Ping to a Republican-American Editorial.
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The unions would win this argument if the contracts were with private entities, e.g. International Harvester's health plan ~ always a good read if you want to see how far this stuff can go.
When it comes to sovereign entities like States or Nations, odds are good they can rewrite the contracts at will and change the terms of employment ~ BUT, there are limits.
One limit is this ~ let's say Cuomo wins on the 2% issue and moves on to lay 98% of the cost on the retirees ~ and let's say Cuomo wins on that as well. I'd suspect the first candidate to pop up saying he'd rescind the Cuomo rule would win the Governorship.
So, lots of luck to Br'r Cuomo, but he's talking peanuts in this.