AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman. We’re broadcasting from Denver, Colorado, from our friends here at Denver Open Media, Open Media Foundation, as we turn now to a Wall Street scandal that’s generated little attention but impacts millions of American public workers.

In recent years, cities and states have been increasingly investing worker pensions in risky hedge funds, private equity and other so-called alternative investments. Many of the investments are being done in secret, while politically connected Wall Streets firms, including Blackstone, the Carlyle Group and Elliott Management, earn millions in investment fees from taxpayers.

Well, the Denver-based journalist David Sirota has been closely following this story for years. Last year he revealed Chicago Mayor Rahm Emanuel, who once served as President Obama’s chief of staff, received more than $600,000 in campaign contributions from executives at investment firms that manage Chicago pension funds. David Sirota also revealed the head of a New Jersey board that determines how the state invests its $80 billion pension fund was in direct contact with top political and campaign fundraising aides for New Jersey Governor Chris Christie during his re-election bid. Meanwhile, some states, including Illinois, Kentucky and Rhode Island, have faced criticism for blocking the release of information about how their pension funds are being handled.

Well, David Sirota joins me here in Denver, senior writer at the International Business Times. In 2013, he authored the report, “The Plot Against Pensions,” that was published by the Institute for America’s Future.

It’s great to have you with us, David, for me to be in your town. Explain what this is all about.

DAVID SIROTA: Basically, states and cities are putting more and more of their pension funds in high-fee, high-risk Wall Street investments. And the question is, that’s been asked is, now, why? We’re talking about a third of a $3 trillion public pension system being handed over, effectively, to Wall Street firms. High-fee, that is the key point, big fees. These firms earn huge fees off these pension funds. And the question is, why?

Well, there’s two—really, two answers. One, public pension systems are trying to big-bet their way out of their shortfalls. Politicians have not properly funded pension funds. They have not made their actuarially required payments each year, and so there are these shortfalls—effectively, money that is owed to workers that hasn’t been paid. And so, rather than have a debate over raising taxes, a lot of politicians have said, “Let’s give a lot of our money to high-risk Wall Street firms,” under the premise that that will big-bet their way out of the pension funds, big-bet their way out of the budget shortfalls.

The problem is, is that the returns for the pension funds have been lower than the stock market, which costs basically nothing to invest in. So then the question is, well, why are you investing in high-fee investments that aren’t generating, better than the market, returns that we can get with no fees? And I think one thing you can look at is campaign contributions. You have Wall Street firms, executives at Wall Street firms, making campaign contributions. And one of the big goodies they can get back is pension investments, which kind of go under the radar. Nobody really—very few people really watch where these investments are going. The people who do watch are the Wall Street firms.

AMY GOODMAN: What does Governor Chris Christie have to do with this in New Jersey?

DAVID SIROTA: Well, his pension system is one of the biggest pension systems in the world, $80 billion. That is a huge, huge pot of money for Wall Street. And Chris Christie’s officials have moved an enormous amount of money into hedge funds and private equity. New Jersey is now one of the biggest investors in hedge funds in the world. In New Jersey, what’s happened is fees have tripled. New Jersey is now paying more than $400 million a year in fees just to manage its pension system. New Jersey has, similarly, delivered below-median returns—that is, below-median returns for similarly sized states. So, it’s paying a lot more in fees and getting less back than the typical pension fund, which of course is a double whammy for taxpayers.

AMY GOODMAN: When Governor Christie was asked about your, David Sirota’s, ongoing investigation into the New Jersey pension system, he lashed out at Sirota.

GOV. CHRIS CHRISTIE: The article that spurred all this conversation has been written by a guy who is a completely discredited journalist, who’s been fired for being inaccurate and inflammatory before. So, you know, right now, anybody who can, you know, pop up on a website calls himself a journalist. David Sirota is not a journalist. He’s a hack.

AMY GOODMAN: That is Governor Christie. You’re a hack.

DAVID SIROTA: Yeah, right. I mean, this has been the answer from the Christie administration, to simply lash out in a personal attack. But this is not a personal issue. This is about pensions for hundreds of thousands of workers.

AMY GOODMAN: And the head of the New Jersey board that determines the state’s investments in the $80 billion pension fund?

DAVID SIROTA: He ended up resigning. He ended up resigning. His name is Bob Grady. He ended up resigning after there were questions about the proximity of campaign contributions going into the Republican Governors Association, Governor Christie, the New Jersey Republican Party, proximity to pension deals going out.

AMY GOODMAN: Blackstone Group—there’s a major protest against Blackstone in New York that has to do with housing.

DAVID SIROTA: Yeah, well, and in New Jersey, again. New Jersey moved $2 billion of pension money into Blackstone at the very same time that Blackstone waived a number of rules to allow Bob Grady, the head of the New Jersey pension system, to allow his firm to invest in Blackstone at the same time.

AMY GOODMAN: What do you think needs to happen?

DAVID SIROTA: Well, clearly, there needs to be more transparency. As you mentioned in the beginning, if you’re a retiree, if you’re a taxpayer, and you call up your state and you say, “I’d like to see the terms of the deals about these pension investments that my taxpayer dollars are going to,” your state will likely say, “I’m sorry, we can’t tell you what the terms of the deals are, what the fee structures are, what the risks analysis is.” So there needs to be more transparency. And there needs to be a debate, a healthy debate, over whether this money is being properly invested, whether this is a prudent investment in high-fee Wall Street firms.

AMY GOODMAN: Can you say something quickly about Chicago Mayor Rahm Emanuel?

DAVID SIROTA: Sure. I mean, in Chicago, he has said that the city doesn’t have enough money to pay its pension obligations. Meanwhile, more of that money has moved into so-called alternative investments, paying higher fees. And let’s remember, there is an SEC rule on the books that says you cannot accept campaign contributions, if you’re running a pension system, from the people who are managing your pension system. And Chicago lawmakers have asked for an SEC investigation in Chicago about his campaign contributors.

AMY GOODMAN: Well, David Sirota, there’s so much more to talk about, and we’ll get you back on again. David Sirota, senior writer at the International Business Times. We’ll link to his report, “The Plot Against Pensions.”

And that does it for our broadcast. A very happy birthday to Brendan Allen. And I want to thank our crew here at Denver Open Media, the Open Media Foundation: Tony Shawcross, Ann Theis, John Aden, Gavin Dahl, Ivy Pharr, Susannah McLeod, Dana Thibault, Courtney Steele, Niki Smith-Reynolds and David Stewart. Special thanks to Denis Moynihan.

I’ll be speaking at the Carbondale Public Library tonight at 7:00. Hope to see people there.