[Mb-civic] Attack on Pensions

[Michael Butler]

latimes.com
http://www.latimes.com/news/opinion/la-oe-angelides7feb07.story
COMMENTARY
The Right's Attack on Public Pensions
By Phil Angelides
Phil Angelides is treasurer of the state of California.

February 7, 2005

Gov. Arnold Schwarzenegger says getting rid of public pension plans for
California's state and local government workers is about helping to balance
the budget. Peel back the budget wrapping on his plan, though, and you will
find the governor's real agenda: the California prong of a national attack
on the pension funds that have stood up for corporate reform and the
interests of ordinary families and investors hurt by the recent wave of
corporate scandal.

The governor has proposed privatizing government pension plans and replacing
them with individual 401(k)-style private accounts. His proposal strikes at
the power of public pension funds, which have used their financial clout to
protect the retirement savings of 2 million Californians ‹ teachers, police
officers and other public servants.

The governor says his proposal is necessary because pension costs are out of
control. Pension costs are certainly worthy of public debate, but his plan
requires running two pension systems: one for current workers, a second for
new workers. That would cost California taxpayers billions more in years to
come ‹ $5.9 billion in the first 10 years in the California State Teachers'
Retirement System alone. Tellingly, even four of the governor's own six
appointees to the teachers retirement fund oppose his proposal.



Why this proposal then? Because for the right-wing ideologues behind his
plan, the issue is not saving money. It is about draining public pension
funds of their clout.

As recent news reports explain, the driving force behind the proposed
pension ban is the same crew of "anti-tax advocates, free-market enthusiasts
and Wall Street interests" that is pushing President Bush's Social Security
privatization plan. They include Grover Norquist, the president of Americans
for Tax Reform, and Stephen Moore, president of the Free Enterprise Fund.
They see the governor's proposal as "one of our highest priorities," and the
governor agrees. "This is a national battle," he told reporters as he laid
out his plans to collect millions of dollars from wealthy out-of-state
political contributors.

Across the country, the governor's ideological soul mates are targeting
public pension funds for elimination because those funds ‹ with the
California Public Employees' Retirement System and the California State
Teachers' Retirement System at the forefront ‹ have stood up for ordinary
investors against the rampant corporate abuses.

"Just 115 people control $1 trillion in these funds," Norquist said. "We
want to take that power and destroy it." What bothers him and others is that
these funds have rallied other institutional investors to protect the market
from abuses and fraud and to support such corporate reforms as linking
executive pay to performance, requiring auditor independence, separating
stock analysis from investment banking at financial firms, ending insider
trading at mutual funds and opening corporate board elections to
shareholders.

Moore calls such actions a "witch hunt against corporate excess and
corporate accounting scandals," as if the abuses at companies like Enron,
WorldCom and Tyco had never happened. Jon Coupal, president of the Howard
Jarvis Taxpayers Assn., which also supports the governor's attack on pension
funds, denigrates the corporate reform efforts as "straying from bottom line
of the benefit of members."

But protecting the bottom line for members is precisely the goal of the
corporate reform movement. To ensure long-term returns and reduce risk,
large pension funds must invest to mirror markets. When scandal hits those
markets, the pension funds ‹ made up of taxpayers, teachers, police and
firefighters ‹ get hurt. CalPERS and the teachers retirement fund lost more
than $1 billion in the WorldCom and Enron frauds.

In pursuing corporate reform, the pension funds are operating not just in
their own self-defense. They are also giving a powerful voice in the
boardrooms to the interests of millions of families that have invested their
savings in the markets.

That's why the governor and his right-wing ideologues have targeted the
pension funds: not because the funds have strayed, but because they are
leading the fight on behalf of ordinary shareholders to put transparency and
accountability back into American capitalism.





If you want other stories on this topic, search the Archives at
latimes.com/archives.
TMS Reprints
Article licensing and reprint options



Copyright 2005 Los Angeles Times