By Will Swaim | Watchdog.org
RNC CONVENTION—I ran into former California Gov. Pete Wilson Tuesday at the Trade Winds resort in St. Pete Beach, Fla., official home away from home of the California GOP delegation. They’re here as part of the Republican National Committee’s weeklong infomercial to launch the Mitt Romney and Paul Ryan ticket.
I asked Wilson, California’s governor from 1991-1999, about his state’s ballooning pension problem, and whether Gov. Jerry Brown, a Democrat, can work with state workers to close the funding gap, now estimated at about half a trillion dollars.
Is Brown in better position than Republicans to bargain with the state’s public-sector unions?
Wilson looked at me in a way that made me wonder if he’d lost a little something in the intervening years.
So I asked again, adding that, you know, it’s possible Brown might do for public-sector pensions what anti-communist crusader President Richard Nixon did for U.S. relations with the People’s Republic of China.
“I don’t recall the Chinese ever paying for Nixon’s political campaigns,” Wilson told me.
It was a great line—indicating that Wilson hasn’t lost anything. But beneath the humor is the truth that union dues fund the campaigns of politicians who, once elected, vote to boost the pay and benefits of the union members who back them.
That cycle of immiseration has produced a pension crisis that is practically climatological or geological. It shapes everything in California state politics.
“Between them, the California Public Employees’ Retirement System (CalPERS) and the State Teachers’ Retirement System (CalSTRS) manage the pension and disability benefits of nearly three million Californians,” two California researchers wrote in 2010. “One of out every nine adult residents of the state is a member of one of these public pension plans. Yet, despite their economic influence and political importance, both CalPERS and Cal- STRS currently find themselves in their most precarious financial positions in decades. One recent analysis has estimated their combined unfunded liabilities in the hundreds of billions of dollars, and a growing number of policymakers and observers have argued that significant pension reforms are needed to protect the financial solvency of the state’s public pension systems.”
And it’s not just California’s problem. The Pew Center on the States recently estimated that the gap between what states can pay retired workers and what they owe those workers is about $1.4 billion. That estimate is likely too conservative: Pew relied on the states themselves for its data, and the states routinely overestimate the value of their Wall Street investments, the source of much of cash they send retirees.
Wilson continued talking while we walked toward the massive vinyl tent thrumming with air-conditioners in anticipation of House Majority Leader John Boehner’s speech to the California delegation. Wilson said he holds out hope for the “Stop Special Interest Money Now Act,” a so-called paycheck-protection proposition on California’s November ballot.
Even if that succeeds, it won’t stop the flow of union cash into political campaigns. And Brown is unlikely to make any dramatic flights to the Beijings of union headquarters.Instead, the same November ballot will feature Brown’s solution: he’s asking Californians to raise their taxes or cut state services—neither of which will stop the state’s death spiral.