Locked out of debates, Libertarian finds another venue

Robert Sarvis complains that he has been unfairly shut out of debates between his opponents in the U.S. Senate race — Republican Ed Gillespie and Democratic incumbent Mark Warner.

Narrowing the field in a political debate to its major players is common practice, much to the displeasure of third-party candidates like Sarvis. The Libertarian, however, appears to have found an unusual venue for airing his views and showing that he is a serious analyst of thorny issues. He has produced a think-tank report on the economic problems posed by public-pension debt. Don’t hold your breath waiting for rejoinders from Gillespie and Warner.

Sarvis is no ordinary third-party gadfly. His résumé includes mathematics degrees from Harvard University and the University of Cambridge, a law degree from New York University and a master’s in economics from George Mason University.

During his career, the 37-year-old Fairfax County resident has been a software engineer, teacher, lawyer and new-media entrepreneur.

A political unknown before the 2013 gubernatorial campaign, Sarvis managed to corral 6.5 percent of the vote running as a Libertarian, the best performance by a third-party Virginia candidate since 1965.

If Sarvis had not run, his votes could have given either of the major candidates a solid margin of victory. In the end, Democrat Terry McAuliffe defeated Republican Ken Cuccinelli by only 2.5 percentage points.

The election results immediately raised questions about Sarvis’ role as a spoiler in the race.  Conspiracy theories, however, ignored widespread dissatisfaction with both mainstream candidates.

For example, the editorial page of the Richmond Times-Dispatch, historically a reliable ally of the Republican Party, refused to endorse any candidate in the race. The Daily Progress in Charlottesville, on the other hand, urged voters to write in the name of Republican Bill Bolling, the lieutenant governor at the time.

Sarvis’ role in the Senate race likely will be a different story. A recent statewide poll shows him having the support of 5 percent of the electorate, a figure just 1.5 percentage points under his performance in the gubernatorial race. Warner, however, held a 25 percentage-point lead over Gillespie in the same poll. Unless the dynamics of the race change drastically before November, Sarvis will have no chance to be a spoiler this time.

Nonetheless, his continued presence on the Virginia political stage coincides with what The New York Times describes as a possible Libertarian moment. Libertarian causes such as gay marriage and marijuana legalization are gaining traction.

In addition to supporting those positions, Sarvis favors reining in the federal government, deregulating health care and opening the nation’s borders to immigration.

Despite his Senate candidacy, Sarvis’ paper on public pension debt includes no political pitch. In fact, a biographical note at the end of the report mentions his run for governor but says nothing about his current campaign.

The report, “Understanding Public Pension Debt: A State by State Comparison,” was issued in early July by the Washington, D.C.-based nonprofit Competitive Enterprise Institute as part of a three-part series called “The High Cost of Big Labor.”

For many state pension plans, Sarvis notes, the amount of benefits to be paid out to future retirees is fixed and guaranteed by law.  Therefore, underfunded programs will require further infusions of cash. That could mean raising revenue or shifting funds from other budget needs.

“Many government reports show pension plans being well-funded, even though the accounting standards used by private companies in the United States and most governments throughout the world would show they are not,” Sarvis writes in the report.

Sarvis says the interest rates (called discount rates) used by many states to determine the present value of future retirement payments are too high.  As a result, these states underestimate the value of pension liabilities and the level of contributions needed for their retirement systems.

Sarvis ranks the 50 states combining the results of six studies measuring underfunded pension liabilities as a percentage of state gross domestic product. New Mexico, Illinois, Mississippi, Kentucky, Ohio, Hawaii, New Jersey, Alaska, Connecticut and Montana are listed as the 10 worst.

Virginia, on the other hand, clocks in at No. 41, placing it among the 10 best states. Moody’s Investment Service, the source of one of the studies cited by Sarvis, estimates that the fair market value of Virginia’s underfunded pension liabilities represent only 2.2 percent of state GDP.

The commonwealth fell behind on payments to the Virginia Retirement System after the Great Recession. The legislature still funds VRS below the level needed to cover future unfunded liabilities, but payments into the system are expected to hit recommended levels in 2018-20.

The retirement system was reformed in 2012. The legislation reduced  benefits for employees with fewer than five years of service and introduced a hybrid plan, including 401(k)-style employee contributions for state workers hired after Jan. 1, 2014.

Sarvis says pension debt can cripple a state’s competitiveness. If public pension programs are severely underfunded, tax rates may be raised and government services curtailed in order to meet payment obligations. That could be bad news for business.

Businesses looking to locate to a new state “are wise to consider not only the current policy climate … but also the risk of policy changes made necessary by looming budgetary concerns like the need to increase funding of public pensions,” Sarvis says.

He makes a good point, but it would be tough to summarize on a campaign brochure.