As public pensions take up a larger share of state and local budgets — and headlines — interest groups across the political spectrum are stepping into the limelight at unprecedented levels.
Still, as many public pension systems start racking up stronger investment returns that help ease the strain on public budgets, the call for wholesale public pension reform might lose some steam, observers say.
While public pensions traditionally have been seen as a union issue, the more recent voices for change are “probably more conservative,” said Frank Shafroth, director of the Center for State and Local Government Leadership at George Mason University in Fairfax, Va. “There's not great sympathy for defined (benefit) pensions, and there is enormous focus by the whole country on what's happening with Detroit,” said Mr. Shafroth, who is a former federal relations director for the National League of Cities. (Detroit in July became the largest U.S. city to seek bankruptcy protection; at the time, the acting city emergency manager said the city's two municipal pension plans had about $3.5 billion in combined unfunded liabilities.)
“To my mind, much of the opposition (to public defined benefit pensions) is really political,” said David Madland, director of the American Worker Project at the Center for American Progress in Washington, a progressive think tank. “It is not really about reform and it's not about saving taxpayers money. To me, it is about several things, including shifting the blame for states' problems, and scapegoating the unions. There is also an ideological fight by some who think that people should be completely on their own in saving for retirement.”
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, thinks the recession helped make pension reform a more frequent topic at the state and local government level, particularly where private-sector workers continue to struggle with employment and benefit coverage. “It's become a fairly mainstream centrist position. The recession was a huge opening,” said Mr. Baker.