A credible media figure (i.e., not George Skelton) has emerged to defend Democratic lawmakers’ “pensions for all” proposal. SB 1234 would require private sector employees to pay 3 percent of their wages into a low-risk pension fund in return for a small guaranteed retirement benefit. In Prop Zero, Joe Mathews took issue with my description of the plan as “baked.” I think the first reaction of most people would be fury over the fact they were being forced to take a 3 percent pay cut to fund a novel, untested state program they had no reason to trust. Joe said my reaction and those of other critics was understandable but “completely backward.” Yo, Joe, say it ain’t so. Yo, Joe, when it comes to SB 1234, I like my side’s odds.
Why does Mathews think it makes sense? Because its emphasis on low-risk pension funds could midwife a more cautious approach to public sector investment returns’ assumptions and usher in a new era of realism at CalPERS.
While this proposal offers a modest, low-risk pension plan for private workers, it has even greater potential as a new, smarter, safer approach to pensions for everyone — including public sector workers.
This seems like an excessively complicated way to address CalPERS’ habit of trying to disguise its vast financial problems and bully its critics. But even if you think Joe Mathews is onto something when he makes this point. he still doesn’t address SB 1234′s manifold shortcomings. It’s not accurate to imply that the bill was dismissed by critics without being fully scrutinized. When I wrote about this on Feb. 23 after reading the bill analysis on leginfo, I identified lots of problems and obstacles:
1) It can easily be depicted as statewide 3 percent pay cut for private sector workers at a time when many are counting every last penny.
2) It can also be depicted as a truly bizarre response to the real pension crisis: requiring everyone who doesn’t have one of the great public employee pensions to invest in the state’s low-rent version of Social Security.
3) Does anyone really believe that this program wouldn’t morph into something that’s partly or largely subsidized by taxpayers or (more likely) private employers?
4) It is built on the assumption that everyone in the private sector is an idiot without the forethought to prepare for retirement. Poverty among the retired is low — even among those who don’t enjoy for decades 75 percent of their highest pay from their government pensions.
5) It presumes a faith in government that I just don’t think Californians have.
If Joe has his public-policy-analyst hat on and thinks there are worthy aspects to SB 1234, that’s one thing. But if Joe is in political analyst mode and actually thinks this will fly with the public, I’ve got a subdivision in Lake Elsinore that I’d like to have him take a look at.
To believe Californians in the private sector have anywhere near the level of faith in state government to accept losing 3 percent of pay on an ongoing basis to fund a state-overseen pension fund … well, that is hard to believe.
A shorter description comes to mind. You guessed it. This view is, yes, baked..
Back to you, Joe. When it comes to you and SB 1234, to paraphrase Moses Malone, I want mo, mo, mo!
P.S.: Yes, emailers, I know that I said last week that this week I would be on vacation. In my defense, I just had no idea I would face such provocations. I will try to avoid the fray tomorrow. But I have a bad feeling that the bullet train’s ludicrous new business plan may bring me back to Calwhine on Tuesday night.