Reed/DeMaio initiative threatens the middle class
By Dave Low
In their never-ending effort to force-feed warmed-over political ideas to a skeptical public, the pension attackers are back, using new poll-tested language and focus-grouped talking points to undermine retirement security for millions of working families.
Under the Orwellian moniker of the “Voter Empowerment Act,” former San Jose Mayor Chuck Reed, former San Diego Councilman Carl DeMaio and their anti-pension cohorts are proposing nothing short of gutting the public employee pension system – one of the last bastions of middle-class economic security.
They are falsely selling their proposed ballot measure as a potential cut in pensions for new employees. In reality, it could cut or eliminate pensions earned by current employees for future work.
Whether it is a function of poor drafting or something more sinister at play, a careful reading of the proposal reveals its potential reach is far more extensive than its backers admit. This proposal attempts to eliminate state constitutional protections for current and future employees to receive the pension benefits they were promised when they were hired.
What Reed and DeMaio are selling as “voter empowerment” is little more than a bait and switch, allowing governments to break promises made to teachers, nurses, firefighters and other public employees when they were hired, and to essentially rewrite their benefits without any negotiation or other compensation. Many public employees make long-term financial planning decisions based on the promises made to them when they were first hired.
This brazen assault on retirement security makes contracts for public employees meaningless, permitting voters, without collective bargaining, to increase or decrease compensation and retirement benefits by initiative and referendum. The proposal repeals 60 years of law and alters the fundamental balance of power between workers and management. It closes pension plans to new employees and prohibits government employers from contributing funds to existing pension plans to fund promised benefits without voter approval.
This proposal goes well beyond anything Reed attempted in San Jose, or what DeMaio tried in San Diego. This is an effort to undermine the very foundation of economic security and public pensions in our state. Even its proponents admit the initiative is much more than meets the eye. The San Diego Union-Tribune’s Steve Greenhut, a longtime pension warrior, gleefully called the measure a “backdoor” attack on rules that have been put in place to protect existing employees.
The truth is, despite the continued drumbeat from fear-mongerers, state and local governments have already taken steps to shore up their pension systems. In 2011, Gov. Jerry Brown and the Legislature passed extensive pension changes that raise the retirement age for new workers, and require all employees to contribute a larger share of their own retirement. The average public employee pension is approximately $2,500 a month, and every new employee must now pay half the normal cost of these benefits.
This measure would eliminate defined benefit pensions for new employees hired after Jan. 1, 2019, restricting them to either 401(k)-style plans or nothing at all, unless a vote of the electorate restores benefits. It also eliminates the current death and disability benefits for new police, firefighters and other public employees.
Voters are smarter than Reed and DeMaio give them credit for. Their latest assault on middle-class retirement security will be revealed for what it is – a cynical attempt to break fundamental promises to working families.
Dave Low is chairman of Californians for Retirement Security.