Skip to comments.Blue-state pension funds act to balance GOP control in Washington
Posted on 11/27/2004 11:54:26 AM PST by NormsRevenge
SACRAMENTO (AP) - On issues from global warming to corporate reform, public pension funds controlled by union officials and Democrats in states carried by Democratic presidential candidate John Kerry increasingly see themselves as counterweights to Republican control of the nation's political agenda.
As Bush plans a second term, multibillion-dollar investment funds - especially in so-called "blue states" such as California, New York, Connecticut and Illinois - have already forged alternate agendas on clean energy, the environment, executive pay, even gay marriage rights that can run counter to "red state" values.
They also view themselves as an increasingly important check on corporate power under a Republican-dominated government that typically promotes fewer regulations on business and financial markets. Their muscle comes in the billions of dollars invested in corporate America.
"We've had no choice but to step up," said California's Democratic state Treasurer Phil Angelides, a director of the nation's largest and third-largest pension funds with combined values of nearly $300 billion. "This administration has turned its back on ordinary investors, or on issues of substantial concern to our economy."
While the primary mission of enormous Democrat-controlled pension funds such as California's $177 billion Public Employees Retirement System and New York State's $118 billion Common Retirement Fund is to produce income for their millions of public sector retirees, how they do it often has fierce partisan overtones.
Unlike major institutional investors, such as private pension funds and insurance companies, public pension funds led by union officials and activist treasurers and comptrollers often aggressively rattle U.S. corporate cages, use news conferences to embarrass or shame rival causes and companies and wield their riches to push alternate economic or political visions. For example:
- As the White House and Republican congressional majorities tread cautiously on global warming, Connecticut's pension funds led by Democrat State Treasurer Denise Nappier have launched an eight-state investor assault on corporate policies she said contribute to climate change.
- As former oil industry executives Bush and Vice President Dick Cheney press for drilling rights in the Alaska National Wildlife Refuge, California's pension funds have agreed to invest nearly $1 billion in "clean" energy.
- While the White House officially supports a constitutional amendment against gay marriage, New York City pension funds run by union leaders and Democrats are successfully pressing companies in which they invest to add sexual orientation to nondiscrimination policies.
Fund leaders say it's about the bottom line.
"We do not want to see a sudden devaluation in those stocks," said California Controller Steve Westly, a former executive of the online auction house eBay, who's pushing automakers in which CalPERS has invested $836 million to embrace cleaner-burning cars. Westly and others at CalPERS, citing the U.S. auto industry's resistance to California's moves to curb carbon dioxide emissions from vehicle tailpipes, said Detroit could lose market share as Honda and Toyota lock up a growing market for hybrids.
Connecticut and New York City pension fund leaders cited similar reasons for attacking Halliburton, alleging the oil exploration and construction giant headed by Cheney from 1995 to 2000 does business through subsidiaries with terrorist nations. CalPERS has likewise pressed for a full-blown investigation into CACI International, Inc., alleging behavior of company employees at Abu Ghraib prison in Iraq damaged America's standing in the world - and threatened the company's stock values. After an initial plunge in May, CACI's stock values have thrived since August.
Big blue-state pension funds have also become leading voices for U.S. corporate reforms that include letting big shareholders such as themselves nominate company directors - a movement not embraced by Washington.
"Institutional investors came through a period where they had these lousy returns for three years and a lot of trustees were mad as hell, and they weren't going to take it anymore," said William Atwood, director of the Illinois Board of Investments. The $10.5 billion retirement fund jumped headlong into corporate reform issues after the 2002 election of Democratic Gov. Rod R. Blagojevich and new Democratic appointments to the board.
Prodded by funds in such Democrat-friendly states, public pension funds throughout the U.S. have since pushed to curb corporate salaries and reform practices of investment banks, mutual funds and the New York Stock Exchange. Among their champions: New York Attorney General Eliot Spitzer, a Democrat, whose lawsuits against U.S. businesses have overshadowed federal regulators under a Republican administration.
