For years, right-wing groups have been beating the drums to roll back decent pensions and retirement benefits for American workers. At the federal level, Wisconsin Congressman Paul Ryan, ranking member on the U.S. House Budget Committee, proposed a “Road Map” plan to privatize social security, cut payments and slash Medicare benefits for all seniors.
Similarly, state-based conservative groups like the American Legislative Exchange Council (ALEC) have called for cutting public employee pension and health care benefits and replacing them with less secure 401k-style plans that would inevitably leave many retirees in poverty.
Yet despite these attacks and in the midst of financial meltdowns in the private sector, state public pensions are largely a success story, riding out the economic storm, delivering benefits to families, helping drive economic demand in state economies, and projecting solvency for decades to come.
Don’t Believe the Hype
It’s unfortunate that a report last week from the Pew Center on the States added to right-wing doomsaying about state retirement systems with its alarmist title, The Trillion Dollar Gap: Underfunded state retirement systems and the road to reform. In fact, the actual substance of the report paints a pretty positive story about fiscal responsibility by most states and highlights well-funded pensions with trillions of dollars in assets available to deliver benefits in coming decades.
As this Dispatch will emphasize, there is no crisis in most state retirement systems, even according to the numbers of the researchers demanding state leaders take unneeded action to cut the incomes of retirees. And despite the hype from a few carefully selected anecdotes of retirees gaming pension systems, the reality is that the overwhelming number of public employees receive pretty bare-bones benefits, in some cases not enough even to keep them out of poverty.
We do need a debate on public pensions, but one that sees protecting them as part of a broader campaign to restore retirement security for all American workers, especially in the wake of a stock market collapse that has revealed the empty promises of Wall Street in hyping 401k-style private accounts as a substitute for the guaranteed retirement income of social security and defined-benefit pensions. Public pensions are actually a key tool for driving economic growth in the states, both through the purchasing power of retirees themselves and through the direct investments of pension assets in job creation. Any reforms undertaken should be done to both enhance the positive economic role of retirement systems in our state economies and to increase equity among retirees to raise living standards for low-income retirees.
Follow the must-read Progressive States Network analysis on the ideological wars being fought over public pensions.
