Resolving the Public Pension Crisis
This Essay is an effort to provoke discussion of the normative issues surrounding pension reform, mainly concerning how public employees and retirees should be treated. Should pension claimants be treated like any other unsecured creditor, or any other person who suffers when the regulatory background is altered, or is there a case for treating them as victims of a fiscal disaster beyond their control? Is pension reform just one more step in the evolution of the labor market that has made it much more difficult for lower-skilled workers to achieve a middle class lifestyle? If so, how should the law react? This Essay also discusses some of the fascinating federalism issues raised by the potential clash between state law protecting pension rights and federal bankruptcy standards. Should a federal bankruptcy court respect the decision of a state court that the use of federal bankruptcy to reduce pension obligations would violate state constitutional protection of pension rights? This federalism dispute may be the most interesting one in decades.