While the Bush Social Security plan continues to founder in the face of sober and responsible analysis, it is worth taking a moment to consider the fate of San Diego’s experience in ideologically driven investing – its billion dollar plus current pension-funding crisis.

This week, San Diego mayor Dick Murphy (a Republican ex-judge and empty suit) announced his resignation. Murphy, chosen last week as one of the three worst mayors in America by Time magazine, was re-elected with the help of the judiciary last November in spite of receiving several thousand fewer votes than write-in candidate Donna Frye, a Democratic city council member. But, while he shares with President Bush having judges to thank for his election, Dick Murphy differs from the Bush in that he faces an actual crisis in retirement funding – a collapsing employee pension system.

How did this happen, you ask? First (and most hilariously) because the City of San Diego decided that the mid-‘90s were the best time to show off their city to whole country. With high-tech businesses booming and housing costs climbing on the beautiful shores of the Pacific, San Diego wanted everyone to see the success story they had on their hands. And, given the rock-ribbed conservatism of the city fathers, attracting a family-friendly event like the 1996 Republican National Convention seemed like just the thing to focus all eyes on San Diego.

But putting on spectacles like the Republican National Convention costs money. And, as good Republicans, the municipal government had an almost limitless faith in the profitability of the markets. So, voila! The City of San Diego began underfunding their employees pension fund to pay for the RNC and invested the remaining money more aggressively, confident that the markets would more than make up for the shortfall. The stock market always overperforms everything else, right?

Wrong. Their investments (predictably) started to slump and San Diego’s GOP leaders responded by…ducking. Murphy is third Republican mayor in a row to use what the Associated Press called ‘mind-numbing accounting complexities’ to avoid confronting the issue while making individual deals with the labor representatives on the pension fund board to increase their own pensions. So far has the damage spread that San Diego’s bond rating has plummeted and their financial bumbling has managed to attract the attention of the less-than-diligent Bush Department of Justice and Securities and Exchange Commission.

With a $1.71 billion combined health and pension benefit shortfall looming, Mayor Murphy didn’t sit on his hands. He busied himself with important matters: Saving the Mount Soledad Cross. The cross, a 54 ft. edifice that looks as if it was built with cement blocks left over from a school cafeteria building project, sits on public land in San Diego and has seen its fate debated by courts from the municipal to the federal. While few among San Diego’s municipal retirees would applaud Murphy’s handling of their fixed-incomes, they could take prayerful solace in his decision to join luminaries like Rick Santorum, George Bush, Dick Cheney, Bill Frist, and Bush cabinet secretaries Gail Norton and Anthony Principi in defending the Mount Soledad Cross.

At a time when the Bush White House splits its time between right-wing saber-rattling about Christian judges and the Wall Street-driven effort to privatize Social Security, it is helpful to examine the wreckage of San Diego’s finances. Murphy’s Bush-in-miniature administration has emptied the treasury, rewarded the financiers, and left retirees holding the bag. We can’t let the Bush clowns do the same to the rest of the country.

Oh, and it’s probably a bad financial idea to host Republican Conventions…

-Keith McCrea, Reviews Editor

This entry was posted on Wednesday, April 27th, 2005 at 2:09 pm by Arthur. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.