A.J. DiCintio
Multiple cracks in the public pension cookie jar
By A.J. DiCintio
June 17, 2012

As events in Wisconsin have greatly helped the country understand, retirement promises made to public employees are so lacking in actuarial soundness that experts estimate public pension plans nationwide to be underfunded by $3 trillion dollars, a number that may well be significantly higher, given the kind of madness that had Wisconsin's teachers contributing to their pension at the rate of zero.

Not that the Badger State is unique with respect to the problem. Just this week, for example, the NY Post praised the Manhattan Institute for reporting the mathematically astounding information that last year "more than 10 percent" of New York policemen and firefighters qualified "for pensions above $100,000."

Now, there are only two realistic options for setting this inevitably disastrous pension path straight.

Solution One requires lowering benefits to bring them into line with strict actuarial realities that include what taxpayers and employees can afford to pay into the system, thereby eliminating today's "unfunded" pension liabilities, which constitute yet another instance of the moral and fiscal madness called generational theft.

Solution Two eliminates defined benefit pension plans entirely, replacing them with the kinds of defined contribution plans common in the private sector.

Sadly, however, the very politicians needed to carry out the reforms, including many of the nation's most powerful political leaders, have a vested interest in the status quo.

As outlined by the Manhattan Institute's Steven Malaga in his WSJ article "State Politicians and the Public Pension Cookie Jar," reform is desperately needed regarding legislator retirement programs "that are . . . more generous than those of . . . government employees."

Often crazily generous, as revealed by the article's report that right before he retired, former Chicago Mayor Richard Daley complained about the dangerously onerous costs of Chicago's public employee pensions only to forget all about pension burdens when he retired and eagerly took advantage of an "obscure loophole" in Illinois law to enrich himself with both a legislative and mayoral pension that pays him, in total, $183,000 annually.

Honesty does require reporting that the article makes no mention of Daley's receiving a pension from his many years of service to the Chicago Political Machine. Of course, that's because the nation's most notorious political gang doesn't offer one, rightly believing its most important members are more than richly rewarded during the course of their employment.

Next, Malaga turns to the New Jersey Legislative Machine, whose politicians not only offer themselves benefits more generous than those granted ordinary state employees but permit their pensions to be paid as soon as a legislator qualifies, the double dipping as they collect a legislator's salary notwithstanding.

Undeniably, the double dip represents a very ugly twist on the notion of pensions. However, after learning this from the article, no ordinary citizen will regard it as the ugliest, most contemptible pension contortion.

"The online site New Jersey Watchdog recently reported on a triple-dipper: state Sen. Frederick Madden, Jr., who earns a $49,000 salary as a senator, a $106,983 salary as a police academy dean, and an $82,272 annual pension as a retired police officer."

As his article goes on, Malaga expands upon the State Legislator Pension Problem. But in the interest of brevity this commentary will stop here on the issue, except to observe that a whole lot of other states have legislator pension schemes in need of being analyzed and exposed by whistleblowers and other honest citizens who have not just the brains but the stomach for the work involved.

Next, there is the problem that by their very nature, politicians find it nearly impossible to keep their expediently rapacious hands off state pension funds.

One instance occurs when, having one of their incessantly recurring urges to spend without asking the public to pay, politicians fail to make state contributions to a fund, using the money for apparently more important purposes and exhibiting not the teeniest twinge of conscience as they lay the cost of their rotten duplicity on the state's children, living and yet to be born.

Another arises when governors and legislatures disregard actuarial reality to offer temporary retirement incentives, ostensibly to create jobs through new hires but in reality to reach a political accommodation with unions.

In Pennsylvania, Republican Governor Tom Ridge was guilty of this con, which like others of its kind, erodes a retirement fund's fiscal integrity and ultimately saddles the public with the bill.

And another when politicians worm their way into making investment decisions regarding pension fund investing, ignoring the fund's fundamental need for meticulous due diligence in favor of satisfying desires having to do with rank cronyism and mindless ideology.

For an excellent example of where those despicable aims were likely at work, we turn to California's CALPERS AND CALSTRS, the nation's largest public employee retirements funds that placed hundreds of millions with investment firm Yucaipa.

That's the Yucaipa whose billionaire head Ron Burkle hired close friend Bill Clinton not just to secure public pension clients but to serve as an investment adviser . . .the Yucaipa that claimed it was dedicated to investing in "lower-income urban and rural communities". . . and the Yucaipa that actually invested in Al Gore's Current Television and made other investments that appeared to define its "real emphasis [as] Democratic cronyism."

(Quotes and content above taken from Peter Schweizer's excellent exposé, "Bill and Hillary's Teacher Pension Perfidy," as posted at gabriellecusumano.blogtownhall.com.)

Still not convinced about the significance of politician-directed pension fund raiding in California?

Then consider that an article in the Berkeley Political Review gushes over "[an] initiative launched by former [Democratic] California State Treasurer (and CalPERS trustee) Phil Angelides, which mandated investment in environmental technologies and environmentally friendly companies."

And consider that . . .coincidence of coincidences!. . . one of those "green wave" initiatives "[invested] 50 million in a London-based socially responsible investment firm founded by Al Gore."

Yes, sir, if that information about Al "Green Has Made Me Fabulously Rich" Gore doesn't get you fired up about the multiplicity of cracks in the public pension cookie jar, including the one having to do with status quo loving politicians at every level of government, you just might be one of the true believing ideologues who would jump at the chance to turn every penny of their life savings over to the king of the Public Pension Status Quo crowd, Barack "Solyndra" Obama and his team of crack investment associates.

© A.J. DiCintio


The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
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A.J. DiCintio

A.J. DiCintio posts regularly at RenewAmerica and YourNews.com. He first exercised his polemical skills arguing with friends on the street corners of the working class neighborhood where he grew up. Retired from teaching, he now applies those skills, somewhat honed and polished by experience, to social/political affairs.


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