Earlier this week, an extraordinary story hit. CALPERS, the California Public Employee Retirement System, announced that it took a HUGE hit. From the WSJ:
The California Public Employees’ Retirement System, known as Calpers, said its assets have declined by more than 20%, or at least $48 billion, from the end of June through Oct. 10.
But here’s the catch. While people in 401(k)s or IRAs also took a 20% or so hit, CALPERS and other defined-benefit contribution plans are demanding that the taxpayer make up the hole in their pension plans:
Unless returns improve, Calpers is poised to impose an estimated increase in employer contributions of 2% to 4% of payroll starting in July 2010 for about two-thirds of its state-employer members, and in July 2011 for the remaining third. Any decision will be made after Calpers knows its returns for the fiscal year.
This is a transfer from already overburdened taxpayers to public employees that they didn’t even get to vote on. This is a political opportunity for the right. Corrupt unions are asking for money from the taxpayers to fill their pensions while their own pocket books are getting slimmer.
This is a bailout. And Americans didn’t like the bailout.
Note that when the bailout bill came through Congress, AFL-CIO and other unions wanted their piece of the action too:
He also said the bailout must include protections for worker pensions which suffered large losses because of Wall Street irresponsibility–a point Teamsters President James Hoffa echoed–and it must “ensure that taxpayers receive any future profit from mortgages bought by the Treasury.”
Whether you agree with the framing of "Wall Street irresponsibility" (I do, to an extent) the unions and their lackeys in Congress are going to have to explain why they deserve a bailout on the backs of the rest of us.
This is an opportunity for the right. These fights will often be at the state level over an issue that people understand: their taxes. The leaders who articulate why this is wrong will become recognizable voices on behalf of all Americans, not just the 12% in union pension programs, will become public figures.
Between this issue and the broader issue of the state budget crisis, there are the seeds of the rebirth of the next right.