Over the years, he has been retained for speeches by numerous financial firms, including Baker Capital, Catterton Partners, Driehaus Capital Management, ING, Merrill Lynch, Oak Investment Partners, Charles Schwab and T. Rowe Price, according to the website of the Royce Carlton speakers bureau.
All of which brings us to his new column in Time magazine, where he rails against the cushy pensions of public sector workers and slams the Democratic party for protecting this class of allegedly privileged workers.
Zakaria uses the recent Wisconsin recall election to argue that “on the central issue of the recall–the costs of public-sector employees–the Democratic Party is wrong on the substance, clinging to its constituents rather than doing the right thing.”
Yes, it turns out that public sector pensions
are the single biggest threat to the U.S.’s fiscal health. If the U.S. is going to face a Greek-style crisis, it will not be at the federal level but rather with state and local governments. The numbers are staggering. In California, total pension liabilities–the money the state is legally required to pay its public-sector retirees–are 30 times its annual budget deficit. Annual pension costs rose by 2,000 percent from 1999 to 2009. In Illinois, they are already 15 percent of general revenue and growing. Ohio’s pension liabilities are now 35 percent of the state’s entire GDP.
That’s a lot of numbers. You’ll notice that the comparisons keep shifting. Why is California’s deficit the relevant comparison, while in Illinois the comparison is to the state’s general revenue? Economist Dean Baker tries to sort out the math at his Beat the Press blog (6/14/12), noting that the California system is currently more than 75 percent funded– slightly less than ideal, but nothing like the calamity envisioned by Zakaria.
The long and short of the story is that some pension systems clearly do have problems, but most are in reasonably good shape and none threaten to turn a state into Greece. The hit that state budgets incurred from a mismanaged national economy, and are still experiencing from an economy that is operating 6 percent below its potential level of output, dwarfs the problems that states will face dealing with their workers retirement pay.
There are also other considerations; many public sector workers are not in the Social Security program, which means a pension is likely their primary source of retirement income.
Zakaria’s problems with math are one thing. But that’s probably not his main point, which is strictly political. Zakaria, like so many overpaid center-right pundits, wants the Democratic Party to punish workers and the labor unions that form a key part of its base:
Public-sector unions are strong supporters of the Democratic Party, so their clout has drowned out the voices of the poor, the young, students and average citizens. That is why real credit for courage should go to those few Democrats who are taking on these issues, even at the cost of losing support from one of their key constituencies. That includes mayors like Rahm Emanuel and Chuck Reed as well as governors like Andrew Cuomo and Pat Quinn. Sadly, they are too few and too isolated. Democrats should take note: the ideals of liberalism are now being sacrificed for the interest groups of liberals.
If you think about it, I guess what he’s saying is that the lesson to be drawn from Wisconsin is that Democrats should be more like Republican Scott Walker. I guess there are bankers that might pay $75,000 for that kind of wisdom.