The Press Democrat's recent story on San Jose Mayor Chuck Reed's visit to Santa Rosa (“San Jose mayor Reed pitches pension changes,” Feb. 28) and the accompanying editorial (“The dangers of ignoring San Jose mayor,” March 2) simply regurgitate the same myths and mistruths the anti-pension crusaders have been propagating for the past five years.
The first myth is that current pension benefits are unsustainable. Pensions funds were doing just fine until Wall Street speculators crashed the stock market in 2008, causing most of them to lose between one-third and one-half of their value. But the bullish market has brought the funds back.
For example, the major public employees' pension fund in the state, CalPERS, has recouped all its losses from 2008 and recorded a rate of return of 12.5 percent in the last fiscal year. The state's second largest fund, CalSTRS, the one for teachers, recorded a 13.8 percent return in the same year. Both are way above the 7.5 percent that actuaries use to project many years out what the fund needs to pay obligations.
The anti-pensioners then use these vastly inaccurate numbers to project ever more vastly inaccurate estimates of what the funds will need to have pumped into them. Then they act as if those inflated numbers are the amount government agencies need to contribute to keep the funds viable, when in reality two-thirds of all benefits are paid out of returns on investment, not the contributions of the employer government and its employees.
Voila! With that you get the myth that “generous” public employee pensions — which actually average under $30,000 per year — are unsustainable. Then sky-is-falling politicians such as Reed whip up Armageddon hysteria and admonish that cuts must be made sooner than later or the deficits will get worse when reality says the opposite. Then newspapers and Fox News echo these “facts,” pushing mythology rather than reality.
But besides the manipulative dishonesty of the anti-pensioners, one has to ask if Reed's plan is good policy for our communities. Poverty among seniors is already a moral and humanitarian problem, but it also is a drag on the economy and requires local governments to spend more social services. Instead, if local seniors have a reasonable income, they will spend it in our communities. That will have a reverberating multiplier affect on the local economy and increase local tax revenues.
So why would we support unnecessary, mean-spirited policies that end up hurting everyone? Instead we should be looking to increase retirement security policies that make for healthier communities and vibrant local economies.
Lisa Maldonado is executive director of the North Bay Labor Council. Tom Popenuck is North Coast vice president of SEIU 1021.