Pension Issues Point out Conservative Hypocrisy

One of the most important property rights issues in recent history has arisen around the country, but conservatives are not taking up the cause. The issue is whether state and local governments can renege on contractual obligations to pay pension benefits earned by public employees when those governments run into financial problems.

To be clear, the issue is not whether state and local governments can change pension benefits for new employees, but whether they can retroactively change benefits for current employees and retirees. In San Jose, for instance, the Mayor and his allies are proposing a measure to lower the cap on the cost of living adjustment for current retirees. Under the plan, the average City retiree, who survives on a meager City pension, could see her fixed income dwindle to the poverty level in a matter of years.

During the Great Depression a similar issue arose. So many people could not pay their mortgages that several states passed foreclosure relief laws which extended the payment period for borrowers who were in trouble. The banks complained bitterly and took their case to the U.S. Supreme Court, which decided the issue in the case of Home Building & Loan Association v. Blaisdell.

As anyone with the leading legal conservative organization the Federalist Society can tell you, in Blaisdell the Court ruled that emergency economic conditions justified the states’ interference with the banks’ property rights. For legal conservatives Blaisdell is sacrilege, and even for mainstream legal scholars it stands as an extreme.

There is little difference between the legal issues raised in Blaisdell and pension cases around the country. Yet legal conservatives have been largely silent about the pension cases, except when they are complaining about the need to cut public retirement benefits.

The reason for this hypocrisy is clear. Blaisdell infringed on the property rights of banks, while pension cases have to do with the property rights of unionized public employees. When it comes to the highly charged debate over pensions, conservatives have abandoned their highest principles.