THE PRESIDENT: Good morning. Christmas is fast approaching, and I know many of you are busy trying to finish up your holiday shopping. This week, we received good news about the economy that should brighten the season and keep us optimistic about the year ahead.

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First, the Commerce Department released figures showing that sales for America’s retailers were up in November and that the increase is much larger than expected. These figures are important because for many American businesses November and December are their highest sales months for the year. So the healthy increase in retail sales is a good sign for American employers and workers.

America’s working families also received another bit of holiday cheer this week: We learned that real hourly wages rose by 2.3 percent over the past year. That may not sound like a lot, but for the typical family of four with both parents working, it means an extra $1,350 for this year. At the same time, our growing economy continues to create jobs and that has brought unemployment down to just 4.5 percent. These numbers give all Americans a reason to celebrate: More people are working than ever before, and paychecks are going further than they used to.

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Little attention has been paid to the New Hampshire Retirement System, the 4.5 billion dollar public pension system on which fireman, policemen, teachers and municipal workers depend for retirement income. When Governor Benson was in Concord he tried to reform the system but was ignored. Many times over the last 5 years I have wondered when the obvious problems with the pension system would come home to roost. 

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Only about 2/3rds of the present value of the promises made to public employees have been met. The story is one of human error, bad judgment, hubris, arrogance and ignorance. In short, the problems with the pension system start with very poor assumptions about return expectations that any prudent person would know are too high. From there the contributions from employees are too small, particularly when compared to the contribution rates that private investors are taught are adequate in their own un-guaranteed plans.  Return assumptions should be lower and contributions higher.

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The fees the NHRS has paid its investment managers over the years are excessive. Here are the fees other pensions have paid, using 2002 as an example (as a percentage of net assets):
• NH: .70 percent
• WV: .20 percent
• MT: .10 percent
• NE:  .20 percent

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It’s also important to note that during this year each of the above paid much less and got higher returns.

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This might not sound like much until going over an actual example. Say the 4.5 billion dollar fund pays .65 percent (as NH did in 2002), or about 30 million dollars per year as investment fees. Ok, so what that this is .40% too much? Nebraska would have paid 9 million per year. That’s almost 20 million per year less. Well, over 20 years this equals a simple figure of 400 million dollars. This is a simplistic analysis and does not take into account the growth of the fund over time, but certainly if the NHRS had been paying what other like pensions were paying the problem today would be much smaller. Why has the NHRS continuously paid so much in extra fees?

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Our primary question in those early years was: How do we reform government and return money and power back to the American people?

Eventually, the policy innovators and the "Spirit of ’94" were largely replaced by political bureaucrats driven by a narrow vision. Their question became: How do we hold onto political power? The aberrant behavior and scandals that ended up defining the Republican majority in 2006 were a direct consequence of this shift in choice criteria from policy to political power.

Nowhere was this turn more evident than in the complete collapse of fiscal discipline in the budgeting process. For most Republican candidates, fiscal responsibility is our political bread and butter. No matter how voters view other, more divisive issues from abortion to stem-cell research, Republicans have traditionally enjoyed a clear advantage with a majority of Americans on basic pocketbook issues. "We will spend your money carefully and we will keep your taxes low." That was our commitment.

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This year, no incumbent Republican (even those who fought for restraint) could credibly make that claim. The national vision — less government and lower taxes — was replaced with what Jack Abramoff infamously called his "favor factory." One Republican leader actually defended a questionable appropriation of taxpayer dollars, saying it was a reasonable price to pay for holding a Republican seat. What was most remarkable was not even the admission itself, but that it was acknowledged so openly. Wasn’t that the attitude we were fighting against in 1994?

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WASHINGTON, DC — Catherine Smith, interim chairwoman of Working Families for Wal-Mart, issued the following statement today regarding Sen. Barack Obama (D-Ill.) and former Sen. John Edwards’ union-sponsored attacks on Wal- Mart:

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"As a lifelong Democrat, I am disappointed that instead of leading, some politicians in my party are attacking a company that does more to help working families than perhaps any other private institution in America. Wal-Mart saves working families money, creates quality jobs in areas where they are needed most and is a corporate leader on environmental sustainability efforts. They are attacking the wrong company. On behalf of the 150,000 Democrat, Republican, and Independent volunteer members of our organization, we urge all of our elected leaders to pursue the work that we have elected them to do, and most importantly to get the facts about Wal-Mart, a company that is creating needed jobs and saving working families money every day."

According to an October 2006 poll conducted by Democratic pollster Thom Riehle for Working Families for Wal-Mart (margin of error + 3.1), two-in-three voters (68 percent) would disapprove of a candidate making Wal-Mart an issue in the campaign.

Additionally, Riehle found many of the key target groups for the union leadership’s anti-Wal-Mart campaign are turned off, not turned on, by the campaign: 64 percent of Democratic voters disapprove, as do 66 percent of those who hoped Democrats would take control of Congress in the 2006 elections. 72 percent of those in union households disapprove of the premise of this anti-Wal-Mart campaign.

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Perhaps this is why during the 2006 election cycle, Connecticut gubernatorial candidate John DeStefano was the only candidate for statewide office who attempted to turn Wal-Mart into a significant campaign issue. But even in heavily Democratic Connecticut, and in a strongly pro-Democratic year, DeStefano’s attacks were resoundingly rejected, and he was defeated by the second-largest margin of any Democratic gubernatorial candidate in the country.

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