Republicans and their corporate allies frequently criticize Spitzer and California's Angelides as publicity hounds aiming to further their own gubernatorial ambitions. The California Republican Party has suggested that CalPERS' 13-member board of Democrats and union leaders be fired for putting social agendas ahead of profits. Although the value of CalPERS investments has jumped this year from $161 billion to $177 billion, party officials cite $2.6 billion in pension costs assumed this year by state taxpayers as proof. Fund officials blame it on losses during an economic downturn after the Sept. 11, 2001, terrorist attacks.
Likewise, the Business Roundtable, a Washington, D.C.-based group of 150 corporate chief executive officers, many of whom contributed to Bush's re-election, has opposed pension fund campaigns to nominate their own corporate directors. Their leaders said the practice could become a tool for labor unions and environmentalists to disrupt U.S. corporations.
Still, many experts still downplay an overt partisan nature to corporate reform issues, saying in the wake of corporate meltdowns like Enron and Worldcom, Republicans and Democrats equally favor making business more accountable to investors.
"You can't really characterize it as a Democratic or Republican issue," said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. Elson said Bush's re-election is likely to have little impact "one way or the other" on the issue's growing visibility.
Likewise, Nell Minow, a corporate watchdog and editor of the Maine-based Corporate Library, said public pension funds are reacting more to their financial losses than which party runs Washington. But she acknowledged that institutional investors may see Bush's re-election as an "additional risk, that we may be getting less oversight from government. That's all the more reason for the investor community to pay more attention."
Democrats nationally said the role of public employee pension funds in shaping political and corporate agendas may be more symbolic than actual when set against the massive power of the U.S. government.
Richard Atkinson, vice president of the Progressive Policy Institute in Washington, D.C., a Democratic Party think tank, likened pension funds' role as counterpoint to Republican control of Washington as a "thumb on the scale.
"We need the thumb, the hand and the arm on the scales," he said.
On the Net:
California Public Employees Retirement System: http://www.calpers.ca.gov
California State Teachers Retirement System: http://www.calstrs.com
National Conference on Public Employee Retirement Systems: http://www.ncpers.org
Connecticut State Treasurer's Office: http://www.state.ct.us/ott
New York State Common Retirement Fund: http://www.osc.state.ny.us/retire/
New York City pension funds: http://www.comptroller.nyc.gov
Hope someone is taking a real good look at the health of those pension funds.
Issues on which blue-state pension funds tackle Washington
The Associated Press
Issues on which blue-state pension funds tackle Washington:
While the Bush White House and a Republican congressional majority have moved cautiously on global warming issues, Connecticut's Democratic State Treasurer Denise Nappier and her state's public pension funds are pressing investors to consider if their money contributes to climate change. Connecticut's funds and others worth $1 trillion organized an investor summit on global warming at the United Nations and workshops at Harvard University for pension fund trustees. Other participants include California, New York, Maine, Oregon, Vermont.
While Bush and Vice President Dick Cheney have oil industry backgrounds and many in the Republican congressional majority favor drilling in the Arctic National Wildlife Refuge, California's public employee pension funds are investing nearly $1 billion in a "green wave" of clean energy and technology. California pension fund officials are also pressing Detroit automakers to greatly reduce vehicle exhaust emissions. Car makers call it a backdoor attempt to force greater fuel efficiency in California. The Bush Administration has likewise opposed higher mileage standards for automobiles.
While the nation's corporations are among the biggest financial backers of President Bush and Republican congressional leaders, public pension funds run by unions and Democrats are the loudest proponents of reforming how U.S. corporations govern themselves. With $2 trillion in assets, many funds want limits on executive salaries and investor rights to nominate board members. New York State's Democratic Attorney General Eliot Spitzer is a leading national crusader for corporate reform, far more visible than federal regulators. CalPERS and California Treasurer Phil Angelides have also been leading voices.
