Metavid

Video archive of the US Congress

Senate Proceeding on Mar 17th, 2011 :: 7:29:15 to 7:44:10
Total video length: 9 hours 9 minutes Stream Tools: Stream Overview | Edit Time

Note: MetaVid video transcripts may contain inaccuracies, help us build a more perfect archive

Download OptionsEmbed Video

Views:377 Duration: 0:14:55 Discussion

Previous speech: Next speech:

Orrin Hatch

7:29:05 to 7:29:25( Edit History Discussion )

Orrin Hatch: i'm talking about dangerously underfunded employee pensions. we hear about this problem every day in states like illinois, california, new jersey and many others. it is a multiinterest-dollar problem. let me -- it is a multitrillion-dollar problem. the underfunding of these pensions runs into the trillions of dollars. not billions. trillions.

Orrin Hatch

7:29:15 to 7:44:10( Edit History Discussion )
Speech By: Orrin Hatch

Orrin Hatch

7:29:26 to 7:29:48( Edit History Discussion )

Orrin Hatch: now how did this happen? there are two primary causes. first, governments have promised too much money in lifetime pensions. and second, governments have not set aside enough money to pay for those pensions. the shortfall tpwaoepb -- the shortfall between the money promised and the money set aside

Orrin Hatch

7:29:49 to 7:30:09( Edit History Discussion )

Orrin Hatch: is called underfunding. that is a sterile accounting term that means we don't have enough money to pay the bills. where i come from that's called being broke. it is bad enough when you go broke because you have been irresponsible with your own money. yet, it is a tragedy when governments go broke being irresponsible with taxpayer money. that is what i fear we are

Orrin Hatch

7:30:10 to 7:30:31( Edit History Discussion )

Orrin Hatch: watching as this public pension crisis unfolds. there have been many studies in recent years of a public pension crisis. there is no question about whether this crisis exists. the only question is the magnitude of the crisis.

Orrin Hatch

7:30:32 to 7:30:52( Edit History Discussion )

Orrin Hatch: one study by scholars at the kellog university indicates underfunded plans are underfunded by $3 trillion. analysts at the brookings substitute said public pensions are $2.5 trillion in the red. a study found by itself california has a $240 billion pension shortfall.

Orrin Hatch

7:30:53 to 7:31:15( Edit History Discussion )

Orrin Hatch: you heard that right. california alone has a pension debt of $250 billion. some estimated illinois is in even worse financial shape. if the states and localities do not act aggressively to address these shortfalls, then the question will not be whether the states will become insolvent but when. regardless of whose numbers and

Orrin Hatch

7:31:16 to 7:31:36( Edit History Discussion )

Orrin Hatch: which study gets the closest to the mark, there is no denying that public employee pensions face a multitrillion-dollar shortfall in the aggregate. though none will deny this shortfall, some will seek to shift the blame and shirk responsibility for this crisis. i want to nip in the bud one of the arguments of those interests

Orrin Hatch

7:31:37 to 7:31:59( Edit History Discussion )

Orrin Hatch: that would prefer to ignore this crisis. they will argue that this is not a problem of too many pension promises and the underfunding of those promises. they will try to divert attention from the fact that public employee pensions have too often not been funded on a sound basis. instead they will say that the pension funding problem is owing to the 2008 economic crisis and

Orrin Hatch

7:32:00 to 7:32:20( Edit History Discussion )

Orrin Hatch: the big businesses that they say caused it. this is way off the mark. but don't trust me. trust the numbers. this pension shortfall existed before the recession and an attempt to lay blame at the feet of wall street or big business or some other group is just blame shifting. one aspect of the problem is the governments have been slow and

Orrin Hatch

7:32:21 to 7:32:42( Edit History Discussion )

Orrin Hatch: public employees have been resistent to transitioning to the types of retirement plans that private-sector workers have been living with for years. the rest of the world has moved toward 401(k)-style plans called defined contribution plans. these plans, costs are lower and more predictable, and they fit

Orrin Hatch

7:32:43 to 7:33:04( Edit History Discussion )

Orrin Hatch: well with an increasingly mobile and dynamic workforce. yet, governments have remained wedded to expensive traditional pension plans for far too long. these old-style traditional pension plans define benefit plans owe a monthly payment for life to each employee regardless of how much money the government has set aside.

