A new report by author David Sirota confirms that a concerted, state-by-state campaign is under way to undermine Americans’ retirement security, with a Houston billionaire and former Enron trader at the helm. What Sirota calls “The Plot Against Pensions” would kill off public pensions like the guaranteed-benefit plan run by the Texas Teacher Retirement System, would actually cost taxpayers more money, and would enrich private fund managers.
The Houston billionaire in question is John Arnold, whose Laura and John Arnold Foundation has forged a destructive partnership with the Pew Charitable Trusts’ Public Sector Retirement Systems Project. (Arnold also happens to be one of the leading corporate backers of efforts to hand over the operation of Texas public schools to private management.)
As described by Sirota, the Pew/Arnold modus operandi is first to have Pew come into a state with studies and legislative briefings to promote the idea of an imminent crisis, claiming there’s a pension shortfall that the state cannot afford to cover. Then Pew and Arnold put forward a package of proposals to address the claimed crisis by cutting pension benefits. And then Arnold funds the political/lobbying campaign to enact these benefit-cut proposals.
In a conference call to unveil the new study of the “plot against pensions,” a state legislator from Kentucky described how the Pew/Arnold combine stampeded lawmakers there into enacting a scheme that promised to reduce the state’s pension liabilities and enhance retirement security but actually will result in higher costs to taxpayers while degrading benefits.
A key part to the Pew/Arnold strategy of sowing panic is the use of big, scary numbers without putting them in any meaningful context. Thus, Pew has issued reports decrying the $1.38 trillion in pension shortfalls facing U.S. states—without clarifying that this is a 30-year cumulative total equaling less than three-tenths of 1 percent of our nation’s gross domestic product. The annual figure for the pension shortfall is $46 billion—far less, Sirota points out, than the $80 billion a year in subsidies and tax breaks that the states dole out to corporations. Yet somehow Pew and Arnold do not cite these corporate subsidies as the cause of any budget “crisis” for the states.
Pew and Arnold plainly are engaged in a misleading advocacy campaign designed to undercut public pensions. In contrast to the individual retirement accounts they advocate, like the 401(k) accounts that were devastated by the Great Recession, public-sector pensions continue to provide retirement security with guaranteed benefits to millions of Americans. What’s more, many state and local employees, including the vast majority of Texas school employees, are not covered by Social Security and thus depend on these state and local pensions for their only secure benefit. Instead of responding to a ginned-up “crisis” and enacting harmful “reforms” that tear down retirement security in the public sector, legislatures across the nation ought to be looking for ways to build up guaranteed benefits and extend this successful model to more Americans.