There has been a considerable amount of buzz in the lefty blogosphere about "The Plot Against Pensions" report by David Sirota for the Institute for America's Future (http://y.ourfuture.org/...). The report details the state-by-state, systematic efforts by the Pew Charitable Trusts' Public Sector Retirement Systems Project and the Laura and John Arnold Foundation to pressure state legislatures to do away with traditional defined-benefit pensions for public employees and shift these workers into riskier 401(k)-type plans.
Among the report's findings:
* Conservative activists are manufacturing the perception of a public pension crisis in order to slash modest retiree benefits.
* The pension “reforms” being pushed by conservative activists are often more expensive and risky for taxpayers than existing pension plans.
* Pew/Arnold are working together in states across the country to focus the debate over pensions primarily on slashing retiree benefits.
* If successful, this campaign will probably fuel a renewed effort to privatize Social Security.
* Since the Pew/Arnold partnership began in 2011, it has successfully lobbied legislatures in several states to switch from defined-benefit plans to hybrids (a combination of a defined-benefit and 401k plan): Florida, Rhode Island, Kansas, Kentucky, Montana. It is widely expected that this partnership will next move into California, Colorado, Pennsylvania, Oklahoma and Nevada.
Pension finance is dry, wonky stuff. But here's why you should care, and why you should push back and seek out the facts when you hear that there's a "pension crisis" in your area:
"The campaign against public pensions is an exercise in perfecting methods that manufacture the perception of a crisis -- and then result in cuts to guaranteed retirement income. If the state-based crusade agaisnt public pensions is successful, it will probably fuel a renewed effort to privatize Social Security."
Sirota goes on to note this:
"The amount states and cities spend on corporate subsidies and so-called tax expenditures is far more than the pension shortfalls they face. Yet, conservative activists and lawmakers are citing the pension shortfalls and not the subsidies as the cause of budget squeezes. They are then claiming that cutting retiree benefits is the solution rather than simply rolling back the more expensive tax breaks and subsidies."
According to Pew, public pensions face a 30-year shortfall of $1.38 trillion, or $46 billion on an annual basis. This is dwarfed by the $80 billion a year state and cities spend on corporate subsidies, Sirota writes. But conservatives say the solution is to cut retiree benefits, not raise public revenue or reduce corporate give-aways. Mind you, in most states, public workers contribute throughout their careers to their pension plan. Taxpayers don't bear the entire burden of public employee pensions, though the crisis narrative (by now widely accepted as truth) would have you believe otherwise.
Here are a few more things to consider. Why are so many state legislatures moving to throw their public workers into a 401(k) system that is widely regarded as a failure? And how, exactly, does it spare the taxpayer if public employees are switched to a 401(k) -- if one assumes the employer (local government unit, school district, etc.) pays some sort of match? What are the ramifications for state taxpayers when public employees with inadequate retirement savings wind up on taxpayer-supported public assistance? Finally, who stands to gain when public pension dollars are transferred to individual accounts with all of their attendant exorbitant fees?
The "pension crisis" narrative is in the process of being swallowed whole by a lazy, sensationalist and gullible mainstream media, and even by Democrats and others who should know better. David Sirota is to be commended for calling out a once-sterling nonprofit and its alliance with a man who famously decimated public pension funds while making his billions at Enron.
We already have a retirement crisis in this country. Taking away modest public worker pensions does nothing other than hasten a race-to-the-bottom mentality in which only the wealthiest get a sense of security in retirement. We should all be very worried for what this portends for the elderly in states that have switched from pensions to 401(k)-type plans. And we should beware the crisis narrative being ginned up over Social Security. Hang onto your wallets, folks, we're in for a rough ride.