Taking an ax to pension defense

Deep into the argument about the pension overhaul law before the Illinois Supreme Court on Wednesday in Springfield, Aaron Maduff, attorney for the State Universities Annuitants Association, played the “Lizzie Borden” card.

Maduff was one of two lawyers who took to the rostrum to contend that the 2013 law violates the state constitution because it curtails the retirement benefits of certain public employees. And he was pushing back against the argument that had been advanced by Solicitor General Carolyn Shapiro, which I paraphrase as follows:

Yes, pensions are contractual agreements that should be honored under ordinary circumstances. But Illinois now faces an extraordinary fiscal crisis directly related to an estimated $111 billion shortfall in the pension funds, and so should have the power to alter the terms of those agreements.

Maduff alluded to an observation made earlier in the arguments, that this crisis is largely self-generated. For decades, lawmakers failed to invest the state’s full share into five major pension systems, preferring to use some of that money to balance budgets without hiking taxes and hoping for the best in the financial markets. When the recession struck in 2008, it compounded and magnified their irresponsibility.

And then, of course, the General Assembly allowed state income tax rate to fall by 25 percent on New Year’s Day, adding extra urgency to the crisis.

Maduff referred to the state’s “this is an emergency!” argument as a “Lizzie Borden defense,” defining it as, “I’ve killed my parents. Have mercy on me. I’m an orphan.”

It was a good point, but a lousy historical analogy.

Lizzie Borden’s father and stepmother were brutally slain in the family’s home in Fall River, Mass., in 1892. She was charged with the murders and the sensational case became the subject of the most famous jump-rope rhyme in history:

Lizzie Borden took an ax

And gave her mother 40 whacks,

When she saw what she had done,

She gave her father 41

Close enough for folklore, I guess, but police believed the murder weapon was a hatchet, not an ax. And a coroner’s report showed that Abby Borden was struck 19 times, Andrew Borden about 10 times.

Further, Lizzie Borden didn’t use the “Lizzie Borden defense” when she went to trial. At 32 she was too old to qualify as an orphan – instead her lawyers argued that the prosecutors’ timeline didn’t fit their theory of the case and that key witnesses against her had offered conflicting testimony.

The jury quickly acquitted her.

But Maduff’s argument survives this reality check. The state can’t be allowed to blunder its way into a financial crisis that in turn allows it to justify reneging on prior agreements.

That would give lawmakers an incentive to take an ax (or hatchet, if you will) to the idea of sound fiscal stewardship and, as Justice Robert Thomas said from the bench, be “tantamount to giving the state license to modify its own contractual obligations for any reason.”

But can the Lizzie Borden card be trumped? The solicitor general argued that some crises are so unavoidable and so great that it would be catastrophically absurd to give pension payments a higher priority than addressing them.

Her examples included prolonged periods of deflation, natural disasters and epidemics. And she pleaded with the justices to send the case back to the lower court where a judge can determine whether the state’s pension underfunding woes, no matter what caused them, rise to the level of major catastrophe, and if the 2013 law is a necessary way to address it.

That seems fair. Extremely time-consuming, but fair. In fact one question opponents of the law failed to answer Wednesday was whether they could imagine any circumstance that would permit the state to reduce contractually guaranteed pension benefits.

If the answer is yes – which, come on, it has to be – then this case, like the tale of a certain alleged ax murderer, is more complicated than many people think.