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Exposed: California’s Secret Plan to Gut Public Pensions

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Lynn Parramore: A new California memo is just the latest example of Wall Street’s attack on workers’ pensions.

Jaisal Noor, TRNN Producer: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore.

A newly leaked draft California ballot initiative authored by conservative groups would drastically slash retirement benefits for current public employees. The document was obtained by Frying Pan News and comes amidst growing concern of an attack on public pensions being carried out by Wall Street and their political allies.

Now joining us to discuss this is Lynn Parramore. Lynn is senior editor at AlterNet and a contributor to the Huffington Post. Her recent piece for AlterNet is titled “Wall Street Wages Secret War against Pensions”.

Thank you so much for joining us, Lynn.

Lynn Parramore, Senior Editor, Alternet: Great to be here with you.

Noor: So, Lynn, what can you tell us about this leaked memo or leaked draft ballot initiative in California and what the implications could be if that’s passed in 2014 for California?

Parramore: Absolutely. This is just the latest example of a campaign that has been sweeping across the country while everybody’s paying attention to other matters, you know, like all the shenanigans that are going on in Congress right now. A bunch of plutocrats have gotten together and decided that it’s a good time to swindle the American people yet again. And this time they’re going after public pensions. They are waging war on people whose only crime is to get up in the morning and go to work and serve their communities. It’s an audacious and cynical attack on people who, you know, have no responsibility for the state budget shortfalls that, you know, some of these groups are screaming about.

In the case of California, you know, you look behind the scenes, and it’s the same old players. In this case it’s the Reason Foundation, which is a conservative libertarian think tank allied with—big surprise—the Koch brothers. And, you know, the PR campaign they put on is to blame workers for the budget crisis in the state of California. And it’s just absolutely outrageous. But they have a lot of money, they have a lot of bought politicians in their pocket, they can buy up a lot of the media, and so, you know, they have been very successful in pushing this agenda.

Noor: Now, is there a real crisis over pensions? I was reading a report by David Sirota for the Institute for America’s Future, and in the report he kind of points out the pension shortfalls, and he compares them with corporate tax breaks. So in California, where this ballot initiative could be up for a vote next year, the pension gap is $3.7 billion, but annual tax subsidies are $4.5 billion a year for corporations. And across the United States, public pensions face a 30-year shortfall of $1.38 trillion or $46 billion on an annual basis. But as is pointed out, that’s dwarfed by an $80 billion a year tax breaks to states and cities. What’s the length there?

Parramore: So what’s really going on here is, yes, states and cities are having trouble with their budgets. But guess whose fault that is? Not an elementary school teacher or a firefighter. The people that caused these shortfalls come from two camps. One is Wall Street, which drove a financial crisis which ruined budgets throughout the country because tax revenues dried up, and another group are politicians who are allied with Wall Street and who have been playing funny little games once they’re in office, and they have been diverting money that has been meant for pensions into whatever pet project they choose. And, you know, a lot of people think that that’s actually securities fraud, but, unfortunately, authorities haven’t done anything really to stop them.

So, yes, there are monies that have been diverted away from pensions, but, you know, we look to the culprits. I’m talking to you from New York City right now, and the culprits are about a mile down the road here on Wall Street. And so the pensions are experiencing a shortfall—not a huge shortfall when you think about the numbers, but, again, [incompr.] of asking ordinary working people to shoulder the burden of that shortfall when they’re not the ones that caused it. It’s Wall Street. Wall Street has been soaking pensions for decades now in a variety of ways. They have engineered all kinds of schemes, all kinds of fancy, innovative financial products that end up blowing up in the face of, you know, municipal budgets and state budgets. You know, you might have heard about the LIBOR scandal, where a bunch of big banks got together and rigged international interest rates that causes shortfalls in pensions because it mucks around with the rate of return. So they’ve been at this for quite some time now. And, again, the idea of blaming this on workers and pretending as if, you know, something as paltry as a $25,000 pension, which is about the average in California, is somehow blowing up the state budget is ridiculous and very, very cynical.

Noor: So, Lynn, is enough being done to challenge these cuts to public pensions around the country?

Parramore: It’s very, very difficult for ordinary people to wage war against this problem. You know, we have politicians that are captured by Wall Street. We have regulators that are captured by Wall Street. We have all this money coming and being thrown at a PR campaign which is essentially a lie, and it gets repeated all the time in the media. I mean, most people believe that there is some unfunded liability crisis going on in the states that requires cutting pensions, and it’s just a fiction. It simply isn’t true. And again, where the shortfalls occur, the corporate subsidies you mentioned and the ridiculous Wall Street fees that are placed on managing pensions, you know, hedge funds are getting into the game, that’s where you should deal with the money problem.

But states all over the country, not just California, but Arizona, Rhode Island, Florida, they’re all under attack. And when you really start, you know, kind of peeling back the curtain and you see who is behind there, it’s the absolute worst of the worst. When I say plutocrat, in the case of Rhode Island there’s a guy named John Arnold who’s been throwing a lot of money at this lying campaign, and he comes straight out of Enron. You know. So he’s a billionaire who made his money at Enron and clearly doesn’t have the public interests at heart at all.

And really what this is all about is privatization. It’s about transferring money from the 99 percent to the 1 percent. We’ve been lucky that people like David Sirota and also Matt Taibbi over at Rolling Stone have been calling attention to this, and you guys on The Real News Network. But, you know, the mainstream media has not been paying enough attention to this problem.

Noor: Lynn Parramore, thank you so much for joining us.

Parramore: Thanks for having me.

Noor: And we’ll certainly keep following this story. Thank you for joining us on The Real News Network.

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