Politics: A Pension for Politics
Norquist, Grover G.
POLITICS by Grover G. Norquist A Pension for Politics I f the Iowa McCaughey family of septuplet fame has already made a personal contribution to strengthen the demographic trends that favored...
...All numbers in 1998 constant dollars...
...In 1996 Kaloogian introduced a bill to give all state employees the option of moving to a portable defined-contribution pension...
...It flees high-tax states and high-tax nations...
...More revealing is that while the number of defined-benefit plans fell from 1o3,000 to 84,000, the number of employees covered grew from 33 million to 40 million...
...Breaking up the Michigan pension fund is an important step in undoing what Peter Drucker called "pension fund socialism...
...Today, a state employee knows his salary and pension are controlled by politics...
...By contrast, the stock market has grown an average of 7.5 percent over the past seventy years —a period that includes the Great Depression, bumps, and "corrections...
...These millions aren't coming from thin air...
...An electorate withreal wealth in the stock market will bring the property tax revolt to the capital-gains tax and the inheritance tax and the corporate-income tax...
...Phone: 703-243-3733, ext...
...a 30-year, $267,468...
...He will care about cutting the capital-gains tax...
...The federally-created Social Security system now has a $6 trillion unfunded liability...
...But a worker with a defined-contribution plan doesn't lose his investment if he moves to another state or is hit by a bus...
...From 1975 to 1993, the number of private-sector defined-contribution plans rose from 208,000 to 619,000, and the number of workers covered by such plans rose from 12 million to 44 million...
...Scientists predict that when his 401K rises above $225,000 the Truman Democrat becomes a Reagan Republican...
...In debating Kaloogian's reform, a Republican state legislator or city councilman can look government workers in the eye and say, "I want to make you rich...
...It also permits those who switch to withdraw their contributions and the state's contributions and the built-up interest and place it in the equivalent of a 401K...
...Republicans will soon find new support in their campaign to abolish the inheritance and capital-gains taxes...
...There is one difference between the previous investment in houses and new pension wealth in stocks...
...In the fall of 1996 Gov...
...The investment moves with him and transfers to his estate at his death...
...It stipulated that all new hires after March 31, 1997, would automatically go into the new defined-contribution plan, while all previously hired state employees would have the option during the first four months of 1998 to 72 March 1998 • The American Spectator switch over from the state's defined-benefit plan...
...A state worker earning $40,000 a year and contributing io percent of his income—combining his and the state's contribution—into a defined-contribution plan will, after ten years at work, have $54,333 in his account...
...While debating pension reform will be a boon to Republican candidates and incumbents, enacting such reform could prove fatal to the Democrat coalition...
...In a hearing on Kaloogian's bill, union leaders actually said out loud that their members were not smart enough to invest their own money...
...Each month he receives a letter informing him whether his investments have grown (or not...
...The politics of America will never be the same...
...He knows the only way to get a raise or better pension is to work through his union to elect or lobby politicians...
...And also just how untruthful they are—Kaloogian's bill gives workers the option to switch plans, it doesn't mandate it...
...While Republicans have found a winning issue to use with government workers, labor bosses and their domesticated Democratic pols are fighting this reform...
...The rate of return on the investment is assumed to be only 5.5 percent...
...a 2o-year employee $128,751...
...Unfunded liabilities for Washington, D.C.'s police, firemen, and teachers' pensions now surpass $5 billion...
...And after forty years, $576,476...
...Countless economists and political scientists have written about how the deductibility of home mortgage interest payments has encouraged more and more Americans to own their own homes and how this development has created high levels of property ownership and made Americans more "conservative...
...I want you to retire with hundreds of thousands of dollars in your 4oiK...
...Michigan and New York have one each...
...One measure of a city or state's irresponsibility is the size of its unfunded pension liabilities...
...He can point out that more than half of all state employees never invest in state pension systems because they move or shift jobs...
...Polling questions in the future will have to ask not only for the respondent's income, but also his wealth...
...John Engler signed pension reform into law...
...If these giant pension funds are not broken up and distributed to individual, worker-controlled 401Ks they remain a tremendous temptation to those, like Jesse Jackson, who wish to use state and private pensions for "social investing" or "economically targeted investments...
...Currently, most state and federal employees use a defined-benefit pension program in which annual payments are calculated by the number of years worked and an average of the last few years' salary...
...The state of the general economy, the value of the Dow Jones average, capital gains, business investment—these have no effect on his pension...
...Unlike homes, capital is mobile...
...The largest fifteen state pension fund systems have a total of $667.1 billion invested by a grand total of 128 individuals on the governing boards...
...By August 9, both houses of the legislature had unanimously passed a defined-contribution option for all employees of the California The GOP has a plan to help government workers...
...Ofii Advertiser Index By patronizing the companies and products posted in this issue, your positive response rewards them for advertising in one of the gems of American publishing, The American Spectator...
