Guild News: Attack on Public Pensions

by Richard T. Kamei

Guild President

Public pensions such as CalSTRS have probably been under attack since their inception. I still recall, back in 2004 and 2005, our Guild and parent union CFT were fighting to stop then-Governor Arnold Schwarzenegger’s so-called pension reform ballot initiative. Fortunately, our side won that battle and Schwarzenegger withdrew his initiative. I remember feeling a sigh of relief, but I knew, as many others also knew, that the war was not over.

Since that time, the efforts by those who wish to see public pensions fundamentally altered have increased. On October 21, 2013, Campaign for America’s Future published an excellent article by Isaiah J. Poole titled “ALEC and TIAA-CREF Join the Assault on Public Pensions.” In the article, Poole discusses the American Legislative Exchange Council’s (ALEC’s) entry into the war to fundamentally dismantle public pension systems. According to the public pension advocacy group National Public Pension Coalition, “In addition to listing anti-labor ‘right to work’ laws as one of their 2014 legislative priorities, ALEC is also joining the effort to eliminate public pensions as we know them.”

ALEC’s involvement must be taken extremely seriously. They are highly influential in dictating state politics. As stated on the website for ALEC Exposed, “Through the corporate-funded American Legislative Exchange Council, global corporations and state politicians vote behind closed doors to try to rewrite state laws that govern your rights. These so-called ‘model bills’ reach into almost every area of American life and often directly benefit huge corporations.” The highly respected journalist Bill Moyers did an outstanding documentary on ALEC titled “United States of ALEC,” which aired on September 28, 2012. The documentary is eye opening and well worth watching.

Unfortunately, well-meaning Americans are often fed disinformation about public pensions. Many are led to believe that the pensions are too expensive and do not serve the overall society. Furthermore, dramatic changes such as shifting to 401(k) type funds are advocated. David Sirota, in his article titled “Exposed: Enron Billionaire’s Diabolical Plot to Loot Worker Pensions” published in Salon on September 26, 2013, writes about the alliance between a political branch of Pew Trust and billionaire John Arnold, who was a former Enron executive. The goal of the alliance, according to Sirota, is to bring together resources with the goal of cutting retirement benefits. We must carefully examine why this is happening.

Aside from the right wing’s effort to undermine social programs, except for those that benefit corporations and the wealthy, the attack on public pensions can also lead to lucrative alternatives for the players on Wall Street. Moreover, as stated by the CFT in an article titled “New Pension ‘Reform’ Bad Idea” there are two fundamental reasons why public pensions are under attack by corporations.

First, as they reduce or eliminate their own private defined benefit plans to boost profits at the expense of their workers, their greed is more readily revealed by comparison with ongoing decent public pensions. Portraying public pensions as ‘overly generous,’ or as special perks for public employees, helps to reduce the risk of a poor corporate public image on the issue. Second, less visibly, the anti-defined benefit push represents a corporate counterattack on efforts by public pension fund trustees to demand accountability from corporations in which the pensions invest.

As mentioned earlier, the effort to “reform” pension systems is relentless. On October 15, 2013 in California, a ballot initiative known as The Pension Reform Act of 2014 was filed with the Secretary of State. The initiative seeks to amend the California Constitution to allow for fundamental changes that would, as stated by John Woolfolk writing in the San Jose Mercury News, “give governmental agencies clear authority to negotiate changes to existing employees’ pension or retiree healthcare benefits.” The initiative is sponsored by the Coalition for Fair and Sustainable Pensions, and the accompanying letter was signed by the mayors of Anaheim, Pacific Grove, Pulido, San Jose, San Bernadino and Santa Ana. Supporters of the initiative hope to get the 807,615 signatures required to get the initiative on the November 2014 state ballot.

It is unfortunate that hard working public employees may be punished for the economic problems various municipalities face due to the monumental mistakes and criminal activities of those on Wall Street. An excellent article on how Wall Street looted the pension funds was written by Matt Taibbi aptly titled “Looting the Pension Funds,” which was published in Rolling Stone dated September 26, 2013. Interestingly, while an attack on pensions is being waged, there is no serious discussion about the billions of dollars in subsidies and tax expenditures that corporations receive or the need to increase tax revenues through an oil extraction tax and/or modification of Proposition 13.

Needless to say, our members must fight back by getting the truth about public pensions out to our communities. As Kevin G. Hall states in his article titled “Why Employee Pensions are not Bankrupting States” published in McClatchy Newspaper on March 6, 2011, “…there is simply no evidence that state pensions are the current burden to public finances that their critics claim.” In fact, as stated by the National Public Pension Coalition, “Traditional defined benefit plans help to create retirement security for employees, and create long-term economic benefits for the state.” Moreover, public pensions such as CalSTRS have proven themselves to be run efficiently while providing strong and appropriate oversight, guaranteeing retired public employees with a livable income to enjoy the remainder of their years after a career dedicated to public service. This, in turn, provides an economic stimulus for our economy.

On the other hand, states, such as Alaska, Michigan, Rhode Island, and West Virginia, that have switched to 401(k) or defined contribution plans, provide a cautionary example of what can occur. These states, as pointed out by Isiah J. Poole, suffered from increases in pension debts, lower incomes from the plans that made retirees eligible for means-tested public programs, and increases in fees to Wall Street money managers.

By educating the public, we can defeat the efforts put forth by the monied interests that relentlessly work to undermine public pensions.

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