"Dan needs no introduction," said Richmond Mayor Tom Butt at an April city council meeting, as Daniel Borenstein, an influential columnist and editorial page writer for the Bay Area News Group, walked up to the microphone to talk to city leaders about Richmond's retirement debts. "For people on the city council who have had to run for office, we've all been out there to [Borenstein's] inquisition where he has thrown obscure terms at us, and quizzed us on what we're going to do about it, where he's thrown fear into the hearts of all of us," Butt said with a smile.
Borenstein quickly launched into his Power Point presentation. He warned that Richmond's unfunded retirement debt was $446 million, or $4,150 per resident, calling it the "biggest enchilada." The city's retiree medical benefits debt totaled another $125 million, he said. His essential argument — one that he has repeated dozens of times in columns and editorials — was that, over the years, Richmond, like many cities, contributed too little to its retirement fund, building up an unfunded liability that could lead to financial catastrophe. "It's like charging last night's steak dinner on your home mortgage," he told the councilmembers, using one of his favorite folksy sayings.
For much of the past decade, Borenstein has been waging a campaign against what he views as the financial irresponsibility of elected officials and public sector labor unions, zeroing in on one issue in particular: public employee pensions. In columns and editorials, he has warned that looming debts threaten to "strangle," "choke," and "bankrupt" communities. He's called public employee pension systems "unsustainable," and scolded cities such as Oakland for "living beyond [their] means."
Borenstein, a sixty-year-old Oakland resident, has called for slashing public employee benefits while excoriating elected officials who have prioritized spending on services rather than using limited tax dollars to rapidly pay down long-term retirement liabilities. In political endorsement editorials and other writings, he's consistently backed fiscal conservatives and slammed those who he feels are ignorant or unwilling to acknowledge that unfunded pension liabilities are the most important problem facing local and state governments.
Throughout California, Borenstein's hardline view on pensions has been championed by conservative groups and well-funded think tanks, which, in turn, have financed reports that warn of the financial calamities presented by public sector retirement plans. In a sort of negative feedback loop, Borenstein has then repeatedly pointed to these reports as proof that his views are correct.
Yet despite his laser-like focus on pensions, and his constant advocacy for cutting employee benefits and services, Borenstein contended during a series of interviews for this story that he, in fact, actually supports unions, pensions, and strong government. "I believe very strongly in the ability of government to provide these services, but also to survive in the long run," he said. "I'm concerned about debts strangling local governments in the future.
"Defined benefit pensions are a really good idea, and if I could be God, wave a magic wand, everybody in this country would have one," he added. "But the benefit levels have to be affordable, and the accounting and forecasting methods have to be realistic. I don't think they are."
However, many economists and critics of Borenstein say that the obsession with cutting public pensions is an unsound fiscal policy that can damage the economy, particularly during tough times. Moreover, austerity measures like pension-cutting have been shown to not only widen the gap between the wealthy and the middle class, but also have helped villainize public employees, while ignoring the broader political and economic factors that have caused local governments to run up retirement system debts in the first place.
In fact, these days Borenstein can hardly print his views or speak publicly without workers and progressives pushing back. And as the Great Recession recedes and local government revenues climb back to normal levels, the unfunded liabilities that Borenstein has identified over the years as dark icebergs threatening to sink local agencies have instead been melting and becoming much more manageable.
Even so, he soldiers on, most recently praising a campaign by Chuck Reed, the pension hawk former mayor of San Jose, to strip public employee pensions through ballot initiatives.
And political candidates throughout the East Bay know full well that they will never receive the endorsement of the region's major dailies — Oakland Tribune and the Contra Costa Times — unless they toe Borenstein's line on pensions during endorsement interviews that Mayor Butt half-jokingly referred to as "inquisitions."
Borenstein began writing consistently about pension liabilities in 2008, at around the same time that the global economy descended into the most severe recession since the Great Depression of the 1930s. The simultaneity of his obsession with pensions and the Great Recession wasn't a coincidence. As the stock market slid downward in 2008, the value of assets invested by state and local retirement systems declined by as much as a quarter. This caused the unfunded liabilities of most pension systems to shoot upward, seeming at the time like insurmountable mountains of debt that would wreak havoc on the public purse. And budget deficits, born of plummeting property and sales taxes and other revenue streams, created an atmosphere of crisis and scarcity.
The sudden growth in unfunded liabilities spawned a cottage industry in journalism that focused on pension finance, with Borenstein leading the charge in California. In his view, massive unfunded liabilities were caused by decades of financial irresponsibility, the fault mainly of corrupt elected officials who pandered to greedy labor unions. Cuts needed to be imposed immediately to free up money to pay down these debts, otherwise disaster loomed, said Borenstein and other pension-obsessed journalists.