THE PLOT AGAINST PENSIONS


The Plot Against Pensions: By David Sirota
http://ourfuture.org/plotagainstpensions

“In 2011 and early 2012, Pew and Arnold focused their efforts on four states.

California: Seeding a Future Ballot Initiative to Cut Retirement Benefits
Pew began in California in 2011 by making local headlines claiming the state’s pension shortfall was an emergency even though, according to The Sacramento Bee, it was anything but.
In a January 2011 dispatch, Stateline noted that the newspaper reported that because of smart investments, the state’s two biggest pension funds “erased the losses incurred during the stock market collapse of 2008.”77 A few months later, the Bee added that “With 12 percent of the nation’s population and about that proportion of the nation’s economy, (California) had just 6 percent of the nation’s unfunded pension liability.”78 Meanwhile, state actuaries pointed out that Pew evidently omitted two years of positive investment performance in order to “present a
misleading picture of the health of public pension funds.”79

One might think that with his connection to Enron – a company that according to Businessweek “played a major role in California’s 2000-2001 power crisis” – and with his infamous history pleading the Fifth when asked about energy manipulation that harmed the West Coast, Arnold wouldn’t want to show his face in the Golden State.80 Instead, his foundation donated $150,000 to a local conservative front group that generated more headlines with another draconian proposal to slash pension benefits.81

What was so revealing about this one-two punch from Pew and Arnold was that its discussion of state finances focused on benefit cuts and omitted a conversation about simply replenishing pension monies through revenue raised by limiting California’s $45 billion in annual tax expenditures (a k a expenditures written into the tax code).82

This is a particularly stunning omission because in pension terms, just three years of that annual expenditure is more than the entire 30-year, $112 billion public pension shortfall in the state.83 Additionally, many of the tax expenditures are wasteful corporate welfare. As the Los Angeles Times notes, “Hundreds of millions of dollars are spent every year on handouts to business…despite the lack of evidence that some of these programs keep employers in the state, lure employers from out of state or are cost-effective in any general way.”84 Similarly, the Howard Jarvis Taxpayer Association admitted that “many California tax breaks given to corporations constitute corporate welfare (and) actually impede economic growth.”85

Of course, Pew, Arnold and the business lobby are focused on preserving
those tax expenditures – and so they forward the notion that California’s only real budget options are either a cut in guaranteed retiree benefits or more employee contributions to the pension fund.

Though those proposed reforms were not passed by the legislature in 2011, conservative activists told California Watch that they are hopeful Arnold’s money will prompt a statewide ballot measure to force a cut in pensions. Within two years, it appears their dream is coming true. In 2013, Reuters reported that Arnold Foundation officials had “attended a private ‘pension retreat’” where “California city officials, lawyers and taxpayer groups…shared information and plotted strategy” as Arnold looks “to fund (California) groups supporting ballot initiatives that would scale back” retirement benefits.86”

foot notes
77 John Gramlich, Stateline, 1/21/11, 78 Dan Walters, Sacramento Bee, 3/3/11 CalPERS press release, 79 4/28/11 James Nash, Bloomberg/Businessweek, “Enron
80 Billionaire Bankrolls California Advocate for Public Pension Changes,” 8/11/11; Barbara T. Dreyfuss, “Hedge Hogs: The Cowboy Traders Behind Wall Street’s Largest Hedge Fund Disaster,” p. 60, 2013; Leah McGrath Goodman, Institutional Investor, “The reckoning of Centaurus billionaire John Arnold,” 2/1/1181 Arnold Family Foundation and John and Laura Arnold Foundation 2011 990 Report shows $150,000 to the California Foundation for Fiscal Responsibility. On 8/11/11, Businessweek reported that the foundation supports “a 401(k)-style savings plan as an option for future government workers, benefit limits and raising the minimum retirement age to 62, from as early as 50.”
82 Dan Walters, Sacramento Bee, “California tax breaks cost state treasury $45 billion a year,” 2/23/12
83 Pew’s 6/18/12 report “Widening Gap Update: California” noted that California faces a 30-year, “$112 billion funding gap.”
84 Michael Hiltzik, Los Angeles Times, “Corporate welfare and California’s budget deficit,” 6/18/10
85 Howard Jarvis Tax Association press release, 1/30/13
86 Tim Reid, Reuters, “Texas hedge fund billionaire seeks California pension reform,” 6/25/13 “

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About Mad Scientist

Member of California Association of Professional Scientists
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