Riordan and Rubalcava suggest replacing defined-benefit pensions with 401(k) accounts for new public employees. But when another product of America’s immigrant culture, Gov. Arnold Schwarzenegger, tried to do that, public employees’ unions squashed the idea. Riordan and Rubalcava say the retirement age for public employees should be raised from 55 to 65, employees should pay more than the maximum of 9 percent of their salaries for pensions, and the city should end subsidies of up to $1,200 a month for health insurance for those who retire before becoming eligible for Medicare. But even his ideas for nibbling at the edges of the fiscal problem by privatizing the zoo, the convention center, and city parking lots are opposed by the unions.
They are government organized as an interest group to lobby itself for ever-larger portions of wealth extracted by the taxing power from the private sector. Increasingly, government workers are the electoral base of the party of government. So Villaraigosa must live with the arithmetic of interest-group liberalism. The federal government, he says, can run deficits and print money; the state government (supposedly) must balance the budget but can push burdens down onto cities. There, he says, “you have 10 cookies in the cookie jar and every interest wants all 10.”