The myths behind public-employee pension reform

“In state after state, politically active billionaires such as former Enron executive John Arnold, finance-sector think tanks like the Manhattan Institute, and foundations viewed as centrist, such as the Pew Center on the States, have all pushed to cut public workers' guaranteed retirement income, transform pensions into 401(k)-style individual accounts, and turn over the management of pension money to, well, people like the hedge-fund CEOs on the board of the Manhattan Institute. Such reforms are then portrayed as benevolent and transparent initiatives to protect taxpayers and balance budgets.” 

“When we evaluated the ubiquitous pension narratives (Taibbi for a lengthy feature in Rolling Stone and Sirota for a report for a progressive think tank, the Institute for America's Future) we both found the same three problems. 

1. “the legend of the lazy, budget-devouring public-sector employee as the cause of America's fiscal crises has in many cases been carefully manufactured by Wall-Street-funded organizations. Their goal is to pretend that modest retirement benefits are the cause of pension shortfalls. They promote this story even though data show that stock market declines from fraud in the financial services industry were most responsible for those shortfalls. 

2. “the pension initiatives put forward by these reformers and the conservative politicians they back often propose moving America's public pension money into labyrinthine and extremely expensive "alternative investment" programs. This is done in the name of saving taxpayer money, even though these "alternative investments" involve fees paid to billionaire money managers that are often nearly as high as the cuts to public worker benefits. In many cases, that means little real savings for taxpayers and less income for retirees - but a huge payout to Wall Street.” 

3. “The third and most disturbing thing we both found is that many states have gone to extraordinary lengths to hide the details of these pension reform plans. That means public workers are kept in the dark about where their money is being invested and about how much of their dwindling nest egg is being blown on fees for high-risk Manhattan hedge funds and private equity firms. 

“Obviously, public pension shortfalls need to be addressed. But without transparency, pensioners cannot evaluate their retirement income prospects, journalists cannot accurately report on state budgets, and lawmakers cannot make informed decisions about pension legislation. That serves no one, except the wealthy special interests now profiting from an ongoing information vacuum.” 

~ David Sirota and Matt Taibbi

 

 

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...these "alternative investments" involve fees paid to billionaire money managers that are often nearly as high as the cuts to public worker benefits... that means little real savings for taxpayers and less income for retirees - but a huge payout to Wall Street. [emphasis mine]


To me that's the bottom line.

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