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California wants to rob you blind -- again with state-run "private" pensions ...

There is little or no doubt in my mind that California’s ruling class of elite Marxists, their union buddies and special interests are looking for additional ways to keep the union and special interest juggernaut afloat as wealth creators leave this state for more sane and tax-friendly havens.

Enter California Senator Kevin de Leon, a prototypical democrat/Marxist promoting the entitlement culture …

“Senator De León has spent a lifetime fighting to empower working families and the poor—as a community organizer, English as a Second Language and U.S. Citizenship teacher, and an advocate for public schools. During his five years at the California Teachers Association, De León fought for additional funding for “high-priority schools” in low-income neighborhoods, more school construction, and health insurance for children.”

As a Senior Associate for the National Education Association (NEA) in Washington, D.C., De León advocated for more resources for schools in low-income neighborhoods. He also coordinated a team that fought schemes to take funds from public schools in the form of taxpayer-funded vouchers. At the NEA he also thwarted efforts to impose academic censorship on public school teachers.” <Source>

And California Senate Bill SB1234 …

“This bill would enact the California Secure Choice Retirement Savings Trust Act, which would create the California Secure Choice Retirement Savings Trust to be administered by the California Secure Choice Retirement Savings Investment Board, which would also be established by the bill.”

Question One: Is the Act mislabeled?

Secure Choice? As we have seen from the financial fiasco that has followed the dot com bubble burst and the mortgage meltdown, there are few secure choices for investors when financial institutions are paying a pittance for deposits and savings – and even that does not overcome the ravages of inflation and the decline in the dollar’s purchasing power.

Question Two: Trust?

Trust? You mean like the non-existent, non-functional Social Security Trust with its plethora of government IOUs that take the place of hard assets?

Question Three: Investment Board?

Who are these people? How politically-connected will they be? Can they be pressured in to loaning the near-bankrupt State of California additional funds to keep their bloated union pensions and unionized employees afloat – all with the fiction that the bonds they are buying from the state represent a sound, prudent and productive investment? Especially in light of politicians who have ignored taxpayers and given the unions an unprecedented deal. Creating a class of untouchable political workers who are unstoppable – even when their demands are bankrupting the State.

“The bill would require eligible employers, as defined, to offer a payroll deposit retirement savings arrangement so that eligible employees, as defined, could contribute a portion of their salary or wages to a retirement savings program account in the California Secure Choice Retirement Savings Program, as specified.”

Already the money is being dissipated from day one …

“The bill would require a specified percentage of the annual salary or wages of an eligible employee participating in the program to be deposited in the California Secure Choice Retirement Savings Trust, which would be segregated into a program fund and an administrative fund, both of which would be continuously appropriated to the board for purposes of the act.”

“The bill would limit expenditures from the administrative fund, as specified. The bill would also require the board to establish a Gain and Loss Reserve Account within the program fund.”

Accounting tricks?

Now we see a bifurcation in funds – a program fund and an administrative fund. Of course, there will be those who will say you have to pay “investment banker” salaries and perks to get good people. More than faintly reminiscent of the over-paid politically-connected leadership of the bankrupt Fannie Mae and Freddie Mac. So much for the administrative fund and the plethora (or should I say remora) of consultants that will follow.

As for reserve accounts, this is where the real manipulation takes place. Transferring money near the end of a quarter to show performance and then transferring it back when necessary.

But wait! It gets worse …

“The bill would provide that the operational provisions of the California Secure Choice Retirement Savings Trust Act shall be operative only if sufficient funds are made available through a nonprofit or private entity, federal funding, or the annual Budget Act, as specified, to allow the board to study, develop, and obtain the approvals necessary to implement the program and the board determines that the program can be self-sustaining.”

Hold On! We need to create the Board to study if the program can be self-sustaining …

We need another million-plus dollar study to determine if the plan is workable. Filled with consultants who are sure to offer the politically-correct options of those selecting the consultants and paying their outrageous fees.

But of course, it won’t cost the State any real money because we can see “sufficient funds” becoming available from a non-profit or private entity. Can you spell lobbyists and their tax-exempt dodgy foundations like the ones that allows politicians to live-it up on the foundations dime. As if these monies were not returned a hundred-fold to the lobbyist’s masters in the form of state-sponsored contracts and agreements.

Who might be on this Board that will protect the working Californian from corrupt politicians?

“100002. (a) (1) There is hereby created within state government the California Secure Choice Retirement Savings Investment Board, which shall consist of seven members, with the Treasurer serving as chair, as follows:

(A) The Treasurer.

(B) The Director of Finance, or his or her designee.

(C) The Controller.

(D) An individual with retirement savings and investment expertise appointed by the Senate Committee on Rules.

(E) A small business representative appointed by the Governor.

(F) A public member appointed by the Governor.

(G) An employee representative appointed by the Speaker of the Assembly.”

Out of the gate I see political corruption and influence … 

It should surprise no one that all of the members are beholden to the corrupt politicians who are held in thrall by their union masters. If you doubt that they will exert control over the board and insure that there will be no independent opinions, just consider 100002. (a) (2).

(2) Members of the board appointed by the Governor, the Senate Committee on Rules, and the Speaker of the Assembly shall serve at the pleasure of the appointing authority.

Yada. Yada. Yada.

Read the rest of the bill and its technical provisions if you are so inclined. But be aware of the fact that this legislation is never written in stone and may be amended at any time by additional legislation. So much for the idea of a “trust” relation between the politicians and those they profess to serve.

Bottom line …

Can you trust the corrupt California politicians who continue to allocate exorbitant funding for a failed educational system because it serves the purposes of the unions who provide the politicians with campaign funds and voter support?

Can you trust the corrupt California politicians who have continued to appoint six-figure board members (mostly failed politicians between gigs) to meaningless boards, commissions and panels in this time of fiscal peril?

These are the very same people who have spent multiple millions on “high speed rail” studies for a trillion-dollar (when all is said and done) rail system that goes nowhere of interest and is likely to be the state’s greatest boondoggle. A massive wealth distribution scheme to the unions and those special interests which control the politicians.

If these corrupt California politicians – and I mean democrats and republicans alike – cannot get their fiscal house in order and continually demand higher taxes to pay for special interest projects, they have proven they cannot be trusted with the people’s money.

One look at how the bloated and mismanaged public employee pension funds have nearly bankrupted every municipality, county and the state itself should serve as a warning to those of us remaining Californians who do not buy into the entitlement culture. One need only consider the  California Public Employee Retirement System with its $85 BILLION unfunded (and growing) liability. 

If the California politicos had any cojones … they would eliminate “defined benefit” pensions at once and make workers accept “defined contribution” programs such as the 401(k) programs that are available in the private sector.

I do not condone the creation of a politically-protected class of workers who is guaranteed a life-time salary with continuing raises, early retirement, fully-paid medical benefits when the rest of us in the private sector are forced to sacrifice family funds to feed these “mediocre at best” government workers.

Ladies and Gentlemen: I call bullshit! on this legislation and the attempt of a corrupt legislature to continue on the path to California’s perdition and bankruptcy.

-- steve

Reference Links …

Senate Bill SB1234


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