Faulconer’s Top Priorities as Mayor: “Pension Reform” and “Managed Competition” – Code Words for the Right’s Agenda of Privatizing Government

by on September 12, 2013 · 15 comments

in Economy, Election, History, Ocean Beach, San Diego

Kevin Faulconer Fox-News-screenshot.Kevin Faulconer - candidate for mayor of San Diego, and sitting councilman for Ocean Beach and District 2 – is staking out his priorities for his campaign, and they’re standard right-wing Republican fare: so-called “pension reform” and “managed competition” – code words for the privatization of public services and retirement plans.

In an interview with the editors of the U-T San Diego editorial page published today, Sept. 12th, Faulconer answers their questions – totally softball, as he is now the standard bearer of the GOP run for mayor and the U-T, of course, is the Republican house propaganda organ. Who would have guessed that he was their first mayoral candidate to be interviewed.

Mr. Faulconer – on the City Council for the past 7 years representing OB, Point Loma, the Midway District, most of PB and Mission Beach, parts of Clairemont, Hillcrest – was asked:

Question: What are those things we still need to do in terms of the financial stability of the city?

Faulconer’s immediate response: “First and foremost, we need to have a mayor who is committed to pension reform.” Period.  After a long-winded further response – that was rather vague in immediate details, he was asked:

Question: Ok it’s Nov. 20, you’ve won the election without the need for a runoff.  What’s your first priority?

Answer: “Several. Absolutely, from a financial standpoint, moving forward on managed competition, …”  He went on to extoll the virtues of managed competition, and also added – as every politician now adds – “getting us back into the infrastructure business, …” He also wants to stabilize the police department.

As the San Diego Republican Party does its darnedest to make Kevin look like a “centrist” or even “moderate”, he continues to espouse the standard – and right-wing, we must add – agenda of the powerful cabal that holds sway over the GOP in this town.

“Pension reform” and “managed competition” are right-wing concepts and are the favorite fare of those who wish to make government so small, that it can be drowned in a bathtub – as the Republican guru Grover Norquist  has famously declared as the agenda of the Right.  Carl DeMaio was such a proponent – and so was former-Mayor Sanders, and his allies  – which included Kevin Faulconer.

Faulconer and DeMaio both still support this hard-right agenda: privatize government and try to ban public employee unions – or at least undercut them at every turn.  Force all the services that public employees now provide into the private sector, the pro-profit sector.  This should not be a surprise as Faulconer has represented downtown interests in San Diego for most of those 7 years – until district boundaries were redrawn recently.

Who else would call maintaining the city’s infrastructure “the infrastructure business“? My emphasis.

Calling “pension reform” a priority is a diversionary tactic, critiques say. It’s a ginned-up attempt to funnel the low-level rage and resentment within the electorate against public employee unions. It’s also a chance for Faulconer to say “thanks for not running” to DeMaio, as the former mayoral candidate is helping to sponsor a state-wide ballot initiative to undermine pensions.

And calling for such “reform” is the right’s push for 401(k)’s – another grand give-away to the private sector.  401(d)s have been shown not to be a reliable source of retirement funds, but it sure helps those who finance them.

Kevin’s priority of “managed competition” is even more obviously a push to privatize what city government provides to its residents.  By requiring city departments to  have to compete with firms in the profit arena in order to get the job done, can seriously waste time and energy within those departments – preventing them from carrying out their tasks, as well as helping to destroy morale within those city departments.

Government and the governmental services it gives is not a business.  Government should not be run as a business. In fact, government works to protect citizens from the abuse of business.  Government stands between citizens and business.

So, Kevin Faulconer is ready to bring San Diego back – bring the city back from the brink of getting out of Republican control. Let’s get on with the business of privatizing government and everything it does, says Kevin.

And woe is San Diego if he is elected.  Far from being a “moderate” or “centrist” – Faulconer is another version of Carl DeMaio – much nicer, yes, but just as nasty – towards those of us who rely on government and those who work for us.

 

{ 15 comments… read them below or add one }

avatar Katydid52 September 12, 2013 at 1:11 pm

Maybe pension reform can mean reducing the amount of taxes I pay to fund retirement programs that are 10x better than my own.

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avatar Dave Rice September 12, 2013 at 10:34 pm

In my grandfather’s generation – he’s 85 and “triple dipping” off retirements from the Navy and as a city worker while drawing Social Security (but still hates people who collect “entitlements” with a passion) – city worker retirement programs were considered modest.

Government retirement plans haven’t exploded with exceptional generosity over the last few decades, private sector retirements have shriveled and are now horrendously stingy by comparison. That’s the difference.

Some people see that they’ve been screwed and want to screw others. I see others getting a fair deal and get mad that I’m getting screwed. Regardless of whether everyone’s screwed or everyone gets a fair shake, I suppose equal treatment should be the goal – we just have a difference of opinion on what the benchmark should be.

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avatar Miguel G September 13, 2013 at 3:27 am

Generosity that we the taxpayers cannot afford to continue.

