By, Dr. John D McGinnis is the host of Two-Way Radio on WRTA in Altoona, PA, and former State Representative.
“Thou hypocrite, first cast out the beam out of thine own eye; and then shalt thou see clearly to cast out the mote out of thy brother’s eye.” –Matt 7:5.
State Treasurer Joe Torsella promises great things for private sector employees wanting to save for retirement with the new “Keystone Saves” plan. The Treasurer sees the need to increase their savings for retirement, which will reduce the long-term demand on the state’s Medicaid liabilities.
Call me, Skeptical.
First, retirement saving depends on take-home pay so any government wanting the private sector to save more needs to spend and tax less. That’s never under consideration in PA by either political party.
Second, employees of businesses without retirement plans can already establish an Individual Retirement Account (IRA) with a qualified administrator on their own. IRS rules allow up to $6,000 to be invested in 2019 and up to $7,000 for those over age 50. So, Keystone Saves is simply a redundancy for political theater.
Third, why have the state involve itself in something that is unnecessary and only leads to opportunities for corruption in a state with a long and extensive history of corruption? Among many other examples, the story of former State Treasurer and convicted felon, Robert McCord, should serve as a sufficient cautionary tale. Individuals on their own can find many reputable firms (Pennsylvania’s own Vanguard comes to mind) that can handle any IRA. No firm chosen by the state government is going to beat Vanguard and other successful investment companies on flexibility and cost bases.
Most glaringly, how does a government, with a $75 billion unfunded liability in its own public retirement plans, consider itself a proper agent of overseeing private sector retirement? Doesn’t it have enough to do cleaning up its own mess? Would a prudent and rational person trust anyone who has so manifestly proven they are incompetent in funding retirement obligations? Is it just coincidence that the other states going down this road also have severely unfunded public pensions?
“This ensures that all Pennsylvanians will have financial security when they retire,” Senator Pat Browne is quoted at the Treasurer’s website. How does it ensure anything let alone something for all Pennsylvanians? It’s a duplicative, voluntary program so it can ensure nothing except more power to the likes of Sen Pat Browne. That’s the same Pat Browne whose votes (Act 9, Act 38, Act 40, Act 120) and whose “leadership” helped create the monstrous $75 billion public sector pension debt. That’s the same Pat Browne who characterized Act 5 in 2017 as a great way for the Commonwealth to move forward to a better designed public sector pension plan but opted out of the better design himself for one more personally enriching. (Senator Browne is coming up on 25 years in elected office. Multiply that by 3% and then by $119,000—his current pay—and right at the moment, he can walk away with $90,000 a year for the rest of his life. Nice work if you can get it.)
If the behavior of these fiscal incompetents didn’t have such costly consequences for all Pennsylvanians, it would be Keystone Kops comical. When they say a private firm will administer the program do they have Bernie Madoff in mind? He has the bona fides suitable for our state government.
The brazenness of these trustees of SERS and PSERS, who are, now and without end, inflicting a whole lot of hurt on school districts and taxpayers across the state is just way beyond the pale.
Torsella, Browne et al claim a win-win as they get citizens to save for their retirement, which may reduce the future liabilities of Medicaid. But those liabilities have already been imposed by their dereliction and those liabilities and dereliction always falls on the private sector. So what is this idea except a targeted way to get the private sector to cover public sector incompetence—only hypocrites of the political class could come up with a lose-lose game for private citizens and call it win-win.
According to Ronald Reagan, the most terrifying words in the English language are, “I’m from the government and I’m here to help.” Do us all a favor Treasurer Torsella, Senator Browne and the rest of your ilk—take a tip from Adam Smith:
It is the highest impertinence and presumption… in kings and ministers, to pretend to watch over the economy of private people,… They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.