Mar 9, 2009
Los Angeles city politicians say the two city employee pension funds are short almost one billion dollars. So now they try to blame cuts in services they have started, and lay-offs they are threatening, on the “high cost” of retiree pensions the funds can’t meet.
But if the funds are short, it’s because of what the politicians have done with them! Under the guise of “investments,” city politicians have been handing hundreds of millions of dollars from the pension funds to businesses. For example, the L.A. pension funds, the majority of whose board members are appointed by the mayor, put 50 million dollars into a real estate fund headed by Henry Cisneros, a former U.S. cabinet member under Bill Clinton.
It’s no different in other cities. In Detroit, pension funds “invested” heavily in real estate, mortgages, small businesses and so-called “alternative investments,” losing 30% of their value in 18 months. Details of two of these investments were revealed by the local press. One was in a hazardous waste plant that has been closed down for environmental violations. The other was in a telecommunications company that never repaid its debt, but later got a big contract from Detroit Public Schools.
The pattern is repeated over and over for many large city and state pension funds across the U.S. The Detroit Free Press recently listed 13 of them that have lost 20% or more of their value within the 18 months ending last December.
If there is not enough money in the pension funds, it’s because politicians and bosses have been looting the funds for years. And they – not retirees, active workers or city residents – are the ones who should pay for it!