President Bill Clinton seems to be in the money management business now. You may want to pay attention if you have a public pension. This could get expensive.
In January of this year, Clinton met with AFL-CIO President Richard Trumka to discuss the Clinton Global Initiative (CGI). A more descriptive abbreviation would be “EGO.” In June, they held the first annual meeting in Chicago.
At that meeting, a “Commitment to Action” was made by the AFL-CIO—gotta love that dues money—and the American Federation of Teachers (AFT), whose president is Randi Weingarten (the kryptonite in the pro-charter school movie Waiting for Superman). In collaboration with CGI and the Center for American Progress (think John Podesta and George Soros), “Commitment to Action” worked with fund managers to:
[R]e-invest up to $10 billion in pension assets of working families into energy efficient infrastructure as an opportunity to create hundreds of thousands of jobs for Americans, develop new industries in the United States, enhance our country’s global competitiveness, and reduce the threat of climate change.
Sounds like a plan to turn blue-collar workers into green thumbs, with start-up capital from teacher pensions, to win a climate change award from the United Nations.
It’s spreading like a weed. A coalition of employee unions chaired by AFT (including SEIU, AFSCME, NEA, the firefighters and the AFL-CIO Building and Construction Department) joined up with state treasurers and individual investment funds on the effort. These are the same state treasurers overseeing the trillion-dollar funding gap for pensions and other benefits. You can’t make this stuff up.
California, shocker, has already allocated $1.1 billion through its public pension funds CalPERS and CalSTERS. What is most concerning, though, is Rhode Island’s involvement. I found out about this through Treasurer Gina Raimondo’s website. In September, she was in New York City as a panelist at the CGI meeting speaking about “Investment and Training for American Infrastructure”:
As the Treasurer, one of my principal responsibilities is to maximize the investment returns on the state’s assets. My priorities also include strengthening the state’s financial position, and advancing economic development opportunities. While we still have a lot of study to do in this area, I am committed to exploring opportunities to identify investment structures that may achieve all of these goals.
Rather than focusing on maximizing investment returns, Raimondo should be raising serious concerns about first-quarter investment losses over 8%. She should also bring union leaders back to planet earth regarding the pension’s unrealistic 7.5% expected return. It hasn’t been met in years. To strengthen the state’s financial position, she ought to consider using long-term Treasuries as a proxy.
Raimondo continued, “This approach may be a unique opportunity to leverage the state’s investing power to grow our economy and develop the energy efficient infrastructure of the future.”
When government officials talk about “leveraging” and “investing,” it’s often followed years later by the word “losses.” Public pensions cannot afford to be led down this path. At the end of the day Bill Clinton and union leadership won’t be at your kitchen table working out your reduced budget.