Friday, September 23, 2011

Local, State and National Politicians Combine with Union Leaders to Fleece Taxpayers

The Five Million Dollar Man tells the story of retired union official and public employee Dennis Gannon, former president of the Chicago Federation of Labor.

Prior to working full time for the union, Gannon was employed by the city of Chicago at an annual salary of $56,000. He then took a leave of absence from the city, went to work full time for the union, and received a union salary of $200,000.

Subsequently, while he continued to work for the union, he applied for and was granted a city pension.

Thus, in addition to the $200,000 union salary, he was receiving a city pension of $150,000, or a total of $350,000 per annum.

No longer a full time union official and now just a city of Chicago pensioner, Mr.Gannon's city pension of $150,000 is roughly three times what his full time city worker pay of $56,000 had been.

Therein lies an interesting story about the actions of governments, unions and politicians. Meanwhile, we largely unsuspecting and scammed taxpayers will receive the bill for being fleeced, as always.

That is, Chicago, Illinois and national taxpayers will pay what the city's ailing pension plans can't afford to pay. We're the "backstop" for the wasted money and abuse of office by government and union officials.

Whatever the government officials choose to spend, they tend to spend. And in the end, we the people always get the privilege of paying for their profligacy. How thoughtful of them to include us!

Put simply, we taxpayers have a well established habit of allowing the politicians and public employee union leaders to play fast and loose with our money. To be sure, they tend to do just that.

And in this modern era of federal bailouts, jobs acts and related federal stimulus-er-handout programs, it's not just the Illinois taxpayers that will get the bill for Mr.Gannon's pension payments. We all will.

In fact, the worse the Illinois politicians act, the more non-Illinois taxpayers will be asked to serve as backstops for their profligacy. For example, this indirect Texas to Illinois backstopping is done through the circuitous route of Washington.

Although he didn't go anywhere close to acknowledging the deal enjoyed by "public servant" Mr.Gannon, Mr. Obama did have many wonderful things to say about government employees and their unions at a Labor Day rally earlier this month. Here goes:

"In his Labor Day speech in Detroit, Barack Obama issued a ringing endorsement of government employee unions:
Having a voice on the job and a chance to organize and a chance to negotiate for a fair day's pay after a hard day's work, that is the right of every man and woman in America--not just the CEO in the corner office, but also the janitor who cleans that office after the CEO goes home. Everybody has got the same right.
And that's true for public employees as well. Look, the recession had a terrible effect on state and local budgets--we all understand that. Unions have recognized that; they've already made tough concessions."

Here's my question. How does Dennis Gannon, being paid a $56,000 salary as a Chicago city employee, end up with an annual city pension of $150,000? (We won't ask the further embarrassing question of why he received that city funded pension of $150,000 while being paid another $200,000 by the union at the same time.)

And "The Five Million Dollar Man" provides the answer:

"Since the 1950s ... city workers who take leaves of absence to work full time for unions have been able to remain in city pension funds if they choose. The time they spend at their union jobs counts toward their city pensions.

Union jobs, however, are far more lucrative than city jobs. Gannon's city salary was $56,000 a year; his union salary, $200,000. But he retired from his city job in 2004--at age 50, and 13 years after beginning a leave of absence. Between then and 2010, when he retired from the union, he collected both the $200,000 union salary and a $150,000 city pension.

How did the city end up paying him a pension nearly three times his salary? That's where things get interesting. Few labor leaders took city pensions, the Tribune reports, "until the law was changed in 1991 to base those workers' city pensions on their union salaries instead of their old city paychecks, dramatically boosting the amount they could receive"--a provision that "became law with no public debate among state legislators and, more importantly, no cost analysis."

And no accountability: "No one from either the state Legislature or city government will take credit for the law, which passed in 1991, and the process of drafting pension legislation in Springfield is so shrouded in secrecy that there's no way of knowing exactly whom to hold responsible."

And no possibility of reversal: "The state constitution says pension benefits cannot be diminished once they are earned."

"Gannon told the Tribune that he was only following the law in filing for a city pension," the paper reports. The scandal isn't that what they're doing is illegal but that it is legal."

And that indeed is the scam or shame of it all, as the effect of all this on the already overburdened American taxpayer is essentially unlimited:

"And as The Daily's Jillian Melchior reported last month, state pension funds frequently make risky investments, knowing that if they don't pan out, taxpayers will have to make up the losses. What's more, the boards that manage these funds are stacked with union representatives and political appointees: "Because public unions are an influential constituency, they're inclined toward union priorities."

Let's summarize what this illustrative scam of "taxation without representation" really involves.

(1) People who work for the city are eligible for a pension upon retirement.

(2) If elected or appointed to a union office, the city worker then takes a leave of absence but augments the city pension entitlement based on the much more lucrative union salary.

(3) Gannon becomes entitled to even more city pension money while employed by the union. That's due to being credited for years worked as a city employee while serving the union on a full time basis, and while on a leave of absence from his lower paying city job.

(4) Then Mr. Gannon retires at age 50 from the city job and is entitled to be paid for the rest of his life at a rate of three times what he had been paid while working as a city employee.

(5) He then continues to work for the union at an even higher salary until he retires several years later.

(6) And the taxpayers everywhere, and not just those in Chicago or the state of Illinois, will pay for the city worker's retirement benefits.

(7) Out of "fairness," if Illinois taxpayers can't pay the entire bill, national politicians like President Obama will send federal "stimulus" money to Illinois to make up for the pension fund shortfall and see that "justice" is done. Enough said.

Fittingly, the article concludes:

"That is the system President Obama defended on Labor Day. And his support for it is not merely rhetorical. Both the 2009 stimulus and the recently proposed Stimulus Jr. include vast payments to states and localities--in effect, a federal taxpayer bailout for governments that have been so profligate with their own taxpayers' dollars. Some of that money, of course, gets kicked back as campaign contributions and independent expenditures to support the campaigns of Obama and other Democrats. It's all legal, but that doesn't mean it isn't a scam."

Meanwhile, union officials work hard with dues paid by janitors, teachers and other hard working people in an effort to keep the Democrats and President Obama in office. They do this in large part by vilifying those evil CEOs and other fat cats who pay the bills, and whose offices the janitors clean, as our "non-class warfare" President Obama says.

And now you know the story of public servant Dennis Gannon. I hope the janitors, teachers and other hard working, dues paying union members hear about it, too.

Thanks. Bob.

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