Public Union Chief defends Gov. Dayton’s veto of Pension Bill; Calls Wall Street “Crockett’s Hungry Fox”
Eliot Seide, the executive director for public union AFSCME 5, went on the counter-offensive (or maybe just offensive) this weekend in response to my recent Strib commentary on pensions (“The perfect defeats the good as Dayton vetoes pension bill,” Kim Crockett June 13).
You may or may not want to read Mr. Seide’s ad hominem attack on me and the Center, and his defense of the underfunded pension system (“Counterpoint: On public pensions, the sky isn’t falling,” June 17). Just don’t skip the Comments. Most writers seem to be delightfully well educated on the problem of pension math and role that the public unions like AFSCME have played in creating a massive unfunded liability now resting on the shoulders of young public employees and taxpayers. That means our five-year educational effort is paying off.
By the way, that’s Eliot Seide in the green t-shirt with Governor Dayton and Chelsea Clinton at a get out the vote event for Chelsea’s mom. The photo is on the AFSCME 5 website in a post urging members to get out and vote for Clinton.
Imagine how public employees feel about being forced to subsidize this kind of political activity through dues, especially if they are not supporting AFSCME’s pick? AFSCME Council 5 has 43,000 members in Minnesota. If each pays $300 in annual dues, that is $12.9 million a year in revenue. Does “collective bargaining” really cost that much?
But I digress.
That friendly photo and Seide’s brave attempt to wave off criticism of pension funding may help explain why Dayton vetoed an imperfect but bi-partisan pension bill that passed with overwhelming support.
Here’s a choice quote from Mr. Seide regarding my recommendation that public employees be moved to a 401k: “If the conservative think tank had its way, most Americans would grow old in poverty as Wall Street gambled away their hard-earned retirement savings on the stock market. Wall Street is Crockett’s hungry fox, and Gov. Mark Dayton refused to lead retirees into the den.”
News flash: retirement funds are invested by the State Board of Investment (SBI) in a mix of stocks, bonds and other investments generally associated with “Wall Street.” So what did SBI pay “Wall Street” in 2015? Roughly $85 million to help SBI manage $82 billion (retirement funds are about $60 billion of the $82 billion in state funds handled by SBI; the report does not separate fees for pension funds from other funds).
So it would appear that Wall Street is actually “the Hungry Fox of the Pension Funds.” Whether that money is well spent on Wall Street is the subject for another day.
In reference to the pension bill’s modest reduction in (annually compounded) COLAs for retirees, Seide said this: “The cut would have reduced benefits by about $10 a month for a typical retiree. It might sound painless to Crockett, but for someone on a fixed income, losing $10 a month could mean going without medication or toilet paper.”
That modest reduction in the COLA may have cost a retiree $10 now but it was projected to save a whopping $81 million for the funds over time. $81 million could buy a lot of medication and even more toilet paper for retirees in the future, especially if it is left in the funds to grow.
Reducing the COLA was not all the pension bill could have accomplished this year, but for the Governor’s unexpected veto. Perhaps the bill, very much needed by the pension funds, can be resurrected in a special session deal.
To end, when I quickly scanned the article over the weekend, I thought Mr. Seide, who can actually be a lot of fun, had called me a “Fox.” In reality, he called me a “Chicken Little” and Wall Street a “Hungry Fox.” Oh, well.