The refrain of privatization seems to play over and over. Our cities are going broke and can’t afford to make retirement payments; public health nurses, city park employees, and other workers who provide important services will not get what they worked hard for all their lives; and the only way out is to put pensions into the hands of privately held corporations. Or at least, that’s what the tea party and other political interests would have us believe.
Fortunately, there is a recent example of a city where people have fought back against this prevailing narrative and won: Cincinnati. Although public employee pensions may seem an unlikely proving ground for new alliances between local unions and business leaders, the people of Cincinnati showed that unity was possible when, last November, 78 percent of voters rejected a tea-party-backed ballot measure that would have drastically altered the retirement prospects for city workers.
Cincinnati’s resounding defeat of an organized effort to privatize public employee pensions is surprising because of the broad spectrum of people who opposed it. As a supporter of organized labor and an opponent of pension privatization, I was struck by the way in which unions and their community allies were able to mobilize major business executives, faith groups, seniors’ rights organizations and even the local chamber of commerce around a single outcome: safeguarding stable retirement for the people who have worked for it.
The yarn that cities can’t afford to honor their pension obligations is one that has spread across the country thanks to a big media push by conservative think tanks and communications outfits. As Cincinnati approached last November’s election, a three-person group called Cincinnatians for Pension Reform (with the clever abbreviation CPR) signed up over 15,000 names in less than a month to put Issue 4 on the ballot. A writer for Labor Notes magazine wrote in October that “Paul Jacob of the Virginia-based Tea Party group Liberty Initiative Fund has put more than $81,000 into CPR thus far. The conservative California-based National Taxpayers Union has put in another $52,000. Liberty Initiative has funded similar anti-retiree measures in other cities.”
Issue 4 would have amended the city charter to turn city employees’ defined-benefit pensions into 401(k) plans, shifting administrative payments to private fund managers. It also would have drastically shortened the timetable for paying off the city’s debt, demanding deep cuts to city services to pay it down more quickly.
Issue 4 was based on a model provided by the American Legislative Exchange Council (ALEC), a national group backed by conservative billionaires Charles and David Koch that sponsors tea party candidates and pushes right-wing legislation in states and cities. While it’s true, as these groups point out, that some municipal and state employee pension funds have been chronically underfunded, draconian proposals such as Cincinnati’s Issue 4 tend to do more harm than good. In Rhode Island, for instance, the state allowed its public employee pensions to be handed over to hedge funds for private management. This move has resulted in public funds being handled in total secrecy by Wall Street banks that do not have retirees’ best interests at heart. Insisting that cities and states shift the pensions to a stock-market-based model removes public control of the public funds. And demanding that the unfunded portion of the pensions be addressed by slashing services is a move that hurts people across our cities.