Orrin Hatch

7:33:05 to 7:33:26( Edit History Discussion )

Orrin Hatch: regardless of how well the pension assets have been invested and regardless of whether the ratio of active workers to retirees has remained stable. for most private companies, these plans proved simply unsustainable. and over time, they moved towards more flexible retirement

Orrin Hatch

7:33:27 to 7:33:47( Edit History Discussion )

Orrin Hatch: plans for employees. as usual, government is slow. it is slow to innovate and slow to adapt. so even though these defined benefit plans had the potential to cause enormous financial problems for governments, governments stuck with them. private companies learned long ago that traditional pension

Orrin Hatch

7:33:48 to 7:34:09( Edit History Discussion )

Orrin Hatch: plans are too expensive for most businesses. in 1985, 80% of medium and large private companies had a traditional pension plan. today just 30% have a traditional plan. by contrast, 84% of state and local government workers are

Orrin Hatch

7:34:10 to 7:34:30( Edit History Discussion )

Orrin Hatch: covered by high-cost traditional pension plans. and government is not just any employee -- employer. governments only exist because of taxpayers. ultimately taxpayers are the employers of government employees. yet, these governments are living in the past and playing irresponsibly with taxpayer

Orrin Hatch

7:34:31 to 7:34:53( Edit History Discussion )

Orrin Hatch: money and leaving taxpayers to foot the bill for too many lifetime pension promises. so why do these lifetime pension guarantees continue? there are many reasons. but at the top of the list is the unique character of government as an employer. private employers moved away from traditional pensions to

Orrin Hatch

7:34:54 to 7:35:14( Edit History Discussion )

Orrin Hatch: more affordable 401(k)-style plans because they can't stay in business if they ignore economic reality. yet, governments have kept their unaffordable traditional plans often because public employee unions use taxpayer-funded union days to elect state and local

Orrin Hatch

7:35:15 to 7:35:37( Edit History Discussion )

Orrin Hatch: politicians and ask the same politicians they just elected for costly pension deals. when a union bargains with a private employer, employer and employees has an interest in the business continuing as a viable enterprise. if the benefits are costly and under controllable, the business goes under and everyone is out of a job.

Orrin Hatch

7:35:38 to 7:35:59( Edit History Discussion )

Orrin Hatch: but where are -- where the interests are in a negotiation between a public employee union and the person they just helped to elect to office, where are those interests? union bosses are sitting across the table from the governor of the state. the governor they helped to elect with millions in campaign contributions and they ask them

Orrin Hatch

7:36:00 to 7:36:20( Edit History Discussion )

Orrin Hatch: for a costly guaranteed lifetime retirement package often with little or no cost sharing by the public employee. what is a politician going to say? sorry, but i can't help you? i doubt. it i want to read you something from the "wall street journal" on october 22, 2010, prior to

Orrin Hatch

7:36:21 to 7:36:41( Edit History Discussion )

Orrin Hatch: the last elections the journal carried a story about the roll of the -- was playing in that election. according to the journal -- quote -- "the american federation of state, county and municipal employees is now the biggest outside spender of the

Orrin Hatch

7:36:42 to 7:37:03( Edit History Discussion )

Orrin Hatch: 2010 elections. 1.6 million member is spending a total of $87.5 million on the elections after tapping into a $16 million emergency account to help fortify the democrat's hold on congress. last week taking out a $2 million loan to fund its push.

Orrin Hatch

7:37:04 to 7:37:25( Edit History Discussion )

Orrin Hatch: the group is spending money on television advertisements, phone calls, campaign dealings and other political efforts. we're the big dog said larry scanland, but we don't like to brag, unquote. we're the big dog? that about sums it up. and when the big dog back, it

Orrin Hatch

7:37:26 to 7:37:47( Edit History Discussion )

Orrin Hatch: expects the people it helped elect to jump. why do you think they are spending all of this money? because public employment unions care about global warming. richard trumpka, the head of the afl-cio, man who i respect, has said that he talks with the white house every day and visits a couple of times a week.

Orrin Hatch

7:37:48 to 7:38:08( Edit History Discussion )

Orrin Hatch: why do people think he's doing that? playing pickup basketball with the president? he's talking about how to benefit his unions. and lately that means public employee unions. there were some recent reports suggesting that organizing for america, democratic national

Orrin Hatch

7:38:09 to 7:38:31( Edit History Discussion )

Orrin Hatch: committee project, designed to reelect president obama, was helping to foment the protests in wisconsin. these unions are spending big-time money to elect politicians because they know the politicians will deliver big-time benefits. but the chickens are coming home to roost as we are seeing in state after state, the markets have something to say about

Orrin Hatch

7:38:32 to 7:38:53( Edit History Discussion )

Orrin Hatch: these exclusive relationships and the benefits they secure. the credit rating agencies have announced that they will begin factoring unfunded pension obligations into the calculations they use to rate the creditworthiness of states. this is significant because the total value of state bond debt is estimated around $1 billion while pension

Orrin Hatch

7:38:54 to 7:39:15( Edit History Discussion )

Orrin Hatch: debt is at least two or three times that amount. state credit ratings reveal another aspect of state budget crisis. the five states that prohibit collected bargaining over retirement benefits has moody's highest credit rating. california an illinois, which allow collective bargaining over retirement benefits for public

Orrin Hatch

7:39:16 to 7:39:36( Edit History Discussion )

Orrin Hatch: employees have the lowest credit rating among the 50 states. the next four lowest states also allow collective bargaining. i'll in the -- illinois' in the worst state of all.

