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Reason Magazine Editor-in-Chief Matt Welch on California’s plan to offer a state-run retirement plan to private sector employees.
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In in the state of California.
A state with ballooning deficits and out of control pension costs set to offer and manage.
Private sector retirement plans and move my next guest says could wind up hitting taxpayers heart.
Joining me now Matt Welch editor in chief for reason magazine Matt welcome OK let's let's just talk common sense here for a second.
California has a projected budget shortfall of fifteen billion dollars -- unfunded pension liabilities 400 billion.
And they think people are going to want them to run their money for retirement.
Absolutely welcome to California a lot of in the -- points hope of course is -- -- self evidently crazy not just that.
Mean think about the public pension problems in California it's not just a half a trillion dollars in unfunded obligations it.
It's driving cities bankrupt right we've had -- -- -- go bankrupt we've had Stockton go bankrupt.
You've had kind of flakes go bankrupt at Riverside or San Bernardino is that which they're going bankrupt under the weight of these pension obligation public pension obligations.
And so now the state is saying well let's get into private.
Pension obligations.
I don't think this just there's no logic.
-- -- I don't understand the motivation for the state in the first place that that all -- problems already with public pension funds and why -- they think look people need help managing their money but why would the state do it.
Well I mean California has a very paternalistic attitude even before for everything Communist journalist that attitude towards medical marijuana of all that's -- So I indeed they mix this and so they say look but people are losing and it's true there are future people in the private sector who have defined.
Benefit pensions that's because defined benefit pensions are terrible deal you can't predict the stock market necessarily it's better to have defined contribution.
Pensions and so.
Californians -- -- liberal orthodoxy idea is OK well let's have is since people aren't doing this and businesses aren't stepping up to the plate but we need to do is to mandate.
3% out of every paycheck will go into a state managed private pension pool and only way to get out is by opting out.
Not just at the start but every two years so the mindset is that.
These -- this isn't going to happen among the private citizens and private companies unless we be enlightened California if you can on -- Paulson quote one of these enlightened few one state senator Kevin -- they all.
He says workers in small and medium sized firms are disadvantaged in their access to employer sponsored retirement plan.
84% of them do not participate in a retirement -- work implementing these bills will enable personal responsibility.
They -- might also enable California can't find some money it otherwise doesn't.
They won't enable personal responsibility personal responsibility by definition is.
I -- you -- my stuff.
What ever I feel like doing personal this is personally taking 3% -- your paycheck unless you step in and say now so it's really the opposite of that and if they really wanted to create more the space for that they would allow people to take home more of their money but what they're doing right now through a series of propositions is trying to say no we're -- people more because that's the only way that we can afford paying for example the public sector pensions and this is where the two pension pools threatened to bleed over.
Don't understand California could manage its way out of -- paper back.
Why if you think think it help explore what it -- I have no idea -- thanks for coming on tonight fascinating story.
Frustrating story -- coming up.
