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Are we shocked?

8/27/2015

By Aviva Bowen

Last week, Michael Hiltzik of the Los Angeles Times ran a story about how shutting down a public pension plan – the kind of thing that occurred in nearby Michigan and regularly in Governor Bruce Rauner’s daydreams – actually costs taxpayers money. Hiltzik references a recent study from the National Institute on Retirement Security, an organization "whose board and advisors comprise officials of public pension agencies and leading academic experts on pension economics.”
 
The upshot:
 

Amid the nationwide panic over the rising costs of public employee pensions, one proposed solution is nearly universal: States and municipalities should shutter their traditional defined benefit plans and place all new employees in a 401(k)-style defined contribution plan instead …  As it turns out, the [Wall Street] Journal -- and the drafters of the initiative -- have the math exactly wrong. The experience of states that did exactly that shows that taking these steps sharply increases pension costs to taxpayers while providing employees with markedly poorer retirement benefits.

Featured in the story is “billionaire former Enron trader John D. Arnold, a backer of the campaign against public employee pensions”:
 

The National Institute's report is a reminder that it's wise to ask who benefits in a shift in public employee pensions from defined-benefit to defined-contribution plans. Not the taxpayers, and not the employees. That leaves the major promoters of public-pension panic: Wall Street investment operators, such as billionaire John Arnold. Wall Street collects billions in fees from big public pension funds, but its take from millions of individual retirement accounts is potentially much higher. The lesson for taxpayers and public employees alike is clear: when you hear "experts" talking about how ending defined benefit plans will save everybody money, keep your hands on your wallets.

Let me put that more simply: destroying your retirement security makes Wall Street a lot more money.
 
But beyond just general outrage, why is that important to us here in Illinois? And why is that Arnold name so familiar …?
 

A billionaire Houston couple heavily involved nationwide in pension and education changes opposed by unions — issues shared by Gov. Bruce Rauner and Mayor Rahm Emanuel — has contributed $5 million to a state political action committee, campaign finance records showed Thursday.
 
The donation from John and Laura Arnold to IllinoisGO, short for Illinoisans for Growth and Opportunity, is the third-largest individual political donation ever recorded by the Illinois State Board of Elections in more than two decades of electronic record keeping. […]

That’s why. The caption that appears below Mr. Arnold’s photo in the Times reads: “What does he get out of it?”
 
Good question.
 
Beyond the Arnolds, other IllinoisGO funders have strong ties to Governor Rauner as well. So far, the PAC has produced an online video, distributed fliers, and sent misleading mailers about school funding into targeted legislative districts around the State.
 
Anyone want to wager what’s next on their agenda? I’ll bet you $5 million.

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