Sunday, February 23, 2014

The Plot Against Public Employees’ Pensions (David Sirota)

“This report evaluates both the general state of the national debate over pensions and the specific effects of the partnership between the Pew Charitable Trusts’ Public Sector Retirement Systems Project and the Laura and John Arnold Foundation. This report evaluates both the general state of the national debate over pensions and the specific effects of the partnership between the Pew Charitable Trusts’ Public Sector Retirement Systems Project and the Laura and John Arnold Foundation.

“Here is a summary of the report’s findings:

“Finding: Conservative activists are manufacturing the perception of a public pension crisis in order to both slash modest retiree benefits and preserve expensive corporate subsidies and tax breaks.

“States and cities have for years been failing to fully fund their annual pension obligations. They have used funds that were supposed to go to pensions to instead finance expensive tax cuts and corporate subsidies. That has helped create a real but manageable pension shortfall. Yet, instead of citing such a shortfall as reason to end expensive tax cuts and subsidies, conservative activists and lawmakers are citing it as a reason to slash retiree benefits.

“Finding: 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. [In Illinois, policymakers also refuse to re-amortize the pension debt they had created and address the state’s revenue problems].

“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 states and cities spend on corporate subsidies. Yet, conservatives cite the pension shortfall not as reason to reduce the corporate subsidies and raise public revenue, but instead as proof that retiree benefits need to be cut.

“Finding: The pension ‘reforms’ being pushed by conservative activists would slash retirement income for many pensioners who are not part of the Social Security system. Additionally, the specific reforms they are pushing are often more expensive and risky for taxpayers than existing pension plans.

“Whether ‘cash balance’ schemes or 401(k) style defined contribution plans, many of the pension ‘reforms’ being championed by conservative activists risk incurring more costs and increasing risks for taxpayers.

“Finding: The Pew Charitable Trusts and the Laura and John Arnold Foundation are working together in states across the country to focus the debate over pensions primarily on slashing retiree benefits rather than on raising public revenues.

“Pew’s Public Sector Retirement Systems Project and the Laura and John Arnold Foundation are working in tandem on public pension policy to manufacture the perception of crisis and press for cuts to guaranteed retirement income. This campaign has played an integral role in states passing legislation that cuts guaranteed retirement income – all while those states preserve more expensive corporate subsidies.

“Finding: The Laura and John Arnold Foundation is run by conservative political operatives and funded by an Enron billionaire.

“John Arnold is an Enron billionaire whose only major experience with pension management was his role in a company that decimated public pension funds. Well-known conservative political operatives and consultants run his foundation.

“Finding: The techniques used by conservative activists to gain public support to privatize the public pensions that public workers have instead of Social Security are, if successful, likely to be used in efforts to privatize Social Security in the future.

“The current campaign to slash public pension benefits has relied on many of the same PR strategies as President Bush’s earlier campaign to privatize Social Security. In that sense, 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 against public pensions is successful, it will probably fuel a renewed effort to privatize Social Security.

“About the Report:
This report was commissioned by the Institute for America’s Future (IAF), a nonpartisan 501(c)(3) research and education institution devoted to new thinking and progressive economic ideas. This report benefited from resources, information, data and research from (among others) the National Public Pension Coalition, the Center for Economic and Policy Research, the Institute for Taxation and Economic Policy, the Center for American Progress, the Economic Policy Institute and Good Jobs First.

“The author, David Sirota is a journalist, nationally syndicated newspaper columnist and the bestselling author of Hostile Takeover (2006), The Uprising (2008) and Back to Our Future (2011). Sirota’s research assistant on this project was journalist Zaid Jilani.”

For the Complete 32-page Report (with footnotes), Click Here.
I have read it. Please read it too.


  1. You've got to really wonder why billionaires have nothing else to do with their time but destroy the lives of everyone else around them. For a number of years, Pew Research was looked upon with respect. Now we know they've gone back to their far-right extremists beliefs, so take anything they put out in terms of research with a grain of salt--and remember, that all of these ideologues are hooked with up with the Koch Brothers and Koch Foundations and are planning to destroy every public program in every state, including putting the legislatures themselves of ALEC puppets.

