Bloomberg on Pension Reform: Not Necessarily a New Tier, But Something

Speaking to reporters on Fifth Avenue after marching in the Veterans Day parade, Michael Bloomberg was asked about Barack Obama’s advocacy of a Detroit bailout.

"Well, I don't think we can bail out every industry,"Bloomberg said.

Bloomberg said that the real problem for many of these troubled industries are the health care costs tied to the benefit packages enjoyed by their union work force. 

"The problem Detroit has more than anything is the defined-benefit health costs, which add something like $2,000 a car in expenses. That is just not something that can go on forever. The airlines industry have the same thing, and interestingly, so does New York City and New York State,” Bloomberg said. “And it is getting to be a very big problem.”

Bloomberg said those health costs have gone up about 65 percent since he came into office in 2002, “and we have virtually no control over it.”

I asked Bloomberg if he’d like to a see a new pension tier created, a move advocated by the likes of Carol Kellerman at the Citizens Budget Commission as a necessary adjustment.

“I think we have to do that kind of thing. I don’t know it has to be that, but we certainly are going to talk to the unions about that,” Bloomberg said.

He went on to say that the cost savings from that measure wouldn’t be realized immediately.

“It’s ten or 15 years before you start seeing any measurable benefit,” he said. Bloomberg also said state lawmakers have also had a history of going back and sweetening pension benefits, making savings from this kind of proposal less certain.