Wednesday, November 09, 2005
The Libertarian Perspective #22 Oct 18, 2005
Evil in Our State Capitol
I've been involved in politics since the Prop 13 campaign in 1977. I've dealt with opponents of every stripe—from honorable adversaries to thieves, liars, incompetents, and idiots. But in all that time I've never felt I was dealing with a person who was truly evil—until last spring.
What was this evil? I saw four state senators, all Democrats, passively watch a tragic collection of distraught and sobbing police widows testifying at their pension hearing, suffering under the mistaken impression that the governor's proposed pension reform measure would cause them to lose all their benefits, leaving them destitute. These senators knew this was not true, but stayed silent for political gain at the expense of these widows' emotional well-being.
Here's the story. In February I was invited by a State Senate committee to testify as one of the three taxpayer advocates on a panel speaking in favor of Governor Schwarzenegger's plan for transitioning new state workers from the current defined-benefit plan to a defined-contribution plan.
The purpose of the governor's proposed pension reform measure was to end the huge taxpayer obligation to fund bloated, guaranteed-payout pension plans, passed retroactively without funding. The full cost comes due years later, usually after the politicians have left office.
Such a modest reform is a crucial first step in bringing our runaway state pension programs under control.
Before we taxpayer advocates had our turn to speak, the labor unions presented dramatic testimony against the change. The dishonesty was stunning.
First, a union official flat out lied. He falsely claimed that the proposed measure would forbid the state government from providing either a death benefit (essentially group life insurance) or a disability benefit to employees. No employer in America, public or private, is forbidden from offering such benefits, and this union hack knew it.
Then this union boss brought forward eight carefully selected people, each of whom had a tragic tale to tell. The three police widows were especially moving. The other speakers were a burned local fireman, a shot-up policeman, a school bus driver having trouble making ends meet, and two school teachers—one working and one retired. Most cried, or were near tears. They weren't acting—these people were generally hurting, or thought they were.
Here's where the evil became apparent. Most of these people had been prepped to believe that they were going to lose their existing pension or disability benefits.
Several of the witnesses pleaded with the state senators to not take these benefits away. Police widows wailed that they didn't know how they would survive without the death benefit annuities that they and their kids were receiving. Yet not one of their legislative "allies" at this hearing would tell them that they were misinformed—indeed, that they had been lied to by their labor union bosses!
I can't emphasize this point too strongly: The measure proposed did not reduce any benefits for the existing employees. It would affect only those employees hired after June 2007.
As despicable as the union's misrepresentation was to its own members, the true evil I saw sat in the elevated state senate seats looking down on the presentations.
Five state senators watched these employee presentations, four Democrats and one Republican. The lone Republican, Tom McClintock, tried desperately to get the committee chair, Senator Joe Dunn, to allow the author of the bill (Assemblyman Keith Richman) to tell these folks that their concerns were totally unfounded.
Senator Dunn would have none of it. The cameras were rolling, and he wanted this dramatic testimony broadcast at any cost. Dunn knew the premise was false, but would say nothing.
The Democratic Party sells itself as the party that cares about people. But you'll never see four more uncaring people than Democratic State Senators Dunn, Nell Soto, Debra Bowen, and Christine Kehoe. Not one of these politicians would tell these frightened people that their benefits were and are safe. To allow those widows to leave the room crying—thinking that they were at risk of losing their husbands' death annuities—was the single most evil act I've witnessed in all my years in politics.
I found it ironic the Senator Dunn would try to make nervous testifiers feel comfortable by intoning that they should feel at ease because "this [Capitol] is your house." Well, I left "my" house feeling unclean and ashamed of our state politicians. I hope I never again witness such a reprehensible act.
The following is from a longer article at http://www.heartland.org/Article.cfm?artId=17833
Fabry: How are taxpayers affected by this? (This conversation is on defined-benefit pension plans for public employees vs. defined-contribution. Public sector and a few large, old-school manufacturing companies are the only ones still using defined-benefit plans. Unfunded liabilities killed off defined-benefit plans everywhere else in the US.)
Clifton: If public entities continue to use defined benefit plans, they cannot maintain their financial position without major tax increases. During the 1990s boom, state pension plans were flush and were actually overfunded. The politicians then moved to increase benefits. In 1999, former California Gov. Gray Davis (D) boosted public employee pension benefits dramatically--allowing many to retire at age 50 or 55 with 90 percent of their salary for life--without almost any debate.
Moreover, the benefit enhancements were retroactive. Neither employees nor the state had been paying for these benefits during the workers' lifetime. They were paid from existing plan assets, therefore increasing the unfunded liability.
While this plan was sold as a "cost-free" measure, the change actually cost California $10 billion in added liabilities over 20 years. Many states did this during the 1990s.
Those rapid pension asset gains should have been held without benefit increases to smooth over the down years that followed. Had this been the case, the resulting stock market downturn would not have had a major impact on the pension system. Unfortunately, though, politicians continue to use the pension system as a slush fund to garner votes from public employees.
Fabry: What do you see as the major roadblocks stopping reform?
Clifton: Public employee unions. It is really that simple. I spoke at the pension administrator conference last August and told them, "The crisis is upon us. You can be part of the solution or part of the problem." I offered to work with them in developing solutions. Instead, they continue to keep their head in the sand and want no changes to this antiquated system. At some point they have to realize they are holding onto a dinosaur.
When I testified in California in support of the governor's plan, what I saw was shocking: The public employee unions presented widows of slain police officers and injured firefighters and lied to these people, telling them that under the plan they were going to lose their survivor and disability benefits. Yet, the plan was for retirement only and would never affect these kinds of benefits. The senators holding the hearing knew this was the case and still let the circus continue.
At that point I realized the public employee unions would stop at nothing. For them, it is not about the retirement security of public employees, but about the power of controlling their workers' money as a slush fund for political gain. I was offended by the theatrics, to say the least.
But with all that said, the current system cannot continue. And it just is not sustainable for politicians to continue raising taxes on working families to pay retirement and health care costs for public employees, when these taxpayers are struggling to save for their own retirement and health care.
There will be a breaking point. Hopefully we can reform the system before we reach it.