State and Local Entitlements

The bankruptcy of the City of Detroit has focused attention on a problem facing many other US cities, counties and states…the cost of the pension and retiree medical benefits promised to (largely union) employees.

  • How should the Detroit obligations be treated in the bankruptcy? Similarly to such obligations in a company bankruptcy context? Some otherway?
  • Should the Federal government intervene to protect these benefits?
  • Why did this issue arise in the first place, and what changes should be made to avoid it in the future?
    • Was it the ease of trading off current compensation against future benefits for cities, etc. on a budget?
    • Should municipal entities follow corporate employers by converting, over time, from defined benefit (pension and retiree medical) to defined contribution (agree on employer’s contribution; employee takes the risk (upside and downside) on investment returns)?

2 thoughts on “State and Local Entitlements”

  1. I’ve been reading some things that have made me sensitive to the way that language is used in discussion–including but not limited to the discussions that we have.

    For example the topic of this post could be titled, as it is now:
    “State and Local Entitlements”
    or using language elsewhere in the post:
    “State and Local Employee Benefits”
    or
    “State and Local Obligations”

    Does it make a difference? Maybe it’s just me, but I think it does. Enough that I went back to earlier posts to see if it was part of a pattern, or an exception. My judgement (and I am happy to say so) is that this is an exception. I think Scott has been diligent about using neutral language in the posts as he is diligent in our meetings to make sure that we hear all viewpoints–even ones not represented in our group.

    Still it raises questions.

    At one extreme: am I being oversensitive to the language? That’s the case if no one else sees this, and that would be interesting for me to know.

    At another: Is Scott being undersensitive? That would be the case if he’s the only person in the group who did not see the term as significant. That would be interesting to me, and I expect to Scott as well because of the care he takes to keep things “beyond labels”.

    In the middle there might be some people who come down firmly on either side (some see “entitlement” as labelling the issue, in some way, and some are absolutely sure it’s a neutral term) and some who say, “Well, I didn’t see that, but now that you mention it….yes.”

    It raises the question: when are we labelling, and when not.

    Might be a topic for another time.

    1. I can add another alternative…sometimes I choose such language (or labels) to be both descriptive and a bit provocative…to elicit a response from those with a different perspective. So I may have achieved that goal.

      In this case, I used “entitlement” as a shorthand for public defined benefit pensions, retiree medical plans, etc. in the national dialogue, I think it’s common, neutral and reasonably bipartisan to call Medicare and Social Security “entitlement programs.”

      But I hope that participants will continue to monitor the language…and it will hopefully be the impetus for further discussion.

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