not of parodying the old; it served the purpose of exaggerating to the imagination the given task, not to recoil before its practical solution; it served the purpose of rekindling the revolutionary spirit, not to trot out its ghost.

—Karl Marx, The Eighteenth Brumaire of Louis Bonaparte

One goal of politics is to universalize the particular, to make your own minority/fringe/idiosyncratic opinion appear part of some grand movement or tradition. It’s the reason your typical conservative Christian dresses up his attacks on gay marriage not as mere hick prejudice, but really fundamental to a sprawling 3,000-year-old tradition stretching from Moses to the hillbillies. And then that conservative Christian is caught doing meth with a gay hooker.

It’s like that with the union leadership’s war on the residents of Costa Mesa. Take for instance “The 99 percent take back America,” Orange County Employees Association president Robert Gibson’s end-of-year message to the rank and file.

The point of Gibson’s missive is to a link the public-employee union campaign for rising pay and benefits into the broader Occupy Wall Street movement. We’ve already examined the collision of interests between the Occupy movement  and the Orange County Employees  Association, which, like most public-employee unions, depends on Wall Street investments to produce huge returns to fund its pensions. When Wall Street can’t deliver, the governments for whom public employees work, ante up.

But never mind the irony. Gibson puts in considerable effort (regard the sweat trickling from his brow) to link his union members to the  Occupy movement.  “The common theme,” Gibson writes, “is that the 99 percent of us in this country are demanding that the focus be placed back on us, that the 99 percent be given the opportunity to earn a living and support our families. The protests are a statement that the wealthiest 1 percent of the country needs to pay their fair share.”

In reality, of course, the union’s campaign has nothing to do with Occupy Wall Street, nor is it the logical next stage in the historic class antagonism between the ragged, trousered proletariat (on one hand) and (on the other) fat guys in top hats, spats and monocles—or, as Gibson puts it, between workers with “families” and “multinational, multibillion-dollar corporations.” It is, in reality, a conflict generated by the union leadership’s desire to raise pay and benefits for its members, regardless of the political or financial costs to Costa Mesa’s residents, many of them poorer than the union’s members.

And when you come to Gibson’s sign-off—“We, the 99 percent, will prevail”—it’s not “The Internationale” that comes to mind. It’s NWA’s “Straight Outta Compton.”

In his companion piece, OCEA boss Nick Berardino works like an entire roomful of pointy-eared elves, cobbling together a political message that features his members as actors on a world stage. In 2011, he writes, union members “were demonized, ridiculed and subjected to the largest political attacks in our history.” Union members are the thin line between savagery and a “safe and civil” Costa Mesa.

“Without people like you,” St. Nick concludes, “our society would deteriorate to a third world status.”

“Would” deteriorate? There’s some evidence that California is almost there. Underfunded universities, cuts in social services, declining environmental quality, highway overpasses that crumble beneath the weight of antiquity: you can trace some of these dark phenomena to the rising cost of pensions pushed for by the state’s muscular public-employee unions; okayed by union-backed politicians on the left and right; and paid for in part with cuts in the very budget items that even Berardino might concede make California more livable than, say, Juarez, Mexico.

COSTA MESA’S UNFUNDED pension liability is a quarter of a billion dollars—about two and a half times its annual budget. In order to pay down even some of that obligation, the city has gone for years without essential street improvements, equipment purchases, and building renovations while cutting public services—all to pay off rising pay and benefits that Berardino & Co. have worked single-mindedly (and successfully) to win. You can see the misplaced priorities while driving the potholed streets of westside Costa Mesa—like strapping yourself into one of those Imperial Vibrating Belt Massagers from the Eisenhower-era. Take a look around City Hall, where such basic renovations as air-conditioning and heating are delayed year after year, blasted by the union’s high-priced PR team as “luxuries” or mere “cosmetic upgrades.” Or walk the athletic fields at Estancia High School. It’s no verdant glen; it’s Tom Joad’s Oklahoma. There are, as one local put it, “simply too many feet.” Why? Because the kids have got no place else to go, because—after paying for salaries and pensions—the city has no cash left for new parks, and little money to support existing parks.

But Berardino and Gibson can’t sell that Dickensian reality. So they argue instead that the union leadership is fighting a world-historical battle against the forces of evil, against “multinational, multibillion-dollar corporations.” Because that sounds better than the truth—which is that what the union really wants is to force Costa Mesa to raise taxes on its younger residents so that retired union members can achieve longer, firmer erections well into their 80s.

THE NEW YORKER MAGAZINE described Berardino as “a hot-tempered man with a placatory gray mustache.” An inch or so beneath that kindly cookie-duster, Berardino’s lips told the Los Angeles Times he’d consider reductions in his members’ pay and benefits if that would help the city, but that he would not negotiate “with a gun to our heads.”

Message to union members: That’s no gun next to Nick’s head. Nick is a comic book figure. That thing next to his noggin is an empty thought bubble.

Or maybe not empty: St. Nick ends his yuletide message with a weird, unseasonal threat: “P.S. For those who plan to attack us in the coming year, get ready because we will continue to fight!!!”

Merry Christmas!!!

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