Thursday, August 01, 2013

Why Poverty Happens to Good People

Lesson to learn -- it’s usually not their fault. Case in point:

Donald Cardin became a firefighter at age 20 in Central Falls, R.I., a town just north of Providence that filed for bankruptcy in 2011. He was making $60,000 a year as a fire chief before retiring at age 42 in 2007 to take care of his wife Lana, diagnosed with thymic carcinoma, a rare cancer with extremely low survival rates.

The couple relied on Cardin’s health insurance, which required no copay, to cover Lana’s $8,000-a-month treatment. Cardin worked a part-time contracting job to make up the difference between his $34,000-a-year pension and his former salary.

But that all changed in 2011 when Cardin, and his fellow firefighters and policemen, were called to a meeting at the local high school, where state-appointed receiver Robert Flanders warned them that the city would not have enough money to survive if pensions were not cut. Weeks later the city would file for bankruptcy.

“After a lifetime of service, with the stroke of a pen, Judge Flanders changes the rest of our lives and doesn’t care,” said Cardin.

So here’s a man who put in a lifetime’s work based partly on the promise that, in exchange for risking his life now, the city would help take care of him in his retirement. Nevermind that he retired at an age young enough to go find another job with a living wage and have a completely new career – which is not an easy proposition living in a small New England town, by the way, and that’s before considering his wife’s medical needs – that was the contract implied at hiring. Then, shortly after retiring, half his pension and half his medical insurance was taken away, leaving him making $17,000 AND paying $48,000 in medical bills, annually.

In a town of 19,000 people, it’s likely many if not most knew Chief Cardin, and other retirees who saw their lives brutalized by unfeeling bean counters, but you’ll notice in reading the article and doing further investigation, the subject of raising taxes never once comes up.

Until they emerged from bankruptcy in record time. They did this by shifting the bankruptcy burden off the town and onto the middle class pensioners, and increasing property taxes 25% over five years. Had it been discussed before the bankruptcy, perhaps those pensions could have been saved or at least, given a shave, not a beheading.