Crime and Punishment in Milwaukee

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If
you're weary of obnoxious government largess, you may want to take
a breather and tune in here,
here, or here
to the Milwaukee County, Wisconsin pension scandal and the heartening
recall rebellion.

The
Milwaukee County Board of Supervisors oddly asserts it was doing
the taxpayers a favor in November 2000 by ladling out huge pension
increases for county workers instead of the usual gratuitous wage
increases. After all, pension benefits were to be paid out from
a plump pension fund ripe from the stock market run-up, instead
of reaching deeper into the pockets of taxpayers right away.

Viewed
through a politician's prism this would be seen as cleverly killing
two birds with one stone. To Milwaukee County taxpayers, though,
that was the last straw.

An
intrepid internet journalist
actually ran
the numbers
and found that the county executive could retire
on schedule in 2008 with a lump sum of between $2.1 and $2.5 million,
plus $98,000 per year with annual increases. The benevolent county
tosses in paid up health insurance for life to assist humble public
servants scraping by on their meager pensions. Unelected county
workers are also paid for all the sick time they never took, retroactive
to the day they started.

A
recall committee was formed to collect petitions and within two
weeks, garnered the 73,000 signatures required to recall the county
executive. How do suppose the politician's responded to the will
of the people? Humility? Shame? Remorse for being caught?

The
county executive did what any modern day, responsible elected official
would do: he sued his accusers over failing to file the proper paperwork.
Grasping at straws, he asserted the recall committee failed to notify
him of their efforts. I guess he missed the month of non-stop press
coverage.

Petitioners
trudged forward despite the lawsuit and within a month of starting,
180,000 signatures against the county executive were collected in
the dead of winter. (That's one in four adults in the county.) Facing
an insurmountable election, the county executive saw the writing
on the wall, he found himself lacking, and he retired last week.

Most
of the executive's staff was sacked the same day. One
staffer was quoted
as saying, “No party. No cake. It all just
happened so fast.” "Let them eat cake," indeed! Welcome
to the real world.

Caught
in the glare
of talk radio
, the rest of the county board scrambled to defend
the pensions. My favorite justification was, in not so many words,
"Eh, the IRS would probably limit those lump sum payoffs
as illegal anyway. What are you complaining for." (Let's ask
the county's legal counsel to see how he missed this. Oh, wait,
he retired last month with $122,000 for accrued sick leave, a $111,000
lump sum, $53,000 pension with annual increases for life, and, of
course, paid up health insurance.) Remember kids, decades of shuffling
paper really can pay off.

Some
board members, of course, feigned ignorance of what they voted for.
Can taxpayers believe that these middle-aged looters not only crafted
their own pension benefits, but they never personally bothered to
check what they themselves would stand to gain? Has human behavior
changed in all of recorded history?

The
gall of the lawsuit and inane excuses from the county board spurred
on the recall army to expand their efforts. Nearly half of the county
board is now facing recall from their $52,000 salaried, part time
jobs. Unfortunately, secession from the half of the county that
won't recall their supervisors doesn't look like a viable option.

One
enjoyable and cynical aspect of this electoral melee is that officials
are oblivious to the depth of public outrage. Palace intrigue blinds
them from seeing scores of elderly taxpayers braving Wisconsin's
winter weather to collect signatures outside grocery stores and
malls.

In
every great saga, the empire struggles to strike back. In a letter
to constituents, one elected "public servant", feeling
the heat, labeled the recall effort "a fire of destruction."
More reasonable folks believe electoral recall efforts are closer
to Schumpeter's creative gales of destruction than a scorched earth
policy. One
county supervisor admitted asking the sheriff for martial law to
settle people down.

The
real kick in taxpayers' pants is that they have to make up the difference
if the pension fund returns less than 13% per year indefinitely.
Under Wisconsin law, once pensions are granted to public employees
they cannot be rescinded without compensation. That leaves Milwaukee
County taxpayers with only one option to avoid being eternal udders
for pensioners: fire most of the county workers. How sweet and fitting.

Given
how frequently governments distract the masses from scandal by starting
wars, Chicagoans should consider themselves fortunate that Milwaukee
County doesn't own gunboats, yet. (Don't forget Milwaukee's biological
weapon: the billions of gallons of untreated poop that the Metro
Milwaukee Sewerage District dumps into Lake Michigan
.

Thanks
again, Greenspan, for yet another unintended(?) consequence of easy
money and speculative bubbles. This one saddled Milwaukee County
taxpayers for decades.

March
7, 2002

Brian
Heyer [send him mail]
is a manager for an investment services firm and is desperately
seeking an asset class that grows at 13% per year with volatility
suitable for a pension fund.

LRC
needs your help to stay on the air.

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