States and cities have used their pension funds as a way of offering supersized payments to senior managers and favoured workers. More than 20,000 former state or local employees in California have retirement incomes of over $100,000; a few enjoy more than $250,000.

Perhaps the best-known ruse is “spiking”. Public employees inflate their final-year salary (by, for example, working overtime, or cashing in unused holiday time) to raise the base from which their pensions are calculated.

Pension reform is needed are else your father’s generation will have an unfunded plan; the cities are going bust. Reform or else the bankruptcy courts will do it for us.

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avatar Frank Gormlie September 13, 2013 at 7:44 am

To use a few anecdotal instances to paint a broad brush of all government pensions is really over the top. These are the exceptions. Find a lower-level than management city worker and ask them if their pension is out of sync. Plus, often they’re also denied social security for those years.

401(k)s are not the answer. “Pension reform” is a red herring if it’s used as a club against public employees and as a top priority, when there are so many other problems.

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avatar Miguel G September 13, 2013 at 10:33 am

Detroit may be an extreme case of fiscal incontinence. But its bankruptcy highlights a long-term problem faced by many American cities* and states; how to fund generous pension and health-care promises that are no longer affordable.

The problem has been decades in the making. It has always been easier for politicians to promise generous retirement benefits to public servants than to raise their wages. The bill for jam today falls due immediately; the bill for jam tomorrow can be delayed for decades long after the politcians have left office.

* List of Bankruptcy Filings Since January 2010

All Municipal Bankruptcy Filings: 37

General-Purpose Local Government Bankruptcy Filings (8):
— City of Detroit
— City of San Bernardino, Calif.
— Town of Mammoth Lakes, Calf. (Dismissed)
— City of Stockton, Calif.
— Jefferson County, Ala.
— City of Harrisburg, Pa. (Dismissed)
— City of Central Falls, R.I.
— Boise County, Idaho (Dismissed)

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avatar Dave Rice September 13, 2013 at 11:12 am

I think it’s misleading at best to expand the argument from city workers to include all public employees in the state before throwing out that 20,000 number, which by comparison to the total number of state employees is likely a tiny share.

I also think the phrase “pension reform” is intentionally misleading. I’d be in favor of “pension reform” if it meant closing loopholes like this “spiking” ruse you bring up. But if I understand correctly, your definition of “reform” is synonymous with “demolition” or “elimination.”

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avatar Miguel G September 15, 2013 at 5:20 pm

Avoiding pension reform, results in maintaining the status quo. The fact is we have unfunded public pensions, created by profligate politicians. In the next five to ten years the unfunded pensions will be resolved in the following ways

1. The rate of returns on pension investments will increase to between 7% and 10% (how much are you currently earning?);

2. General revenue funds will be diverted from normal operating expenses (road repair, safety, etc.) to fund pension;

3. Increase taxes and fees;

4. A combination of #2 and #3

5. A Federal bankruptcy judge will solve the problem by increasing contributions, reducing benefits or a combination of both

Change will happen, and it is better to control the change. Taxpayers need to step in where profligate politicians have failed us and demand pension reform. Pension Reform meaning:

• Public-sector workers should retire later, so that full benefits kick in at the same age as applies to Social Security payouts;

• An even bigger saving would occur if public-sector employees received defined contribution (DC) pensions. Under a DC, employers and employees contribute to a fund and the eventual pot (and thus the pension) depends on the investment return. If returns are poor, the risk falls on the employee; not taxpayers.

The reforms championed by Jerry Brown are the first steps, but must now continue. Brown’s reforms include:

Lengthening the peak-salary period from which pensions are calculated from one year to three years;

Capping the salary at which new recruits can earn pensions at $110,000.

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avatar Dave Rice September 15, 2013 at 8:55 pm

Just to be clear, I’m not advocating “avoiding” pension “reform.” I’m questioning whether “reform” is just a code word for “destruction,” as it seems to be the case with most people who use this word – not saying that’s you.

1. I have nothing, having lost it all cashing in my defined contribution plans early after a layoff several years ago. So my effective return is 0. I don’t really know what others are making, but 7-10% sounds slightly optimistic but not impossible to return given the bullish market lately.

2-4 – If this happens, it’s unfortunate, but it’s due to poor decision-making by our elected officials, and I think it’s somewhat ludicrous to blame employees because the bosses chose to intentionally fail to fund their pensions as agreed.

5. This would be unfortunate, but again I believe it’s clear where blame is to be assigned, and it’s not with workers who signed up for the deal they were offered being hit years or decades later by an employer looking to shirk its responsibilities.

Extending retirement age, capping maximum pension benefits, and taking a three-year average of peak pay rather than basing pension off a sole high year are all constructive ideas, and I think you could sell those to me and a lot of other fence-sitters.

