Smoke, Mirrors, and Pension ‘Reform’
By Mary Ellen Flannery
Public pensions are under attack across the U.S. From Arizona to Florida, state governors and legislators have been moving to cut pension benefits for retired teachers and other public employees, and enroll new workers in 401K-style “defined contribution” funds instead of traditional, secure “defined benefit” pensions.But a close look at the numbers shows that pensions aren’t the real problem in these states. Yes, some pension systems are underfunded, either because politicians diverted their required contributions or because investments went sour during the recession. But the real problem, according to a report from “Good Jobs First,” a national policy resource center, is the huge amount of money that states are throwing away on corporate tax cuts, loopholes, and subsidies.
Consider Michigan, where state pension costs add up to about $586 million per year, while the annual cost of Gov. Rick Snyder’s giveaways to corporations near $1.9 billion. Or Florida, where pensions cost the state about $900 million per year, and, thanks to Gov. Rick Scott, wealthy corporations get away with a whopping$3.8 billion. (For additional state figures, visit goodjobsfirst.org.)
The Plot Against Pensions
If you think this just a coincidence, you’re just plain wrong. Rightwing activists, with very deep pockets, are behind these attacks on workers. In Florida, Americans for Prosperity, a group funded by the billionaire Koch brothers, teamed up with lawmakers this spring in an attempt to overhaul that state’s pension fund and protect their own financial interests. ““If the Koch brothers have come into Florida and want to influence how we do our pension system, the only reason I see that they are doing it is for monetary benefit,” explained retired teacher Phyllis Compton. Thanks to the efforts of the unions, the pension-gutting bill was defeated in the final hours of the legislative session.
A recent report from the Institute for America’s Future, called “The Plot Against Pensions,” shows clearly that the Pew Charitable Trusts and the Laura and John Arnold Foundation are working in tandem, especially in Arizona, Kentucky, and Rhode Island, to “manufacture the perception of crisis and press for cuts to guaranteed retirement income.” The Arnold Foundation, which was started by an Enron billionaire, also gave millions of dollars to pay for the one-sided PBS series, “The Pension Peril.” (The good news is that earlier this year PBS returned Arnold’s money and pulled the series when Arnold’s motives came to light.)
NEA believes strongly that retirement security shouldn’t be for wealthy people only. We know public employees have faithfully contributed their fair share to their pensions — typically 8 to 10 percent of their paychecks — and we understand that an insecure 401K-style plan is no substitute for a pension. In addition, one-third of teachers are not covered by Social Security so their pension is their only source of retirement income. (For more about NEA’s positions on educators’ pensions and additional resources, see Smoke, Mirrors, and Pension ‘Reform’ | NEA Today:
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