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SB 512 — 'Something Wicked This Way Comes' — is back like Banquo's ghosts... Civic Federation skews 'research' to promote destruction of pension plans for public workers

Glen Brown - February 01, 2012

The past theft of pension assets in Illinois was quite easy for a few governors and some legislators; even for other rogues, who bargained for money-enhancing incentives (spiking) for retiring public employees at the expense of the many that they would leave behind without their exorbitant financial perks to retire early. We know who the indifferent scoundrels are today and about their schemes to steal even more monies from the public pension funds. These are the same types of perpetrators that still advocate a radical “pension reform” bill without reading it or understanding its consequences. That was then.

Laurence Msall of the Civic Federation of Chicago oversees "research" that always provides a supposedly "non-partisan" basis for right wing legislation aimed against Chicago's public workers and public worker unions. Msall was a participant in the semi-secret "working group" discussions on public pensions held at the Chicago offices of House Speaker Michael Madigan in September and October 2011. Above, Msall during the September 12, 2011 meeting, where he was seated at the main table along with representatives of all the public worker pensions from Illinois. Left out of Msall's analyses for the Civic Federation are the accurate histories of political manipulation and gross underpayment into most of the funds under discussion. For example, Msall's allies promoted the ending of the tax that guaranteed the Chicago Public Schools contribution to the CTPF in the early 1990s. That decision by Illinois legislators opened the door to the repeated raiding of the Chicago pension fund by Chicago officials and to the current screaming claims that Chicago Public Schools face a "pension cliff" that the school children will fall off of. Msall's apologetics for his allies in the Civic Committee and the higher reaches of corporate Chicago are legendary. Substance photo by George N. Schmidt.Now comes, once again, the Civic Federation (based in Chicago), claiming to do "non partisan research." They are a very good example of why we must guard against the so-called “expert” testimonies and negotiating that will be used to influence the Illinois legislators’ decision this spring regarding radical “pension reform,” arguments based upon omissions or adjustments to make the pension systems appear less funded and “indisputably” in need of urgent “reform.” We must guard against the disingenuous claims embodied in their demand for radical “pension reform.”

Be aware of our legislators’ mantras: “retirees are living longer now; current teachers’ salaries are increasing; the expected rate of return on pension assets will not be what it was in past years; the state’s costs are too high; Illinois has to reduce its expenses to remain economically competitive; we will have to cut services to schools and health care for the elderly; we have to make some hard decisions; we cannot reduce the liability without reducing benefits; the pension systems are unsustainable; health care costs are skyrocketing; it’s about shared sacrifice; we have to do something!”

We should know by now how statistics used for pension liabilities are based upon changing assumptions that include interest and mortality rates, asset returns, estimates of what the state will have to pay in the future, preferential accounting rules and undisclosed influences on legislative decisions. Most of us are aware how certain elements from media, especially Illinois Is Broke, Fox News and the Chicago Tribune, attempt to garner consensus from the wealthy business community, where it succeeds quite easily, and propagate distorted information and scaremongering schemes to a mostly oblivious public by using deceptive practices to distract them from carefully examining more sensible and ethical solutions to the problems.

Dee Meyer of the Civic Committee of the Commercial Club was an active participant in the meetings held at the offices of Michael Madigan in September and October 2011. Above, Meyer, with hands flat across the table, was seated beside Kevin Huber of the Chicago Teachers Pension Fund during the October 12, 2011 meeting of the group, while (among others) Chicago Teachers Union staff coordinator Jackson Potter (rear, right) looked on. Substance photo by George N. Schmidt.We should realize that there is a real incentive for some executives from the Civic Committee of the Commercial Club of Chicago, Civic Federation, and for others like them to aggressively attack the public employees’ pension and to inflate the liabilities of the public pension systems while promulgating their fallacious suppositions. We have learned about the types of criminals who can orchestrate the collapse of a pension system.

There were hundreds of examples of these in the private sector during their buildup to their current attack on public workers' pensions. Consider Victor Rice’s blustering “with cognac and cigars” after he accomplished his “organized liquidation” of the retirees’ pension for Varity Corporation, (Rice later collected $50 million in severance after he sold the company in 1999), or chief executive Patricia Russo’s slow and deliberate destruction of the employees’ pension and benefits in 2005 at Lucent while using what remained of the pension savings to pay executives’ million-dollar bonuses “because that’s what it’s going to take to continue to attract and retain the talent required to build this company back to where we want it to go.” Examples of this style of Machiavellian bravado are not exceptions in today’s plutocratic worldview.

It is our duty to protest against any diminishment of the public pension systems and public employees’ benefits or any sort of financial restructuring thereof before it is written into law this spring. Consider that defined-contribution plans will obviously create no liabilities for the state but generate enormous profits for the financial sector (of which 40 percent of the Civic Committee are members). They are the spawns of defunct defined-benefit plans from the private sector.

State Rep Darlene Senger's promotion of attacks on the defined benefit pension plans of Illinois public workers has become legendary. Senger (along with Rep. Tom Cross) co-sponsored the attempt by Chicago Mayor Rahm Emanuel to take over the Chicago municipal employee pension funds during the last session of the Illinois General Assembly (which took the form of HB 3827). While the Chicago Tribune and others who are attacking public worker unions push the so-called "scandals" of a handful of public pensioners, the corporate media in Chicago ignore the fact that Republicans like Senger stand to profit themselves personally from the kinds of "reform" that they are promoting. Senger also works as a Financial Planner and would gain an enormous amount of business under reform.We should ask whether the Civic Committee and Sidley Austin’s past preemptive assault and semantic word-game manipulation was meant to test a possible reduction of benefits in the public pensions without violating Article XIII, Section 5 of the Illinois Constitution? Does anyone believe that members of the Civic Committee (and many legislators of the 97th General Assembly) care about whether a public employee has any retirement plan at all? Who has the most to gain by radical “pension reform”? Might they be the executives of the Civic Committee, the Civic Federation, and certain legislators who wish to align the public pension systems with the financial industry? Will reducing the state’s unfunded liability become another means by which the Civic Committee, at al. manufacture even more profits? A Robber Baron’s philosophy includes the dictum that cutting pension benefits will produce gains for employers.

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