Introducing a “defined contribution pension” sounds to me like a disingenuous way of saying workers should be forced into a 401(k) plan (therefore throwing out the window everything that’s been said about “reform” versus “elimination”), except it would be even worse because they’d have no control over their investments. That’s the only part of your proposal that’s sticking in my craw, though I may be misinterpreting what you’re saying. Am I wrong, or is the heart of the plan still to eliminate pensions using misleading language?

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avatar Miguel G September 16, 2013 at 1:16 pm

I think that we agree, “reform” should not mean “destruction”. In fact a well planned and executed reform can avoid destruction. Participant’s vested pension benefits should not take the blame for profligate politicians. It’s unfortunate but that is what happening in Detroit when the City, after avoiding any reform, filed for Chapter 7 bankruptcy.

I absolutely agree that participants of a Defined Contribution (DC) Pension Plan must be able to control their investments. Most DC Plan administrators and employers understand this and offer participants and number of investment options and allow participants to control their investments. To not offer participants to control their investments opens them up to lawsuits. In July of this year Cigna was added to an elite list that includes Caterpillar Inc., Bechtel Corp. and Kraft Foods Global, Inc. These are some of the major firms that recently found themselves on the wrong end of a DC pension lawsuit.

Many of us in the private sector have moved away from Defined Benefit (DB) Pension Plan because the future funding liability is too great. A DB is a type of pension plan in which an employer/sponsor promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee’s earnings history, tenure of service and age, rather than depending directly on individual investment returns. Most public-sector employees are in DB plans.

It is these DB plans that are seriously underfunded. In June of 2012, California Public Employees’ Retirement System, or Calpers lowered the expected rate of return on its portfolio to 7.5% from 7.75%. Calpers had last dropped the rate in 2004, from 8.25%. But even the 7.5% return is fiction. Wall Street would laugh if the matter weren’t so serious.

And the trouble is not just in California. Public-pension funds in Illinois use an average of 8.18% expected returns. Who wouldn’t want 7.5%-8% returns these days? Ten-year U.S. Treasury bonds are paying 2.50% [but watch what happens tomorrow (Tuesday) after the Federal Reserve meeting]. There is almost zero probability that Calpers will earn 7.5% on its $255 billion anytime soon.

I believe the hardest part of pension reform is for public-sector employees to accept the responsibility for their own investments. This is what I saw when private-sector employees moved to a 401(K) plan. Even now there are quarters when I cringe when I see how my plan’s value tanked. But there are quarters when I benefited from the rise in the market. I’m 55 years old and do not plan to retire for another twelve years. During that time I continue to contribute to my 401(k) and believe in the long term health of my investments. There are no guarantees, but I know that. Then again, I am in control of how much I invest and what my money is invested in. Public sector pension reform must provide that same control to participants.

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avatar Miguel G November 4, 2013 at 1:30 pm

Public pension reform needs to start “at the top”

Calpers Doubles Bonus Payouts to Employees as Losses Recouped

The California Public Employees’ Retirement System, the largest U.S. public pension, doubled bonuses to its staff as the $277 billion fund recouped losses suffered in the recession.

Calpers, as the fund is known, said it paid 130 employees and executives $7.7 million in bonuses last year, more than twice the $3.6 million in the previous year. Chief Investment Officer Joe Dear got $321,750 in addition to his half-million dollar base pay. Three investment officers were paid more than $200,000 each, according to data provided by the fund

http://www.bloomberg.com/news/2013-11-04/california-pension-freezes-executives-pay-cuts-bonuses.html

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avatar Miguel G September 12, 2013 at 1:48 pm

Public pensions are seriously underfunded and it is not just San Diego. The Economist, an English newspaper, ran a very informative article about the current and pending pension problems in the USA. No, it is not a right-wing publication, it supports legalization of drugs.

We cannot Google an answer to this problem, start a Facebook campaign or come up with catchy phrases like “Hope and Change”. Hard problems are difficult to solve. Read the article and “wake up and smell the coffee”

http://www.economist.com/news/united-states/21582282-pensioners-are-pushing-many-cities-and-states-towards-financial-crisis-who-pays-bill

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avatar Jeffeck September 12, 2013 at 3:24 pm

You mean he would uphold the will of the people who voted directly for those two items on ballot initiatives? Albedamned

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avatar Alan Scrivener September 13, 2013 at 8:40 am

San Diego’s pension problems are “structural,” which is a code phrase for “they will keep getting worse of nothing changes.” I can’t think of a bigger problem for a US city to face. Ask Detroit how well it works to ignore this problem for generations.

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avatar Sean m September 13, 2013 at 9:02 am

Sacramento bee: the average retirement payout for new retirees in calpers doubled between 1999 & 2012. Lenders provide cash CA needs to meet its obligations…

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avatar Sean m September 16, 2013 at 12:37 pm

Escondido’s police Chief just retired and received a retroactive 13% raise to spike his pension to $162k per year. Pensions need to be reformed. The day he retired he got put on disability, which will shield his pension from taxation. There are lots of public employees exploitoing taxpayers like this.

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