Orrin Hatch

7:39:37 to 7:39:57( Edit History Discussion )

Orrin Hatch: the illinois situation is so dire that for the last two years the state has had to borrow money just to make its pension contributions. and this year illinois had to pay a 2% higher interest rate just to borrow money to contribute to its pension program. now, this is madness and it cannot go on forever.

Orrin Hatch

7:39:58 to 7:40:18( Edit History Discussion )

Orrin Hatch: 30 years ago the federal government moved away from an expensive, traditional pension plan. and setup a basic pension plan in combination with the 401(k) designed contribution plan. the system has worked well so far, although at some point we might need to reform federal pensions too.

Orrin Hatch

7:40:19 to 7:40:42( Edit History Discussion )

Orrin Hatch: some forward-looking states have been moving to 401(k) style plans. in my home state of utah the traditional pension plan is being replaced. new employees are given a choice between a 401(k) style of plan and hybrid plan with a combination of traditional and 401(k) style features. last year the governor of new

Orrin Hatch

7:40:43 to 7:41:03( Edit History Discussion )

Orrin Hatch: jersey added a 401(k) plan for a portion of the new jersey workforce. in kansas the governor sam brownback and the kansas legislature are studying the possibility of converting their pension system into a 401(k) style plan. in wisconsin the governor asked the state study the feasibility

Orrin Hatch

7:41:04 to 7:41:24( Edit History Discussion )

Orrin Hatch: of establishing a 401(k) style plan. there are many potential solutions to the public pension crisis and all of them should receive consideration. we should be encouraging these courageous governors own rather than demonizing them and demagoguing this issue. i would like to congratulate the

Orrin Hatch

7:41:25 to 7:41:45( Edit History Discussion )

Orrin Hatch: governor of wisconsin for his issue on public employee benefits. the victory he secured last week is really significant. he stood responsibly for long-term interest of his state rather than doing the easy thing and caving under the pressure of union-organized protests and the childish disrespectful lawmakers

Orrin Hatch

7:41:46 to 7:42:07( Edit History Discussion )

Orrin Hatch: who fled the state. governor walker understands that our greater enemy is delay. the director of the pew center on the states has said while these problems are significant, they can be solved if we act now. but if we wait, the crisis will

Orrin Hatch

7:42:08 to 7:42:31( Edit History Discussion )

Orrin Hatch: become unmanageable. mr. president, it is my intention as ranking member of the finance committee to find a way to address the public pension crises if state and local governments don't step up to the plate. ripe under no illusions that -- i'm under no illusions that this will be an easy task. there are many potential solutions that must be studied

Orrin Hatch

7:42:32 to 7:42:53( Edit History Discussion )

Orrin Hatch: and some will not be pleasant. some of my colleagues have a proposal to address the problem, and i will be working with them as well. i do not have all of the answers yet and i have not settled for what really are the best solutions, but we are working hard and talking to the experts about the best way to proceed. i'm sure of one thing, however, and i want to be 100% clear

Orrin Hatch

7:42:54 to 7:43:16( Edit History Discussion )

Orrin Hatch: about this, there will be no federal bailout of any state or local government. let me just repeat that. no federal bailout. just last month, after illinois sold its high-interest bonds, the governor indicated that he plans to ask for a federal guarantee. governor, you can save your breath. the answer is no.

Orrin Hatch

7:43:17 to 7:43:38( Edit History Discussion )

Orrin Hatch: we cut -- we cannot ask taxpayers and rest of the country to pay for underfunded pensions in illinois, california or any other state that made promises that it clearly cannot keep. to do so would be more than unfair. it would be immoral. a federal bailout cannot help

Orrin Hatch

7:43:39 to 7:43:56( Edit History Discussion )

Orrin Hatch: and it will not happen. mr. president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll.

Personal tools

MetaVid is a non-profit project of UC Santa Cruz and the Sunlight Foundation. Learn more About MetaVid

The C-SPAN logo and other servicemarks that may be found in video content are the property of their respective trademark holders. None of these trademark holders are affiliated with Metavid