Federal retirement funds must not funnel money to China's regime
Originally published in the Washington Examiner on April 28, 2020
The coronavirus pandemic is a wake-up call for everyone that we must completely rethink our relationship with China. But if a group of Obama-era retirement board appointees has its way, our military members and federal employees will soon be directly contributing, through their retirement plans, to those propaganda efforts, China’s military buildup, and its ultimate goal of global domination. And most of them won’t even know it.
Every month, a combined 5.6 million members of the U.S. military and the federal civil service (including myself as a National Guardsman) contribute a portion of their paychecks to the Thrift Savings Plan, a 401(k)-style retirement plan. The federal government supplements their contributions with billions in taxpayer-funded matching contributions. The TSP, which is administered by the Federal Retirement Thrift Investment Board, is responsible for over $700 billion in assets, making it one of the world’s largest retirement funds and key to our military’s retirement plan.
A planned change, scheduled to take effect in the coming months, would broaden the tracking exchange of the TSP I fund. This could mean that over $50 billion of American retirement funds are funneled into Beijing’s stock exchange and into its state-owned companies.
Chinese companies directly benefiting from this change include Hikvision, a tech company blacklisted by the U.S. government for its role in the surveillance of the Muslim Uighurs, an ethnic minority group being persecuted and forcefully indoctrinated in barbed-wire concentration camps by the Chinese Communist Party.
Another company includes the government-owned Aviation Industry Corporation of China, which builds high-tech fighter jets and drones with missile capabilities to take down American aircraft and ships. Another, ZTE, is the world’s largest supplier of security equipment and is currently taking the Chinese Communist Party’s surveillance state global.
We cannot allow the TSP’s governing board to use taxpayer dollars and servicemembers’ savings to fund the defense industry of the most dangerous potential adversary America has ever faced.
Just as we were engaged in a 20th-century Cold War against the communist Soviet Union, we too are now engaged in a 21st-century Cold War with communist China.
This board would never advocate for investing in Russian companies building their Soviet military. It should not invest in these companies building the Chinese military.
As a 24-year veteran and congressman serving on the Armed Services Committee, I will not stand for it.
Last November, Michael Kennedy, the Obama-appointed chairman of the Federal Retirement Thrift Investment Board, wrote that the board didn’t feel it was “appropriate” to prohibit millions of TSP participants from making a choice that could be “in their best interest.”
This argument completely ignores the fact that the U.S. government regularly limits its citizens from investing in the economies of our adversaries, such as Iran, Russia, and North Korea. It also ignores the fact that for a military member to have a fully diversified portfolio, they cannot invest in any international stocks unless they invest in the TSP international fund that will soon invest in China.
Many Chinese multinational companies do not abide by international accounting standards, and so, the argument that the potential return on investment is “worth the risk” is spurious at best. The board’s shortsighted vision only considers the potential short-term gains, completely disregarding the disastrous national security implications of financing China’s march toward economic dominance of the United States.
The issue exemplifies a deeper and more fundamental shift that must occur across America’s political spectrum and on Wall Street. All five members of the TSP governing board were appointed by President Barack Obama and have backgrounds in a financial services industry that sees China as an economic opportunity, not as a threat. Like Joe Biden, they see the rise of a China co-equal to the U.S. as a good and peaceful development which is a win for America’s economy and for the world.
Since the end of the Cold War, this crowd has wrongly believed that capitalism would change the Chinese Communist Party for the better. They have yet to understand how this line of thinking has been used against us.
The lies and cover-ups of the Chinese regime in the past few months should be a massive wake-up call. The Chinese Communist Party is not seeking to share world leadership in a responsible way. In President Xi Jinping’s own words, the coming decades will realize the “Chinese Dream” — one which rivals and surpasses the U.S. to establish a new world order.
This is why I urge President Trump to stop this change in the near term, by executive order if necessary, and to replace federal retirement board members as soon as possible in order to prevent it in the long run.
Such an executive order would likely be challenged in court, given the quasi-independent nature of the board, but hopefully, the order will allow the Senate to confirm new members who will reverse this ridiculous decision. I also call on my colleagues in Congress to rally behind my bipartisan legislation to prevent this from ever happening again.
Every dollar we contribute directly or indirectly to the mainland Chinese regime puts American security and the fabric of our society at risk. I know our military members standing guard around the world would agree.