What would you say if I told you that in the state’s current fiscal climate Assemblyman Albert Torrico (D-Newark) is carrying a bill, AB 1967 (see link to .pdf below) that if passed, would cost our state retirement funds (both Cal-STRS and Cal-PERS) billions of dollars?
AB 1967, in essence, puts some pretty huge prohibitions on where the billions of dollars in these retirement funds can be invested. Of course, right now, these funds are invested (presumably) to maximize rate of return. But under Torrico’s bill, these public funds who have to immediately and forever divest from any investments with what are called Sovereign Wealth Funds, which to put it simply are those funds that are affiliated with foreign countries. Torrico’s bill does exempt any SWF’s affiliated with a country (or countries) that have signed onto a bevy of various international human rights accords. Oh yeah, the United States, were it considered a foreign country under Torrico’s bill, would not meet the criteria as we have not ratified all of these accords…
There are some instances when it is sound public policy to restrict investment options for publicly held pension funds. A great example would be last year when Governor Schwarzenegger appropriately signed into law Assemblyman Joel Anderson’s California Public Divest From Iran Act.
It is well known that the political leaders of Iran have been aiding and abetting known terrorists — that is not the kind of place we want funds being invested and, frankly, everyone in America (government or private citizen) should be joining in voluntary economic sanctions against that country.
But it’s a little far-fetched and xenophobic to say that the pension funds of California retirees (and future retirees) cannot participate in any funds that have as participants money from other sovereign nations (oh, except those sovereigns that meet some sort of intricate criteria that the United States itself does not meet).
I wonder if Assemblyman Torrico would take an amendment to his bill to simply prohibit investments by these funds with sovereign nations that are aiding and abetting terrorists? I don’t think that would solve his real agenda, which is apparently something like this…
The SEIU uber-union is driving this legislation… Why? Apparently their target is one specific fund, the Carlyle Group, that bought up a large nursing home outfit called Manor Care. SEIU has been trying to unionize them, and apparently Carlyle has been none too supportive (I have these visions of union members picketing a nursing home). Supporting the generally accepted theory that most Democrats in the legislature are stooges for the unions, everything that I have heard is that this is the real reason why Torrico is carrying this bill.
I don’t often agree with the Sacramento Bee’s editorials, but in this case they penned one in opposition to Torrico’s bill that was pretty good.
Republicans and Democrats should unite in opposition to this bill. With the massive budget shortfall facing California, the LAST thing we need to be doing is passing politically motivated legislation which will serve only to make it more difficult for our already under-funded pension pools to maximize performance.
**There is more – click the link**
April 1st, 2008 at 12:00 am
Thank you Jon for speaking out.
It’s such a big union, with so many people in it, that it makes it awfully difficult saying anything, because we are all surrounded by union workers.
However, this does not always make the leadership correct.
I am working on a project for the SEIU which basically represents all of it’s members across the United States, asking the question: Why does the National SEIU allow Federal Funding to focus on expanding union membership and expanding Federal Funding for California at the expense of all 49 other states, just to lock in the vote.
What is happening is atrocious. Low income people in all 49 other states combined together recieve far less funding than California.
And 48 counties in California combined recieve less funding than Los Angeles for many welfare benefit programs.
The SEIU handles wage issues, and things for workers, and that is great. However, once the workers are unionized, the SEIU collects their dues, and gets them to protest everything in sight, to get more money. Now they have bullied their way into insane expansion, that we simply cannot afford here in California, and LA is getting half the money.
The National SEIU should be concerned about the behavior of California’s SEIU members paying union dues, which go towards benefiting getting federal funding for all this specialized program growth in Los Angeles.
There is no citizenship or ethnicity data reporting done, now that the eligibility requirements freely allow PRUCOL non citizens to receive full federal funding, and for non citizens in general to receive state funding.
Most of the program growth has been in L.A., which means state taxpayers and the fed are potentially supporting expansion to serve 100,000 or more non citizen with benefits, plus 100,000 more plus non citizens with UNION jobs.
While L.A. and the local SEIU there can complain all they want, or the awful lobbyist who goes to bat for union members, without considering how this expansion is going to affect the state taxpayers and is unfair to all the other union members who have to pay higher pensions to share bundled FREE health care for these new union members such as the doubled number of HOME HELP IHSS members who are mostly relatives and friends of disabled people get healthcare.
While I support slow steady expansion which benefits all counties, and helps union members, the way some of these programs are legislated one counties SEIU members benefit at the expense of all 48 other counties union members, county, state and federal budgets and taxpayers.
thanks again for speaking out.
titania jones
April 1st, 2008 at 12:00 am
Sovereign Wealth Funds are not simply “affiliated with foreign countries” but owned by foreign governments. When foreign governments participate in the marketplace, their motive isn’t simply to maximize profit as it is for private actors but to advance their own national interests through exercising political influence in global asset markets.
The world’s largest SWFs are those in Red China and Middle Eastern nations, which have national interests antithetical to our own. If SWFs are permitted unfettered access to US markets, foreign nations could in effect dictate our affairs through control of domestic assets.
For this reason, other than those owned by the few nations we can trust such as Singapore, it’s probably wise for our state’s pension funds not to promote the growth of SWFs by investing in them.
April 1st, 2008 at 12:00 am
Human Events has an interesting article on this today and a very strong case is made for pulling out of these SWFs. I’m not so sure Torrico’s bill is poor fiscal policy…
http://www.humanevents.com/article.php?id=25790