One of the biggest unreported, blockbuster stories in modern America is the alliance between public sector unions and the speculative banking industry. It is a story saturated in greed, drowning in delusion, smothered and marginalized by an avalanche of propaganda – paid for by taxpayers who fund both the public sector unions and the public employee pension funds.

The problem with public sector defined benefit pensions can be boiled down to two cold factors: They are too generous, and they rely on rate-of-return assumptions that are too optimistic. The first is the result of greed, the second of delusion. To indulge these vices requires corruption, and it is a rot that joins public sector unions with the most questionable elements of that Wall Street machine they so readily demonize.

If you honestly review the numbers, the greed is obvious. The average pension for a public servant who has worked 30 years or more in public service is more thanfour timeswhat the average social security benefit is for someone who has worked 40 years or more in the private sector. To cite… Read More

Shame on You! I am appalled to see your “quick facts” focus almost exclusively on public pensions. This is not the stuff of an independent, non-profit think tank. It is clear to me that you are pursuing an “agenda [that] includes opposing … [universal] health-care and climate-change regulations, reducing union protections and minimum wages, cutting taxes and business regulations, tightening voting restrictions, and privatizing education.” As Tracie Sharp, the president of the SPN, noted, your collective goal is apparently to “win in your state.” Californians will not accept your push back to the 1920’s (and look what happened then); we are on to your partisan goals and funders.

Submitted via the CPPC “Contact Us” form by a University of California professor on 11-16-2013

There are myriad ways to respond to these accusations. For starters, they don’t question whether or not our “Quick Facts” are factual. That’s too bad, because they are.… Read More

During the most recent year for which there is publicly available data, the fiscal-year-ended 6-30-2012, the California State Teachers Retirement System contributed a $1.1 billion paymenttowards paying off an unfunded liability of $71.0 billion. This fact, and much more, came out in a California Public Policy Center study released last week “Are Annual Contributions Into CalSTRS Adequate?”

Now let’s suppose you have borrowed $71,000, and you are paying a 7.5% interest rate on this borrowed money. Do you think you would ever have this debt paid off, if you only paid $1,100 per year? How would that work? Isn’t 7.5% interest on $71,000 equal to $5,300? Wouldn’t a mere $1,100 payment put you further in the hole by $4,200? Wouldn’t you owe $75,200 by the end of the year, more than the $71,000 debt you started with?

Multiply by a billion and you’ve got CalSTRS.

And this same disastrous, wishful thinking is playing out in nearly every “professionally managed” public sector pension fund in California. Every year, the combined unfunded liability… Read More

“I believe there is a different way – and that is to work with the Republican members of every labor union and help empower those Republican union members to put additional pressure on their union leadership to spend Republican dues money on Republican causes.” – Jim Brulte, Chairman, California State Republican Party

Well that’s one way. And if you are tasked with reviving a political party that is financially challenged, ideologically conflicted, with dwindling membership and almost no power in the state legislature,you face tough choices.

The concept of constructive engagement with members of labor unions is a good one, although recognizing the validity of the concept is not the same as endorsing specific tactics. If unions, especially public sector unions, begin to financially support both major political parties more equally, anyone who believes in limited government will be in for a long, cold winter of cascading disappointments. There will still be choices for voters. They will vote Republican to expand the security state. Or they will vote Democrat to expand the welfare state. And crony capitalists, already on the… Read More

Whenever anyone suggests that public sector unions are forcing their members to make political contributions, the unions retort that the contributions are strictly voluntary. Technically speaking, this is true, but the tedious process of opting out of making political contributions is a powerful deterrent.

The California Teachers Association, for example, allow their members to become “agency fee payers,” which means they no longer belong to the CTA, do not have to make political contributions, and merely need to pay their “fair share” of the collecting bargaining expenses from which they still presumably benefit. But even if a CTA member has served written notice and been given agency fee payer status, they still will have 100% of the regular union dues withheld from their paycheck as full members; about $1,200 per year. They then have to request, in writing, between Sept. 1st and Nov. 15thevery year, that the CTA issue them a check for the portion of their dues that was used for political spending.

This amounts to a rigged system that ensures that very few CTA members bother to opt-out, and even fewer manage to consistently… Read More

Reactions from the press and public to the BART strikes this year have been overwhelmingly negative. In one of the safest Democratic strongholds in the U.S., there is serious talk of outlawing future BART strikes.

Asreportedin the San Francisco Chronicle on October 19th, “That discussion has already begun, in letters from California lawmakers to Gov.Jerry Brown, from state Sen.Mark DeSaulnier, D-Concord, who said he “looking into legislation that could prevent future strikes,” a petition drive by aDemocratic… Read More

“Public employees have a private interest in taking more and more of the taxpayer-generated revenue for themselves. In other words, public employees have a private interest in diverting public funds from public services to their wages and pensions. In this sense, the increasing numbers of public employees and their increasing wages and benefits threaten to hollow out public services in our country.” – Roger Berkowitz, Executive Director, Hannah Arendt Center

The above quote explains quite well the intrinsic conflict of interests that accrues to public sector unions. This conflict of interest is the primary distinction between public sector unions and private sector unions. It is the reason that private sector unions can muster strong arguments for their continued relevance in society, whereas the very legitimacy of public sector unions is questionable. And lest anyone suggest that calls for reform – if not abolition – of public sector unions emanates solely from the “extreme right wing,” consider the provenance of the above quote, and go away. The highly regarded, intellectually elite… Read More

One of the overwhelming challenges facing fiscal conservatives is how to cut government spending without harming economic recovery. It may seem obvious that governments eventually have to stop relying on borrowing to finance their deficits, but eliminating government spending deficits can only partly rely on spending cuts. Economic growth is the other essential element.

To explore and catalog worthy prescriptions for economic growth, the California Public Policy Center has launched a new project, theCalifornia Prosperity Forum. We seek informed and constructive policy ideas and analysis from any source,guided by our core belief that prosperity and opportunity will return to California through a combination of common sense reforms in Sacramento, greater freedom for the private sector, and innovation in our public schools.

Opponents of austerity are not only concerned about the potentially negative impact of reduced government spending on the economy, but also the ability of individual government workers or beneficiaries of government entitlements to pay their bills. This concern is… Read More