Posted on 05/06/2008 1:28:19 PM PDT by LSUfan
Federal employees could have the option of taking their pension dollars out of companies working in countries that sponsor terrorism, under a Senate bill that follows a trend among state government pension plans over the last two years.
The bill being crafted by Sen. Joe Lieberman (I-Conn.) likely will be introduced within the next two months, said a Lieberman spokesman. It will affect the federal pension fund, called the Thrift Savings Plan (TSP). The proposal follows the lead of 19 states that have passed or are considering initiatives to completely divest public employee pension money from foreign companies doing business in terror-sponsoring countries.
"Terrorism is the greatest challenge to our security today and the federal government is working night and day to prevent and prepare for it here and at home and to combat it overseas," Lieberman, chairman of the Senate Committee on Homeland Security and Government Affairs, said in a statement to Cybercast News Service.
"As part of this all-out effort, federal employees should be given the opportunity -- when they invest their money in the federal Thrift Savings Plan -- to opt out of investing in companies that do business with state sponsors of terrorism," he continued. "These companies must understand that there is a price to pay for doing business with countries that support terror."
The coming federal proposal does not go as far as states, which have completely divested pension money from companies. The federal proposal would only make this an option for federal employees.
States that have passed laws to divest pension funds -- including California, Florida, Illinois, Georgia, Louisiana, Maryland and Missouri -- have withdrawn from some or all of the five countries designated by the U.S. State Department as state sponsors of terrorism: Iran, Syria, North Korea, Sudan and Cuba.
The states' model is based largely on 1980s-era divestments from firms doing business with the apartheid regime of South Africa. But critics of divestment argue it hurts the people of the countries targeted, not the regimes, and economic sanctions have a poor historical record of success.
Splitting the difference by just offering the option of withdrawing pension money could mean less opposition to such a proposal, said William Reinsch, president of the National Foreign Trade Council, a business lobby group that has opposed the state divestment initiatives.
"If it's an option that gives additional investment choices, I'm inclined to think it's OK as long as there is adequate disclosures that the reality is these investment will produce a lower return over time," Reinsch told Cybercast News Service. "It's a problem when it's mandated by the state and employees don't have any choice on what will affect their return."
He warned that Congress shouldn't attempt to mandate anything similar to what states have done.
"There would be a lot of resistance if this is mandatory, and the TSP is ordered to divest funds from certain entities," Reinsch said.
Reinsch cited a December 2006 study by Morning Star Research that showed "socially responsible investing" funds -- which could include factors such as terrorism, the environment and human rights -- almost always perform worse than general investing funds. After three years, the study said 64 percent of socially responsible funds produce below-median returns.
Georgia state Sen. Judson Hill, a Republican, who sponsored successful legislation in the Peachtree State to divest state employee pension money from Iran, said the move is in the best interest of workers. Iran in particular is reportedly supplying the insurgency in Iraq with weapons and other resources to kill U.S. military troops.
"This is not to use the state pension fund to impact what's going on the in the Middle East, or with our troops, or with genocide," Hill told Cybercast News Service. "This is about what's in the best interest of the retired employees. It's not in their best interest to have their retirement funds subject to nationalization and war. It's not in the best interest of retirees to direct individual contributions to people who are injuring and killing our troops."
Early evidence has shown that states that pass divestment laws are seeing similar, sometimes better returns, said Chris Holton, director of the Divest Terror Initiative at the Center for Security Policy, a conservative group which has been steering much of the state legislation.
Holton said he would prefer divestment at the federal level, but he thinks creating an option is a big step in the right direction. Also, he doesn't believe the National Foreign Trade Council will sit this out just because it's an option.
"This will be even more heated. We'll see a tremendous amount of pushback," Holton told Cybercast News Service . "We have the moral high ground."
One of the issues being negotiated among senators before the bill is introduced is what countries would be included, said Leslie Phillips, Democratic spokeswoman for the Senate Homeland Security and Government Affairs Committee. She had little other information on the matter thus far.
According to the Conflict Securities Advisory Group, a consulting firm that specializes in managing global-security risk, there are 485 publicly traded companies that operate in the five countries designated by the U.S. State Department as state sponsors of terrorism. The companies are overwhelmingly foreign-owned.
Cybercast News Service first reported last year that more than 30 members of Congress are invested in companies doing business in the five terror-sponsoring countries.
According to a 2004 Divest Terror report, the top 100 public pension systems in the United States invest more than $188 billion in countries listed as state sponsors of terrorism.
The Divest Terror Initiative, a division of the Center for Security Policy, has listed a "Dirty Dozen" of the firms that do the most business in countries designated as state sponsors of terrorism.
Even if the system at the federal level is voluntary, a poll from 2006 showed that 86 percent of workers said if given a choice, they would invest in terror free companies.
"We could have a situation where it becomes a de facto divestment," Holton said.
A very nobile move ...
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