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February 04, 2005

Arnie's Own Pension Privatization

While the national focus is on Bush's attack on the social security pension system, Arnie out in California is attempting a similar stunt with his attack on state employee pensions, wanting to eliminate defined benefits for future retirees and replace them with private accounts.

But the twist with CALPERS, the state pension system, is that its trust fund is invested broadly in companies in ways that enhance California's economy and promote better corporate governance.

Which the rightwing hates.

Attacking CALPERS is a way to silence voices challenging corporate malfeasance. The first step for Arnie was removing the previous president of CALPERS board, former union leader Sean Harrigan, and replacing him with an insurance exectutive. Now, the goal is to drain CALPERS of money and endanger the retirement of public employees.

But California's state treasurer, Phil Angelides, is fighting back and denouncing Arnie's plan. And he's enlisted help from other public pension fund officials around the country, who see Arnie's attack as part of a national rightwing assault on public pensions.

Angelides was joined Wednesday by North Carolina Treasurer Richard Moore, New York State Comptroller Alan Hevesi, and Nell Minow, editor of the Maine-based Corporate Library, who studies corporate governance issues...Hevesi, a Democrat who oversees the $121 billion New York State Common Retirement Fund, said the new campaign was about stopping a "right-wing cabal from protecting the evil people who have done so much to damage the economy."

"Parts of corporate America were stealing," said Moore, a Democrat who oversees a North Carolina pension system valued at $63 billion. "We helped shine a light on that."

Led by the $182 billion California Public Employees Retirement System - the nation's largest - public pension funds have campaigned for curbs on executive salaries, boundaries between the research and sales departments of investment banks and new rules that allow shareholders to nominate their own company directors. That activism has triggered a growing backlash from corporate interests who say the funds have pushed too far into their operations.

I think many progressives miss a large part of what the fight over social security privatization is about.

Kevin Drum asks "if private accounts don't solve anything, if indeed they actually make Social Security's problems worse, then why is Bush pushing them? Cui bono?"

The answer is that conservatives fear that as the social security trust funds grows into trillions of dollars, pressure will increase to invest those funds in the same way as state pension funds do. As I've argued, there is a strong logic to using social security funds to strengthen job creation in the US and expand payroll taxes in the future. Conservatives want to kill that debate before we ever get to that point, so social security privatization is their preemptive strike.

Posted by Nathan at February 4, 2005 08:55 AM