Pension Reform Battle Just Heating Up

B-Daddy B-Daddy 7 Comments

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This is no longer news, but nevertheless important. Carl DeMaio announced that the pension reform initiative had over 145,000 signatures, with 93,346 needed to qualify. It appears likely that the initiative will qualify for the ballot. The furious counterattack by labor on even allowing a vote on the measure has been curious. Clearly they see a huge threat in this initiative. The left of center OBRAG had this to say:

The proposed initiative would eliminate pensions for all new city hires except police officers and replace them with a 401(k)-type plan. It also includes a five-year salary freeze on the pensionable pay of current workers and a cap on future police pensions, among other things. City workers would not be eligible for Social Security under the plan.

The proposal is strongly opposed by organized labor, who characterize the plan as a punitive measure that places the solution to the city’s fiscal crisis unfairly on workers. Labor groups went so far as to send volunteers to popular canvassing locations to argue their point of view after receiving reports of petition gatherers making significant misrepresentations about the petition that they were asking people to sign.

A fair characterization, no doubt. OBRAG also asked a question that perplexed me.

Even though supporters of the ballot measure have known for several weeks that they’d passed the threshold for needed signatures, the campaign has continued using a “we’re desperate” meme. Why? It turns out that signers information was being shared with the DeMaio Mayoral campaign. It’s probably illegal, but unlikely that the consequences will outweigh the benefits.

I’m not sure I believe that, but I’d like to hear from DeMaio and the organizers as to why the tone of desperation. I went so far as to predict rough sailing, based on my reading of DeMaio’s Facebook posts.

Meanwhile, the arguments against placing the initiative on the ballot by San Diego City Beat were that it would pass if it got on the ballot. From the comments.

Bob, I think you missed a key part of the article. See the end of the first paragraph. If the measure makes the ballot, it’ll pass, because it’s a complex issue for the average voter to process. There are a number of misleading statements being made by the pro CPR folks. We think the debate needs to happen now.

Bradley Fikes responded on sdrostra.

The CityBeat interpretation is that that the pension reform measure will pass if it qualifies for the ballot because it’s too complicated for voters to understand. (A nice way of saying the voters are stupid and gullible).

Comments and articles from both sides of the issue make me believe that even if the initiative qualifies, there will be millions more spent by both sides. There will also be some carping about how expensive and unseemly all the spending is. Too quote Dean, “Democracy is, like, hard.”

Ultimately, the question is whether 401(k) pensions are fair. The left’s argument is that just because you as a private sector worker have a pension subject to the vagaries of the stock market, it doesn’t mean you should make government employees suffer that injustice. Some flaws in this thinking:

  • 401(k) plans don’t have to invest in the stock market. My own plan is only in the market 65%.
  • The new generation entering the work force will learn out how to handle this, in fact they already are. My 22 year old son has a 401(k) as well. We have discussed dollar cost averaging and sector averaging and balancing a portfolio. I have faith in their ability and intelligence. I wish I had thought to start investing at that age.
  • Workers will own their own pensions, and won’t be dependent on politicians and union bosses to ensure that they receive pensions promised.
  • Over the course of twenty years, investing in a broad basket of stocks will produce safety and high yield. The market performance of the last few years is part of the normal up and downs.

Look at this graph from visualizingeconomics.com


Most 401(k) plans have the investor re-invest dividends. There isn’t a 20 year period when you would lose money when re-investing dividends.

So why do the unions and left oppose? They fear the loss of power, because the average employee won’t need them anymore.

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Comments 7

  1. The previous City Attorney Mike Aguirre has great insights at the following link:

    http://www.signonsandiego.com/news/2011/oct/01/next-on-pension-front-filners-alternative/

    The City Unions still have the power to put forth their own plans to fix the easily solved problem. However based on the comments linked above by the Police Unions, the Unions are planning on suing taxpayers again.

    Councilman Carl DeMaio has made the case to the voters. Voters will decide if the Union’s Veto Powers should end, in order to give back power to the City Council and Strong Mayor.

  2. B-Daddy, I think (like Bob), you read our editorial wrong. We were disagreeing with the Union-Tribune’s editorial that urged folks to sign the petition and get the measure on the ballot so its merits could be debated. We argued that the debate needed to happen before it made the ballot. Obviously, it’s a moot point now.

  3. Kelly,

    B-Daddy got it exactly right. The SD CityBeat editorial can be reduced to a syllogism:

    CityBeat opposes the pension initiative.
    CityBeat believes the initiative will pass if it gets on the ballot.
    Therefore, CityBeat doesn’t want the initiative to get on the ballot.

    Period.

    There is zero chance CityBeat will support the initiative, because that would violate a core plank of the paper’s liberal/progressive agenda – support of public employee unions and of unions in general. This is not a peripheral issue on which it can afford to disagree with its constituency, any more than a libertarian magazine like Reason could endorse ObamaCare.

    Since defeating the pension initiative is a top priority of these unions, it’s politically impossible for CityBeat to support the initiative, or even to remain neutral. It has no choice but to oppose it.

    That’s the reality, and there’s nothing wrong with admitting it. Indeed, such transparency as CityBeat has practiced about its political views is entirely admirable. When you disclose your motives and ideology, and yet are correct with the facts, you gain credibility. I wish more reporters and news organizations would follow CityBeat’s example of ideological transparency.

    So please, don’t claim CityBeat just wants a debate, when everyone knows CityBeat’s real goal is to make sure the initiative never sees the light of day.

  4. Kelly, it’s funny that we never heard the CityBeat “debate the issues before signing” argument in the past when prop proponents were collecting sigs to put tax increase initiatives on the ballot.

    Surely just a CityBeat oversight, no doubt.

  5. Post
    Author

    Kelly, I am only asserting that your argument seems to give short shrift to the intelligence of the voters. By urging people not to sign, given the very short time frames to put up an amendment to the city charter, you are ensuring that a debate will not take place. Now that the measure has (apparently) qualified, I guarantee that there will be a real debate, because labor will spend considerable resources fighting this initiative. I am willing to make a friendly wager that spending against the initiative will exceed $1 million.

  6. A million dollars??? Wow. Don’t go too far out on a limb there B-Diddy. Considering labor had guys running around talking about identity fraud, and all kinds of non-sense, does anyone honestly think they will look at their finances and say, “maybe we ought to try to cheap out a couple bucks on this one.” No chance, Labor will spend big bucks, easily over a million on this. If anyone takes your wager, let me know and I’ll email them about some beach front property I’m selling in Utah….

  7. Brad,

    You’ll find plenty of instances where CityBeat wasn’t in lockstep with labor. We didn’t endorse Prop. B (term limits for county supervisors) for instance:

    http://www.sdcitybeat.com/sandiego/article-7732-something-for-everyone-to-hate-part-2.html

    We support what we feel is good, sound policy. From what we know about CPR right now, we don’t feel it’s good policy. It needs more public vetting. Unlike the U-T, we wanted that vetting to happen before it made the ballot. But, that’s now a moot point.

    Richard: Which initiatives are you referring to?

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