From Cadillac to Chevy
Pension reform—not typically a hot political issue, nor one full of
intrigue—has emerged as a major platform element for candidates running
for governor, legislator, and state treasurer in many locales. As almost
everyone is beginning to understand, the standard public-sector
practice of paying out a guaranteed monthly stipend (called “defined
benefit”) is proving fiscally unsustainable, the more so when joined to
generous health-care benefits. The private sector has been shifting to
defined contribution plans (think 401(k)). So how does America, in the
face of entrenched public-sector practice and intense union lobbying,
make a similar shift for its state and local employees—teachers
included? We take the matter to the voting booths. On November 2,
California voters in ten cities (including San Francisco and San Diego)
will see ballot initiatives aimed at reining in public employee pension
costs. Polls suggest that most of these Golden State voters favor some
reform. Over on the East Coast, pension reform is receiving top-billing
on gubernatorial candidates’ platforms. The Republican candidate for
governor in Florida has already dropped $1 million on television ads
slamming Democratic nominee Alex Sink, the state’s CFO, for losing
billions of dollars by poorly investing the state’s pension funds.
Equally big stories around pension reform are popping up in New York,
Minnesota, Nevada and Oregon—to name a few states. This “things need to
change” public sentiment has GOP candidates riding high, and those on
Democratic tickets scrambling to find a voice that people want to hear.
It’s doubtful that November 2010 will be marked on the tombstone of
defined benefits, but the upsurge of interest around this seemingly
mundane topic has us hopeful.
“Pensions Become a Heated Issue in 2010 Politics,” by Stephen C. Fehr, Stateline, October 1, 2010.