| The Pennsylvania Capital-Star reports that “Democrats in the state House and Senate are trying anew to deliver a cost-of-living adjustment (COLA) to Pennsylvania’s retired teachers and state employees, who have not seen an increase in more than 20 years.”
As the Cap-Star’s John Micek wrote this past Wednesday, Rep. Steven R. Malagari, D-Montgomery, began seeking co-sponsors for a proposal “that would boost pension benefits for teachers and state employees alike during the fiscal year that ends June 30, and tie future hikes to inflationary increases.”
Micek notes it is the “House companion” to an effort introduced last year in state Senate.
But Micek addresses the elephant in the room head-on:
“Getting the bills to a vote — let alone onto Gov. Josh Shapiro’s desk — is no easy lift, thanks to the sheer cost of such an increase.”
He references an analysis last year by the state’s Independent Fiscal Office indicating, as the Capital-Star reported at the time, that enacting a COLA hike for tens of thousands of retired teachers and state employees would cost hundreds of millions of dollars spread out over a decade.
How many hundreds of millions? Nearly $632 million, by one estimate. Let’s put this in context: That’s half-a-billion dollars more, plus another $132 million.
Legislative hearings on the proposal are upcoming in March.
Backers argue that such a measure not only will help retirees cope with continuing high inflation but – wait for it – also “will help our economy.”
Oh, geez.
Sorry, but increased government spending seldom, if ever, produces anything approaching economy-helping benefits. It’s merely another in a long line of the proverbial robbing of Peter to pay Paul after Paul’s “progressive” champions lobby for yet another wealth transfer. And, of course, Paul seldom complains.
How rich the irony – battling the effects of inflation with an inflationary move.
Back in 2017, Bill Dupor, an economist with the Federal Reserve Bank of St. Louis, noted that “the overall takeaway from” his “research is that government spending” – and make no mistake, these pension COLA’s, no matter the source of the revenue, is government spending – “does not seem to be a very cost-effective way to stimulate the economy.”
Here’s to this latest cost-ineffective measure, one that stands to raise the cost of doing business (in this case, the cost to deliver pensions), dying on the vine.
Here’s a novel alternative: How about finding more than a billion dollars worth of government spending cuts that would leave more money in the pockets of retirees and every other taxpaying Pennsylvanian?
Oh, how naïve we are, right?
And, “Wait a minute,” says Jake Haulk, president-emeritus of the Allegheny Institute. “Were these people not members of unions who negotiated very generous contracts for then including retirement benefits?”
And if they receive Social Security as well, they also get COLA adjustments, he notes.
This is the public-sector unions exercising their leverage over Democrats that are beholden to them,” reminds Haulk, a Ph.D. economist.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
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