Republican-led, Wall Street-Supported Bill Endangers California's Retirement Program

BY MALENA HANSEN The government of California is feeling the pressure of Republican party ideals, particularly at the national level. In particular, the backlash against a state retirement insurance program called Secure Choice evidences the political pendulum that is swinging toward the right. Signed into law by Democratic Governor Jerry Brown, this bill, SB 1234, more colloquially referred to as the California Secure Choice program, aims to help low-income private sector workers in California secure funds for retirement. The primary conflict of interest with this bill is the role of private interests. There has been intense lobbying by Wall Street firms, specifically the mutual fund industry, which has been trying to undermine the efforts of this program. The majority of interests fighting the bill are conservative, which align with the Republican party which traditionally emphasizes the sanctity of states’ rights. However, the fight over Secure Choice in California serves as evidence that the Republican party chooses to enforce the concept of states’ rights exclusively when they want their own policies upheld. This, in turn, contributes to an ineffective system of federalism.

According to the office of the California State Treasurer, the mission of the program is “to promote greater retirement savings for California’s private-sector workers…by providing access to a voluntary, low-risk, low-cost, portable retirement savings plan…managed by a private-sector financial firm overseen by the Secure Choice Board.” In summary, a private board will manage the personal Individual Retirement Account for enrollees, but it will be carefully supervised by a specialized sector of the government that deals with retirement funds. While this law has been endorsed and signed by Governor Brown, it was only established because of a Department of Labor ruling of an IRA law dating back to 1974, which “provides guidance to private-sector employers that may be covered by such state laws” related to retirement plans. This interpretation allowed for Secure Choice to be created because it regulates the process between different levels of government and permits states to implement this kind of social welfare.

However, not all are pleased by this ruling and what it has brought to California. The legal fight over this bill has been spearheaded by both government insiders and outside organizers who are trying to undermine the Department of Labor ruling by removing Obama administration regulations. It is a federal resolution introduced by Representative Tim Walberg (R-MI), but it directly affects IRA programs established at local and state levels. The resolution is consistent with the conservative ideal of cutting regulations at the federal level, but it is also contrary to their beliefs that these kind of programs should be run on a smaller scale. This is where the issue of federalism comes into play. The Department of Labor ruling favors the creation of programs like Secure Choice at the state level, but the Republican party is actively fighting against the state of California’s right to implement this program. However, there are other factors at work. Wall Street mutual fund lobbyists, who argue that Secure Choice will be detrimental to their existence, are guiding the Republican party’s stance on this issue. Lobbyists fear state-sponsored competition, and thus use the Republican party to combat this fear. Their influence has been powerful enough to create discontinuities in regularly used conservative arguments. Therefore, the source of the conflict over state versus national interests in the federalist system can be traced back to the deregulation of private interests. The future of Secure Choice depends on how the private insurance lobby yields its power, but also how the Republican party argues for the resolution, contrary to their beliefs.

While it is important to follow and uphold the legal process for Secure Choice, it is also imperative that lawmakers consider the effects that the retirement program has on citizens’ daily lives. Social welfare programs promote financial stability, which in turn translates into other forms of prosperity. The state of California has already passed this legislation, and although it will not be completely implemented until 2018, it has benefits that will help all participating parties. For example, employers will not have to contribute directly to the fund and the program will follow the worker if they find employment elsewhere in California. While there are alternative methods to obtain a retirement savings plan, Secure Choice is a substantial piece of legislation that paves the way to help people in the future, and it should not be infringed upon simply because of the influence of a lobby that does not represent the voices of those whose lives will be affected by the program.