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Heyl: Dermody fuzzy on pension history

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Tuesday, July 22, 2014, 10:42 p.m.
 

History apparently wasn't House Minority Leader Frank Dermody's best subject in school.

Dermody, D-Oakmont, had harsh words on Monday for Republican Gov. Tom Corbett when Moody's Investors Service downgraded Pennsylvania's bond rating. That's a dull development to most people, although it could trigger higher borrowing costs for the state.

Dermody put the blame for the financial kick in the pants squarely on the governor. Given Corbett's huge deficit in the polls to Democratic gubernatorial candidate Tom Wolf, the move was the political equivalent of placing a pillow over the face of someone on life support.

“The downgrade of Pennsylvania's bond rating is a direct result of (Corbett's) misguided philosophy and discredited budget methods,” Dermody said in a prepared statement.

No matter what you think of Corbett's performance — and judging from polling, most of you aren't enamored with it — Dermody's comment is historically inaccurate.

In fact, one could make the case that Dermody bears more personal responsibility than Corbett for the fact that only New Jersey and Illinois have lower bond ratings than Pennsylvania.

Don't take my word for it. Take Moody's, which cited the state's inability to deal with its mounting public pension crisis as one reason it delivered the bad news.

To put it in the boring, bond-rating parlance that Moody's favors: “The expectation (is) that large and growing pension liabilities, coupled with modest economic growth, will limit Pennsylvania's ability to regain structural balance in the near term.”

In terms of sexiness, pension liabilities rank right up there with a trip to a live bait shop. But if lawmakers do nothing about the state's pension liabilities, you eventually could face stratospherically higher taxes.

The pension crisis originated in 2001, when legislators increased their pension benefits by 50 percent.

To minimize the outcry over that obscenity, they hiked the pensions of 109,000 state workers and 234,000 public school employees by 25 percent.

Among lawmakers who enthusiastically voted for the pension grab, whose costs now loom ominously: Dermody. At the time, he expressed confidence that ample money existed in the system to cover the enormous increases.

In a phone interview on Tuesday, Dermody discounted the 2001 increase as the primary cause of the pension crisis.

He attributed the problems to the enormous amount of money that the Great Recession took away.

Asked whether the state retirement system could have better withstood the recession's hit without higher pensions, Dermody said: “Hindsight is a pretty good thing.”

So is history. Those who ignore it occasionally are doomed to appear disingenuous.

Eric Heyl is a Trib Total Media staff writer. He can be reached at 412-320-7857 or eheyl@tribweb.com

 

 

 
 


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