Burnt Orange Report

Phil Gramm's Sales Pitch: "Your loss is our gain!"

By Jim Dallas

I meant to blog on this a while back, but it belongs in the "pure evil" category.

The short version: The Republicans want to save the retirement program they screwed up by putting a price on the head of each teacher in the state of Texas.

The long version: Well, just read about it here...

A plan by former U.S. Sen. Phil Gramm to bail out Texas' teacher pension fund partly through retirees' deaths is criticized by some state pension administrators and officials of educators' unions who want to know how much of the money would go into the retirement program.

The plan, backed by Republican Gov. Rick Perry, is similar to so-called "dead peasant" policies that have created legal and public-relations headaches in the private sector.

Gramm, now vice chairman of UBS Investment Bank in New York, has proposed to Texas officials that the state buy life insurance policies and annuities on thousands of retired teachers and cash in on them to close a $700 million funding gap. The plan was set in motion after a recent meeting between Gramm and Perry at the governor's mansion. Retirees would be told they were being insured, with the money going to the agency.

The Teacher Retirement System of Texas, which provides pensions and health insurance for retirees, is in the red and needs to generate an additional $5.2 billion, through investment gains or increases in employee contributions, to cover all future retirees. Officials said the fund's health care portion has enough money to pay all claims during the current budget period but could face fiscal problems in the future.

At Perry's direction, his budget director, Mike Morrissey, and another aide have met in a series of private sessions with teacher fund administrators, state Insurance Commissioner Jose Montemayor, Securities Commissioner Denise Voigt Crawford and representatives of a retired teachers group.

A proposal briefly offered in the Legislature this year to authorize the state to buy life insurance policies on its retired employees without their knowledge, with the government collecting the death benefits, generated criticism from state employees and Rep. Ken Marchant, R-Coppell, pulled down his bill

Memo to 2006 Democratic Candidates: This is WRONG. This is an ISSUE. USE IT.