...Democrats, on the other hand, love to appear before government workers and promise them ever-sweeter pension plans...
...Address: The American Spectator, P.O...
...The creation of millions of IRAs, 401Ks, and other direct-contribution plans will have a similar effect in creating a propertied class...
...These traditional pensions are not only expensive for taxpayers because of unfunded liabilities, but a lousy deal for most state workers...
...Washington Times National Weekly Edition pp...
...By creating Individual Retirement Account- or 4°1K-like plans whereby employer and employee contribute annual amounts into an account controlled and invested by the employee, Kaloogian's pension reform plan hands the GOP another winning issue...
...After twenty years he will have $147,14+ After thirty years, $305,677...
...81 & 85 p. 67 P. 3 p. 6 p. 91 P. 5 p. 20-21 p. 67 p. 65 p. 2 p. 95 p. 69 p.13 p. 25 p. 19 P. 9 p. 29 p. 23 p.17 p. 45 p. 61 p. 72 p. 11 To learn more about the benefits of advertising in The American Spectator, contact: John Funk, Associate Publisher—Advertising...
...But a state worker with a defined-contribution pension is a property owner...
...The American Spectator • March 1998 71 university system and Gov...
...Taxpayer activists now plan to pass pension reform similar to Michigan statewide law and Kaloogian's California legislation in twenty more states over the next five years...
...They receive back only that part of their salary (plus interest) that was paid into the pension fund...
...In the words of a California Teachers Association lobbyist, "Our members don't have the time nor the knowledge to invest the money...
...For instance, a worker after thirty years of work might receive 6o percent of his last three years' salary...
...California's system has thirteen trustees...
...Evidently Floyd is sensitive to the plight of state legislatureemployees, who rarely work more than ten years as legislative staffers and are particularly disadvantaged by defined-benefit plans...
...But a state employee with $200,000 or $300,000 in his 4o1K is likely to bristle at Gephardt's "soak the rich" rhetoric...
...Pete Wilson has signed it into law...
...As with Paycheck Protection—which allows Republicans to stand with the rank-and-file against union bosses who spend their dues on politics without their permission—pension reform allows Republicans to defend workers against boss-control of their pensions...
...He can argue that defined-benefit plans discriminate against minorities and the handicapped —both groups with shorter life expectancies—and women who tend toenter and leave the workforce rather than stay in one job for a decade or two...
...In California and most other states, government workers who change jobs or retire before working a full ten years never qualify for a pension...
...In Michigan, where the average government salary is $35,000, a ten-year employee would be transferring $47,542...
...To begin with, it gives Republicans GROVER G. NORQUIST is president of Americans for Tax Reform...
...He will watch the evening news to check on the stock market...
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...POLITICS by Grover G. Norquist A Pension for Politics I f the Iowa McCaughey family of septuplet fame has already made a personal contribution to strengthen the demographic trends that favored Republicans, Assemblyman Howard Kaloogian of California is making a political one: He is leading a national effort to reform public pensions that will turn millions of confirmed Democrats into Republicans...
...The American Spectator • March 1998 73...
...In May 1996 Kaloogian's bill passed 43-29 in the Republican-controlled California assembly, but was never voted on by the Democrat-led state senate...
...He can criticize the ten-year work requirement as "golden handcuffs" that keep state workers from moving to new and better jobs...
...The movement toward government employee defined-contribution plans follows on developments in the private sector...
...He will come to view government regulations and anti-growth politicians as the enemies and despoilers of his pension...
...Such impolitic talk betrayed just how much the union bosses need to control their members' pensions...
...something cheerful to say to state employees...
...Box 549, Arlington, VA 22216-0549...
...For too long Republican politicians haven't been able to tell government workers anything much more than "I wish there were fewer of you, I wish we paid you less, and I wish you would die before reaching 65 so we could save taxpayers from having to pay your pension...
...Older unionized companies are clinging to old ways while new, high-tech and fast-growing companies are moving to IRA plans...
...M ichigan will be the first test case...
...They exist in the Michigan State Retirement System, which has a total of $28.7 billion invested by the state treasurer...
...Interestingly, as a representative of the California State University system told legislators who oppose offering workers a defined-benefit plan, the option was already enjoyed by university professors and instructors, who otherwise would be more difficult to recruit...
...A state worker dependent on politicians and union leaders for his pay and pension is receptive to House Minority Leader Dick Gephardt's politics of hate and envy...
...But it's not just crack-addled local politicians who pull such stunts...
...Meanwhile, Kaloogian has introduced legislation to provide a defined-contribution option to all employees of the California state legislature—and the bill has a Democratic co-sponsor, Assembly Labor Committee chairman Dick Floyd of Los Angeles...
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...Never mind the fine print—it's far easier to win credit today for spending bills that won't mature until somebody else's term...
Vol. 31 • March 1998 • No. 3
