Spitzer, Pensions, and Expanding the Role of the Government

RNLA member Vinnie Vernuccio has a great piece in Investor's Business Daily today. Vinnie and Ivan Osorio effectively rebut arguments made by Eliot Spitzer. Spitzer's been making a lot of noise in the press lately while working on rehabbing his reputation.

Memo to Spitzer: It's Not Your Money

By IVAN OSORIO AND F. VINCENT VERNUCCIO

Posted 10/21/2009 07:34 PM ET

Disgraced former New York Gov. Eliot Spitzer went on a rant last week. Hurling half-truths and red herring arguments in an article for Slate, he advocated jeopardizing public workers' retirement security for political ends.

Spitzer is miffed at the U.S. Chamber of Commerce for opposing the major expansion of government power being proposed in Washington. To combat the chamber, he advocates using public pension funds as a weapon.

What Spitzer does not say is what will happen to his "weapon of choice" under his strategy. Pension funds do not have a good track record when they wield the money in their care for social and political agendas.

For example, the California State Teachers Retirement System's ban on tobacco investments cost the plan $1 billion in lost gains.

Last year, the managers of CalSTRS had to do an embarrassing about-face, saying they could "no longer justify" avoiding tobacco stocks.

The chamber, he argues, has a "right to be wrong" (apparently "wrong" in Spitzer's universe is anything that opposes the expansion of government), but it doesn't have a right to do it with "our money."

It seems to escape Spitzer's understanding that money in pension funds belongs to individual retirees, in whose benefit it is supposed to be invested. It is not his personal toy to play with as he pleases or to further his — or the fund managers' — social goals.

The full article reveals some startling details regarding union pension funds.