  2. Glen,

    We can analyze this crisis to death. We can find fault with the 'billionaires'. We can blame the out-of-touch legislators and legislature. We can point fingers at the unknowing and irresponsible media outlets. We can ridicule an apathetic public that has a declining percentage of voting families with children enrolled in public schools. We can cite research.

    We know how to place blame elsewhere.

    And we can hold out hope that our constitutional rights will be upheld in court just because of the words in the Illinois constitution.

    But the sad fact is that the blame (and the future of union viability) lies with (and within) the unions themselves. Our 'unions' are currently perceived as weak, ineffective, out-of-touch with public sentiment and unable to withstand any assault.

    No entity wishes to give up power willingly because of history or the law or even logic.

    It's about power and strength and unity.

    The Illinois legislature knows this better than most. And they are TAKING THIS FIRST STEP, at denuding the power and influence of our unions.

    I know this to be true. I live in Wisconsin and currently work with several locals. These locals are STILL unwilling and unable to act on the assault for their dignity and rights for fear of losing their jobs.

    This is where some of us came in around the early 70's.

    As you know the unions in Illinois don't exist by right. They exist by law. And those who make the laws can write unions out of existence.

    In Wisconsin, Governor Walker led the charge to eliminate unions under the guise of portraying collective bargaining as evil, despite the fact that he and his management peers agreed to all contract provisions.

    And he could have simply banned collective bargaining.

    But he banned unions.

    Because he could.

    And so can Quinn, Madigan, Dillard,

    Then watch the accusations fly everywhere but at ourselves and our unions.

  3. With apologies, I neglected to include my name. The previous comment was written by Scott Eshelman.

  4. My question for Scott is - what should the unions have done years ago and what should they do now?

  5. I forgot to state my actual name - Shelley Gordon. Sorry about that.

  6. Shelley, read the post: "It Is a Sad State of Affairs When the Illinois Education Association Can Endorse Any of the Current Candidates for Governor."

  7. In Illinois:

    State legislators have not fully funded the state’s public pension systems for years so they can gain favor from their constituency and from their wealthy supporters. It has been said that approximately 30 billion dollars have been "diverted" from the five public pension systems; 15 billion dollars of that amount was stolen from the Teachers' Retirement System. (Total Employer Contributions to the Illinois Teachers' Retirement System Since 1970).

    “For decades, states have treated pension systems as a credit card to pay for government services and to avoid tax increases or service cuts…” (Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate (2012), Public Pension Benefits under Siege: Does State Law Facilitate or Block Recent Efforts to Cut the Pension Benefits of Public Servants?).

    In 1995, policymakers created a flawed re-funding schedule, and they have refused to correctly amortize the pension systems’ unfunded liabilities since then.

    Instead, policymakers have favored corporate interests (by providing them with unwarranted tax breaks) rather than the interests of their citizenry and; thus, they have seriously sabotaged the public employees’ retirement plans and the State of Illinois’ future economic solvency through mismanagement and fiscal irresponsibility.

    Instead of protecting public pension rights and benefits, which have a legal basis under Illinois State and U.S. Laws; instead of restructuring the state’s revenue base to pay for the state’s growth in expenditures and its recklessly-accumulated debts and obligations, some current policymakers want to diminish the public employees’ constitutional rights and their benefits, even though revenue restructuring and pension debt re-amortization are the best legal and moral solutions.

    How can it be deemed fair that so-called “pension reform” is a legitimate remediation of the state’s incurred pension debt and its revenue problems, especially when pension reform will inevitably create a severe economic disadvantage for most public employees and their families in retirement while creating an economic advantage for the wealthy among us and corporations that subsidize unethical policymakers? This is not protection of the vital interests of the citizens of the State of Illinois. It is, however, a violation of public employees’ guaranteed constitutional rights and benefits.