Not many politicians aspire to emulate former President George W. Bush. But Sen. Rodney Tom appears to be taking a page from W’s playbook with his proposal Monday to shift state workers’ pensions into a private 401(k)-style investment plan.
Bush tried to sell Americans on the privatizing of Social Security over a decade ago, saying it would give workers more control over their retirement savings. Tea party darling Rep. Paul Ryan authored the legislation for Bush that ultimately failed in Congress.
Bush and Ryan learned what Tom has apparently forgotten: People don’t like politicians messing around with their retirement plans.
Tom wants to end fixed-benefit pensions for new state workers, those younger than age 45, and move them into defined contribution plans. Tom is trying to find savings to close the budget gap, and government pension plan obligations are costly.
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This is not new to the private sector, where some businesses have stopped offering pension plans to new employees and frozen them for existing workers.
It is curious that the senator made the pension proposal without any fiscal analysis. Tom doesn’t know if his plan would save the state any money, or whether it might actually drive up state costs. Some experts estimated in 2004 that Bush’s privatization scheme would have added up to $2 trillion to the nation’s deficit over 10 years.
The Tom proposal is a radical and controversial approach to state pension reform that requires much more fiscal analysis and review by all parties involved before it can be taken seriously as legislation.