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Fact Check: The Absurd Claims That Scott Peters Created – and Solved – the Pension Crisis

In a new web ad, Carl DeMaio describes his opponent, Rep. Scott Peters, as the mastermind of the city’s pension scandal. Peters’ campaign’s response: The congressman didn’t create the pension problem – in fact, he solved it.

MisleadingStatement: “Scott Peters concocted a scheme to spike government pensions,” according to a web ad for Carl DeMaio, a candidate for Congress.

Determination: Misleading

Statement: “Scott Peters wasn’t on the City Council when the pension problem began, but he was on the Council that ended it,” Peters spokesman Alex Roth said.

Determination: Huckster Propaganda

HucksterPropagandaAnalysis: If there’s one issue congressional candidate Carl DeMaio has made into his political piñata, it’s San Diego city pensions.

Though he didn’t uncover the city’s pension and financial crisis more than a decade ago, DeMaio has been the politician most identified with trying to reform city pensions. DeMaio’s current congressional campaign has given him another reason to talk about the issue.

DeMaio’s opponent is Rep. Scott Peters. When Peters was on the City Council in 2002, he made a terrible, horrible, no good, very bad vote to increase city pension payouts. The vote improved pension benefits for city workers at the same time that it allowed the city to pay the pension fund less money. The decision was just as stupid as it sounds and helped lead the city into its years-long financial winter, which came with decreased police, fire, street repair and other services.

In a new online advertisement styled after “Who Wants to Be a Millionaire?” DeMaio describes Peters as the mastermind of the scandal. The ad says: “Scott Peters concocted a scheme to spike government pensions.”

Peters’ campaign immediately responded to the ad, saying that the congressman didn’t create the pension problem – in fact, he solved it.

“Scott Peters wasn’t on the City Council when the pension problem began, but he was on the Council that ended it,” Peters spokesman Alex Roth told the Times of San Diego.

Both DeMaio and Peters are misrepresenting Peters’ role in the city’s pension scandal. Peters’ distortion is worse.

Let’s review, starting with DeMaio’s claim.

Peters’ 2002 vote absolutely hiked city worker pensions beyond what they would have been otherwise. DeMaio’s on solid ground by saying Peters gave city workers higher pensions. But DeMaio goes one step further. His claim that the pension scheme was Peters’ idea – that he “concocted” it – isn’t accurate.

There are varying opinions as to Peters’ culpability for the pension problem. Kroll, a consulting firm the city paid more than $20 million to audit its finances and decision-making surrounding the scandal, found that Peters and others Council members acted negligently by not ensuring the city told the truth to investors about its pension fund weakness.

At no point, however, was Peters ever accused of coming up with the pension deal. Even the name of it – Manager’s Proposal 2 – reveals that the idea originated with city management, not Council members.

Our definition of Misleading is a statement that takes an element of truth and badly distorts it, giving a deceptive impression. It fits here. In 2002, Peters made a bad vote on the city’s pension system that damaged San Diego’s finances and public services. But the vote was not, as DeMaio claimed, Peters’ idea.

That said, Peters’ own take on his role in the pension crisis is wrong. Peters contributed to the pension crisis. And he has admitted that.

In 2012, he explained it to us this way:

“First of all, the city had 30 years of bad habits. Not funding its pension, borrowing against the pension. Unfortunately, as you pointed out, I did continue those habits in the early part of my term. I have to tell you, we realized that we had a problem, we recognized it and we took action to solve it.”

Peters points to reforms he supported for his claim that he “ended” the city’s pension problem. In 2004, for instance, he backed successful ballot measures that made it illegal to underfund the pension in the future, required the city to pay back the pension debt more quickly and changed the makeup of the pension board to give employees less power. A few years later, as Council president, he helped negotiate new deals with city workers to give lower pension benefits to new employees.

The reforms helped. But they didn’t fix the problem. Here’s a look at the city’s pension payment in 2002, when Peters made his vote to underfund the system, compared with pension payments four years after Peters left the City Council in 2008.

These numbers alone should put an end to the notion that Peters solved the pension problem. But that’s not all.

The name of the 2008 pension proposal put together by Peters and then-Mayor Jerry Sanders – Comprehensive Pension Reform – again shows he didn’t solve the problem. In 2012, when Sanders and DeMaio led a ballot measure to eliminate pensions for most new hires, they too called their effort Comprehensive Pension Reform.

In other words, Peters’ 2008 Comprehensive Pension Reform worked so well, that the city needed to do another Comprehensive Pension Reform four years later.

Peters’ campaign seemed to acknowledge that its original statement wasn’t right. It later sent an updated one to the Times of San Diego, saying Peters ended “pension underfunding” at the city, instead of the “pension problem.” That’s accurate – their original statement wasn’t.

Peters did support the successful ballot measure that made underfunding illegal. But the real nut of the problem – the growing pension deficit that ate up more and more of the budget – was barely touched.

Peters is right that the city made bad pension decisions before he got on the Council. He’s also right that he made reforms that helped the city grapple with the issue.

But his 2002 vote to underfund the pension is the biggest stain on his political career. His spokesman’s statement is an attempt to pretend that decision never happened. And the idea that Peters later solved the pension problem is wrong. He should know better. It’s Huckster Propaganda.

If you disagree with our determination or analysis, please express your thoughts in the comments section of this blog post. Explain your reasoning.

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