Are Union Pensions Bankrupting America?

This is a RUSH transcript from "The O'Reilly Factor," January 25, 2011. This copy may not be in its final form and may be updated.

Watch "The O'Reilly Factor" weeknights at 8 p.m. and 11 p.m. ET!

BILL O'REILLY, HOST: In the "Impact" segment tonight: According to the New York Post, pensions for city and state workers are going crazy. In fact, pension payments of more than $100,000 a year in the public sector increased 43 percent in New York alone last year. All across the country it's the same deal, public pensions bankrupting cities and states.

So how did this happen? Joining us now from Washington, Fox News political analyst Charles Krauthammer. Charles, is this an outrage or am I overstating things?

CHARLES KRAUTHAMMER, FOX NEWS POLITICAL ANALYST: No, it is an outrage. You are not overstating it. But the irony is it's perfectly legal and it was predictable. I mean, one of the reasons FDR opposed government unions was because he said himself that any public strike – a strike by public workers would be unconscionable. He also understood that the kind of negotiations that you have when you are a public sector union is totally different from what you have in the private sector. In the private sector, the boss negotiates with the union and gives away the store. The boss loses his entire enterprise and he loses his shirt. When public union negotiates with a politician, he can give away the store and he can still get re-elected. Nobody is going to remember or even care about in a re-election campaign whether he promised a pension 30 years hence that nobody really understands in the first place. So you have got this cozy relationship between politicians and the union bosses.

And here is how it worked, Bill. The unions would get the sweetheart deals. They would then, of course, use the dues to create slush funds and with that money they would then get the same politicians re-elected who then would negotiate more sweetheart deals. And this routine where the politicians and the unions fed each other would go on for decades with your tax money.

O'REILLY: And it has gone on for decades. Now we are seeing that states like California, New York, Ohio, that have a big union presence, can't pay. They can't afford the $100,000 a year pensions. There is just not enough money to do that and the entitlement spending. They can't pay.

KRAUTHAMMER: And it is stealing from everything else that state governments do. In New Jersey, they have got about a quarter of a million retirees. If you add up the pensions and the health care and the other side, the benefits, that cost the New Jersey taxpayer $11 billion a year. That's $11 billion a year that you can't spend on education, you can't spend on health care, and you can't spend on public safety. Those numbers are huge, and they are not something that the states can sustain.

O'REILLY: Now, is there anything that can be done because these are legal contracts that are signed. People going, look, I took the job because I was promised this, that and the other thing by the state or by the city or by the feds. Because the federal government has the same problem. I mean, they're paying enormous pensions to people. And a lot of times they, you know, say, look, I have been 30 years in the FBI and I get this or that and the other thing. Not just singling out the FBI but I'm giving an example. This is across the board. Is anything going to be done?

KRAUTHAMMER: Well, for some states that are not on the brink, they can possibly slash enough spending and then continue to pay out the benefits and, perhaps, reform themselves so that they are not promising now to current employees the kind of benefits that will bankrupt that state in the future.

But other states, including a lot of the blue states you mentioned, are way out there where that's not going to work. That's why I think they really have to think of some legal equivalent of bankruptcy. And the reason that we have that is so that a private enterprise or even a municipal government can declare bankruptcy and get a second chance. If you declare it, then, of course, as everyone knows, you are released from your obligations and the courts will decide who gets paid and how much.

O'REILLY: But I just saw today a number of liberal politicians saying they want to have a law that you can't. A state can't declare bankruptcy. They want, you know, because the unions are still fighting. Look, you not only have pensions but you have disabilities like crazy.


O'REILLY: Here in New York, I mean, the people out on disability is astronomical. They are getting paid a tremendous amount of money. So, I -- we have in this country a $14 trillion deficit. And that's going to be one of the big items tonight between the Republicans and President Obama. How are you going to bring it down? But if these pensions and disability and payments and health care and all of that to public union employees can't be corralled, then there is no solution to the problem.

KRAUTHAMMER: Well, look, if GM hadn't had the option of a bankruptcy, it would be dead.

O'REILLY: Yes, but that's a private sector deal.

KRAUTHAMMER: Look, I understand why the public service unions, government workers don't want the bankruptcy option. They don't want anything held over their heads. But imagine if a state has the bankruptcy option the way a business would have the bankruptcy option, then the union has to calculate how will I make out if I refuse to renegotiate.


O'REILLY: That's right. How can states get that option? Would it have to be a congressional law passed?

KRAUTHAMMER: It would have to be a congressional law but then have to go to the Supreme Court and decide whether or not…

O'REILLY: This is a big mess.

KRAUTHAMMER: …the federal government can actually pass a law which would have effect over the sovereign states. It could be that the states are going to have to pass individually constitutional amendments which would allow that because they are sovereign. This is not easy. But the only way out is going to be a form of bankruptcy which will release the state from obligation, which it has no chance of ever being able to meet.

O'REILLY: Right. All right. Just a quick aside, you heard the interview with Kiki McLean.

KRAUTHAMMER: That was the best Abbott and Costello routine I have ever heard. I thought she was going to respond by saying who's on first? You ought to go, you know, on tour with her. Forget Glenn Beck. What a great routine. I have never heard anything quite as hilarious.

O'REILLY: All I want to know is what happened at the meeting, Charles.

KRAUTHAMMER: There was no way you were going to get it but I love the way she would go back over and over again the same repetition. It's fantastic. You ought to think about it. It could work on stage.

O'REILLY: But Kiki probably wouldn't show up. Well, I don't know. All right, Charles. Thanks very much.

Content and Programming Copyright 2011 Fox News Network, Inc. Copyright 2011 Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.