Posted on 03/14/2010 6:58:08 AM PDT by reaganaut1
...
[M]ost Americans have ignored at their own peril a far bigger pocket of privilege [than executive compensation] -- the lush pensions that the 23 million active and retired state and local public employees, from cops and garbage collectors to city managers and teachers, have wangled from taxpayers.
Some 80% of these public employees are beneficiaries of defined-benefit plans under which monthly pension payments are guaranteed, no matter how stocks and other volatile assets backing the retirement plans perform. In contrast, most of the taxpayers footing the bill for these public-employee benefits (participants' contributions to these plans are typically modest) have been pushed by their employers into far less munificent defined-contribution plans and suffered the additional indignity of seeing their 401(k) accounts shrivel in the recent bear market in stocks.
And defined-contribution plans, unlike public pensions, have no protection against inflation. It's just too bad: Maybe some seniors will have to switch from filet mignon to dog food.
Most public employees, if they hang around to retirement, can count on pensions equal to 75% to 90% of their pay in their highest-earning years. And many public employees earn even more in retirement than their best year's base compensation as a result of "spiking" their last year's income by working ferocious amounts of overtime and rolling in years of unused sick and vacation days into their final-year pay computation.
A survey by the watchdog group California Foundation for Fiscal Responsibility found that some 15,000 Golden State public employees are knocking down $100,000 or more, while some 200, mostly police and fire chiefs and school administrators, are members of the $200,000-a-year-and-up club.
THE PROSPECTS ARE BLEAK for many state and local governments as a result of all this.
(Excerpt) Read more at online.barrons.com ...
I want to read more but don’t want to subscribe. If “prospects are bleak” are they planning on anything other than raise taxes to pay for these leaches?
are they planning on anything other than raise taxes to pay for these leaches?<<< Maybe they’ll take the well funded private retirement funds 401ks etc
Okay, go to google and put the title of the article in the search bar. Click on the first one and it should take you to the entire article. It’s a trick that you can use on a lot of these sites.
We face an uphill battle in rationalizing the public db plans. Besides the ferocious lobbying effort by public employee groups, these plans have extremely strong legal protections. The public employee groups claim that retiree benefits cannot be reduced even in bankruptcy. It is not clear that states can declare bankruptcy. Local governments can declare bankruptcy but there may be constitutional prohibitions about state bankruptcy.
Colorado is the first state to reduce pensions for current retirees by reducing the COLA. The COLA was 3.5% regardless of inflation. It is now a maximum of 2%. However, reirees have filed a lauwsuit to restore the COLA. In anticipation of this lawsuit, the legislature kept the benefits unchanged for the judiciary, a semi bribe to obtain judicial consent. The retirees are fearful that this law (very flawed) sets precendent for future benefit reductions.
Most state and local government politicians are doing what politicians usually do about this horrendous problem: establishing commissions and study groups to bat the problem down the road, while unions representing civil serpents ferociously fight any attempt to reduce pension benefits of current workers or retirees. About the only steps taken so far ar to move new state and local government employees onto defined contribution plans, but this approach won’t start saving real money for decades.
My proposal: when states like California come to Washington, as they inevitably will, to seek bailouts because of their pension woes, Washington should bail these obscenely generous plans out but condition this on a federal tax on bailed out plan benefits. Any retiree in a bailed-out program would be subject to an off-the-top federal tax of 10% on the amount of his/her pension in excess of 50,000 to 75,000; 20% on the amount from $75,000 to $100,000; 30% on the amount from $100,000 to $125,000; 40% on the amount from $125,000 to $150,000; and so forth. (I’d be willing to consider a 50% maximum on any amounts in excess of $150,000.) Every civil serpent I’ve ever known is constantly singing the praises of steep progressive taxation: let’s see how they like it when applied to their grossly excessive pension benefits.
This federal tax would also recapture taxes from an amazingly large group of California retirees who’ve mugged the California taxpayer for their gold-plated pension and then moved to Texas so they wouldn’t have to pay income tax on the benefits.
Pensions are the ticking time-bomb here in New Jersey. They’ve been under-funded for years and the amount is in the billions. Gov. Christie is in for a fight with the unions over this and it’s going to be painful and ugly.
These leaches should not be the focul point of all this anger. Be angry at the politicians and the union heads, it’s all about control! If you were offered a raise tomorrow would you say, no thanks. Is it excessive, yes! most union members are in a catch 22 situation. If you voice your opinion, go against the union leaders you don’t work. Much like what Washington and Obama is doing to the states to it’s own party members, to wall street, the corporations and to the American people. There is an underground who vote for America.
A larger chunk of the article is here.
But it really says nothing that most FReepers don’t already know. Public employees pension costs are draining the private sector.
Union leaders negotiate unrealistic future benefits.
Union leaders collect bonus on these “rich” contracts.
Future benefits (ie. pensions) cannot be paid.
(Yawn) Union leaders LIE, again!
The Vallejo bankruptcy was the first domino:
http://en.wikipedia.org/wiki/Vallejo,_California#Bankruptcy
Nice. Thanks.
Dream on, pardner. The unions OWN Congress.
Rattner, Cuomo Said to Be in Talks on Pension Probe (Update2)
Go figger.
We in the dial-up community thank you for that tip.
They do now. After November, maybe not so much.
Federal Government Expenditures vs
Federal Government Current Reciepts
Of course not. We are here to work for the leaches.
I don’t believe County governments can declared bankruptcy in California. Non-chartered County governments here are a creature of the state legislature and subject to general state law. Technically, all non-chatered County property belongs to the state. If California was to go, all the non-chartered Counties would go with it. If a non-chartered County was to fail, the state would have to back it as one is an agent of the other.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.