Rhode Islands Democratic state treasurer, Gina Raimondo, is fond of saying that pension reform is about math, not politics. Other blue-state politicians, ranging from New York governor Andrew Cuomo to Chicago mayor Rahm Emanuel, have moved toward fixing unsustainable pensions. But Californias top statewide political leaders have mostly shrugged at the problems caused by excessive pay and benefit packages granted to public-sector workers. The state faces an unfunded pension liability of at least $300 billion, and major cities—notably Stockton and San Bernardino—are taking the municipal-bankruptcy route; even Los Angeles is mulling the option. Until recently, even the most modest reforms to Californias public-employee compensation have gone nowhere—and though Democrats are now suddenly talking about tackling some kind of pension reform within the next four weeks, history suggests that its wise to be skeptical.
What is it about Californias Democratic leaders that makes them ignore fiscal reality and put politics above mathematics? Conventional wisdom holds that unions elect these politicians and that the politicians do the unions bidding. But in reality, the unions are the legislature. Most of the Democratic leadership in the state assembly and senate comes directly out of the union movement and identifies with the public sector. For these union Democrats, government is primarily a means to improve the financial condition of those who work for the government.
The best articulation of this vision can be found in a speech that state treasurer Bill Lockyer gave last October. As a California public official, I also believe in the principle that our nation and our state have an absolute obligation, to every American and every Californian, to ensure that when the time comes for them to put down the tools and enjoy a well-deserved retirement, those workers can live the rest of their lives with dignity and good health, and not in poverty, Lockyer said. And in my view, nothing is more important in providing for retirement security than preserving the defined benefit pension for those who have it, and restoring and reinvigorating the defined benefit leg of the three-legged retirement stool for those across the country who have lost it in the space of a few short years. Lockyer conceded that pension liabilities are a problem, but only because they are driving unacceptably high contribution rates for employers and workers, too. In other words, public pensions are a concern not because of the costs to taxpayers but because of the burden they place on government agencies and government employees. To ease that burden, union Democrats want—what else?—new taxes.
Sacramento Bee reporter Jon Ortiz, who covers state workers and unions, wrote that Lockyers speech echoed the new argument that public employee unions are making in defense of retirement benefits. And this year, the public got to see an incongruous legislative manifestation of Lockyers argument. Los Angeles Democrat Kevin de Leóns Assembly Bill 1234 would have the state, in effect, create a miniature Social Security system designed to bolster private retirement accounts—albeit at a much lower rate of return and with much lower benefits than those enjoyed by retired public employees. De Leóns bill passed the state senate and awaits a hearing before the assemblys appropriations committee—incredible as it may seem, given the legislatures refusal to give public-pension reform any serious thought.
The reason for the de León bill is union Democrats belief that the pension problem is merely, as Lockyer puts it, a very serious and virulent strain of pension envy. Instead of fixing the unsustainable public-pension system—which they regard as a success that has helped a portion of the public receive the kind of comfortable retirement that everyone should have—the union Democrats want to throw a few bones to private-sector workers afflicted with this pension envy.
Lockyers intransigence illustrates why San Jose mayor Chuck Reed says that getting any reform out of Sacramento is hopeless. Reed, of course, spearheaded a successful pension-reform ballot initiative that unions are now challenging in court. If pension reform succeeds in the Golden State, it will happen at the ballot box—in spite of the best efforts of union Democrats, who continue to defend the indefensible.