The myths behind public-employee pension reform
http://www.sfgate.com/opinion/openforum/article/The-myths-behind-public-employee-pension-reform-4885998.php#next
In the new fable, state and municipal workers are presented as the welfare queens of our age, historical anachronisms living fat and happy in the competition-free panacea of public service, and shamelessly living off the tax dollars generated entirely by the innovation of America's true workforce - its go-getting private-sector employees, who long ago stopped expecting their bosses to give them real health and retirement plans.
To them, the old-fashioned defined-benefit pension plan, the one that guaranteed a unionized state worker extensive health benefits and a sizable monthly retirement check until his (invariably too-distant) death, is the glaring budgetary inefficiency of our age, the first place we must turn to make the fiscal cuts if we don't want to become the next Detroit.
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One was that 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. The second problem is that 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.
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In more than a dozen states, legislators have enacted exemptions for hedge funds and other alternative investments to laws such as the Freedom of Information Act. Other states simply fail the transparency test. Rhode Island illustrates what that kind of thing means in practice. There, state Treasurer Gina Raimondo cited the need to protect Wall Street's proprietary information as a justification to hide the cost estimates of the new pension system she championed in 2012. Only after that system was ratified by the state Legislature did former Securities and Exchange Commission lawyer Ted Siedle estimate that the reforms will take the roughly $2.3 billion cut to workers' cost-of-living adjustments over 20 years and use it to pay roughly $2.1 billion in new hedge-fund fees. Raimondo later relented and disclosed at least $70 million in fees for next year alone.
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