While President Bush has called for a constitutional amendment to ban gay marriage, New York City Comptroller William Thompson, Jr., and Democrat-dominated city pension funds have pressed many corporations to adopt policies banning discrimination based on sexual orientation. New York State's Comptroller Allen Hevesi favors civil marriages for same sex couples, saying it would trim health care costs and boost tourism revenue.
Sources: California Public Employees Retirement Fund, Offices of comptroller of New York City and New York state, Connecticut state treasurer's office.
They're picking a fight they can't win. Until these pension plans are given the power to enact laws, the more activist they become the more they will open themselves up to congressional regulation.
Describes the economic component of Fascism (which leads to the totalitarian component) to a "T", doesn't it?
Yep, let us invest in organic goat farms and camel dung as an alternative energy source. I'm sure 10 years from now as retirees ride in donkey carts and live in cardboard boxes they will appreciate these enlightened socialist investing schemes.
Short whatever these tofu munchers invest in.
Dangerous game. Let one company run into trouble and blame it on something a pension fund "required" them to do. Someone could end up getting a whoooooole lot of unwanted publicity.
CalPERS fyi ping
Hope you're having a good holiday.
In PA, when the teacher's union pension has a shortfall, the state has to make up the difference. We could all be paying higher taxes because of their mismanagement.
Yep, the liberals playing politics with the pension funds. This will jump up and bite them one day. Parley
There's a CALPERS ping list? If so, please add me to it.
Government officials / appointees should not dominate pension boards. Public employees / retirees should hold the majority of the seats. The money belongs to the employees / retirees after all. It changes ownership when it transfers from the government checking account to the pension checking account.
There is a movement in Houston to place the city pension under city government control. For some unexplained reason, the right wing radio station has been walking hand in hand with the mayor to give government more control. In fact, Freepers have been on board with the mayor in his pension pursuits when relevant threads pop up.
Aren't pension fund managers held accountable for the performance of their funds? I think some of these lefties may be looking at some big investor lawsuits.
I know their is no "teacher's union pension" in Pennsylvania. It is a simple public plan.
We could all be paying higher taxes because of their mismanagement.
I can't figure out the antecedent here. Does "their mismanagement" refer to the pension or the state?
Perfect! More power to them! An investment driven by criteria external to investing per se (social agendas, PC boycotts etc) generally underperforms. Underperforming lefty pension fund is a recruitment tool for the righties, correct?
Mismanagement is a nice name for it :)
My first thought also. Your tax dollars at work.
The liberals believe that it's "their money" and can do what they want with it. Hope the retirees sue their asses off.
State employees are the most anally retentive liberals. They would actually rather suffer monetary loss than give up on their nonsensical social justice ideals. Every public employee/AFSCME type I have ever talked to has left me shaking my head in disbelief and frustration.
Today was suppose to be the light traffic day....good luck to those coming home tomorrow....
As the storm hit in the basin with Fog and Rain the traffic was backed up the entirety of the Cajon Pass from top to bottom and to the north end of Victortille.....just incredible....
Since I knew many of the local streets I was able to bypass many miles of it....I don't want to do a quicky holiday vacation trip again ..
Well for awhile at least........rain thruout the LA Basin....high Winds in the High Desert....such fun!!!
Seeing Kith and Kin and having great food was pretty good though!
Lucky ya weren't in Reno, ya'd be snowed in.. they got hit today pretty good. ;-)
the winds are supposed to pick up here tonight too..
Fellow Freepers, Dog Gone and I are attorneys. We had the term "fiduciary duty" drilled into us with rusty spikes in law school. The trustees of these public pension funds are playing with fire.
Consider how the big buck$ law firms went after Big Tobacco and, after they won that fight, tried to find a replacement target in the gun industry. Lawyers playing in that league are truly mercenary.
Somebody just volunteered to be lunch.