Do the American Federation of State, County and Municipal Employees and the National Conference of Public Employee Retirement Systems wink when they say they support Social Security in its current form?
AFSCME represents public employees. About 75% of its members participate in Social Security as well as public employee pension programs. The other 25% don't participate in Social Security and have only public employer-sponsored pension programs to secure their retirements.
NCPERS represents retirement systems that sponsor pensions for public employees. Some 70% of those members are covered by Social Security. The other 30% are not.
AFSCME and NCPERS take positions against radical reform of Social Security. They should rethink those stands and get behind privatization efforts.
Their views stem from fear Congress might try to make Social Security participation mandatory for public employees, as has been proposed in the past. Mandatory coverage would bring more contributions into Social Security to bolster its financial condition (but add to its deficits later when benefits would have to be paid).
But both AFSCME and NCPERS want to keep those members not covered by Social Security out of the system. They recognize Social Security is a bad deal, compared with the funded pensions provided by those states and municipalities that have stayed out of the Social Security system.
They worry that mandatory Social Security coverage for those workers would lead state and local governments to reduce the generosity of the pension benefits for them.
They would be swapping healthy funded benefits, which the union can negotiate to increase regularly, for unfunded benefits only Congress can change.
But if Social Security is a bad deal for 30% of the union members, why is it not also a bad deal for the 70% who are covered? Clearly it is, and change is needed. Still Jay W. Bixby, president of NCPERS, in an interview, said, "Don't mess with the Social Security structure." This is a short-sighted and contradictory view.
If it is OK for the retirement benefits of 30% of public employees to be secured only by investments in stocks, bonds, real estate, etc., why is it wrong for part of the Social Security benefits of the other 70% to be secured in the same way?
If a pay-as-you-go Social Security system is the ideal, why do not the leaders of AFSCME and NCPERS advocate pay-as-you-go pension systems for public employees? Because pay-as-you-go is unworkable, long term, that's why.
Mr. Bixby and Gerald McEntee, AFSCME president, say they are inclined to support the president's idea to allow the Social Security administration to invest 15% of assets in stocks. They like the idea because it would collectivize risk. Union officials like collective solutions. They generally oppose ideas that might give their members any increment of independence, like self-directed Social Security accounts. Every bit of member autonomy reduces union officials' power.
Few groups have the luxury of the laboratory they have, enabling them to observe both types of pension programs. The groups could make a contribution to reform, to enhance benefits and security, by showing how those with only market-based pension coverage have fared compared with those with both Social Security and pension coverage.