Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.
Posted on 08/20/2010 12:26:09 PM PDT by Poundstone
Taxpayers must cover at least a third of a $3 trillion bill for public employee pensions even if lawmakers eliminate cost-of-living increases and raise the retirement age, according to an academic study.
“Even if states uniformly eliminated generous early retirement deals and raised the retirement age to 74, the unfunded liability for promises already made would still be more than $1 trillion,” Joshua D. Rauh, associate professor of finance at Northwestern University’s Kellogg School of Management in Evanston, Illinois, said in a statement.
(Excerpt) Read more at kellogg.northwestern.edu ...
How about concessions. If we have to spread the wealth, let them also spread the pain. This is NUTS!
They need a structure for state and local governments to go through orderly bankruptcy, by which the ridiculous government pension promises will be cut. The cost will be the state and local governments being less able to sell debt in the future—unless the bondholders are made whole through the process.
I don’t think the author understands the word “must”.
Taxpayers MUST?! I’ll be goshdamn....... =.=
If that becomes policy I will stop paying taxes.
“Entering a Death Spiral? Tensions Rise in Greece as Austerity Measures Backfire”
http://www.spiegel.de/international/europe/0,1518,712511,00.html
“austerity” for us, but not the goobermint class.
I think this is an issue that ultimately may hinge on the specific wording of individual state constitutions. From what I’ve read, the pension obligations of some states have some “wiggle room,” allowing those states, potentially, to get out of the obligation. Other states’ constitutions are written in such a way that pension obligations are inviolable contracts which may not be extinguished even by the state declaring the equivalent of bankruptcy.
What I’m saying here is that if you can move to another state, select a state that doesn’t have much of a pension overhang to pay off.
I live in Virginia.
“Taxpayers must cover at least a third of a $3 trillion bill for public employee pensions”
Only if the public employees are among the living.
“Thank God I’m a federal (not state) retiree.”
I would not feel so comforted. Did you know that federal pensions are entirely unfunded? Although the federal government contributes 11.2% for the pension, the money is just spent on current government programs (including retirement income for federal retirees). We will reach a day of reckoning on federal spending including federal pensions, Social Security, Medicare, Medicaid, and many other programs. The era of free government money is coming to a close.
Repeat Offender says "no." Who wants to don kevlar and play chicken?
Weimar Germany
"As an apprentice painter Wilhelm found himself making more and more money as wages increased during the early 1920�s. Unfortunately those Reichsmarks would purchase less and less as time went on. My grandfather told me that at one point he made RM1,000,000 a day, an amount that was paid daily. One million Marks, it turned out, was enough for his lunch on the job site, and then to buy food for dinner for himself, his father, and his sister. Nothing else.
His father, Edward, had found by this time that the buying power of his pension was drastically reduced.
There was labor unrest among the railroad workers, and one of their demands was for the total lifetime pension to be paid as a single lump sum. Eventually this was done, and my great-grandfather discovered that his total pension was sufficient for dinner for the three of them at a restaurant. So much for his pension.
Early in 1923, the family decided that my grandfather was to emigrate to the United States. In the U.S. he could find work and the money would be worth something. He had a childhood friend in New York State who could meet him when he got off the boat. Somehow the money was found and Wilhelm took the train to Rotterdam to begin his journey to the New World.
My grandfather had a large box of money with him on the train. To his surprise, after buying the ticket he actually had money left over! But what should he do with the extra money? My grandfather realized that Reichmarks would be worthless in the U.S., so he decided to pack the money up in another box (�larger than a shoebox,� he said) and mail it home to his father. However at the central Post Office in Rotterdam he was disappointed to be told that the postage on mailing the box of money to Germany was as much as the box of money itself!
So with the box of money under his arm, my grandfather stepped out of the Post Office into the city square in Rotterdam. He said it was a bright Spring day and a clock was chiming the hour. Just then the square filled with children as their school day ended. On an impulse my grandfather opened the box and began throwing the money into the air! How my grandfather would laugh and his eyes twinkle as he described the squeals and shouts of the children! How they scrambled for the worthless German money floating in the air! At least for a moment, it was good for something.
Moral to the Story.
I believe that the story of my grandfather during the Weimar inflation has several morals. One is that inflation punishes economic virtue. My grandfather�s family had income-producing property and a pension, but the income from both was destroyed by the debasement of the Reichsmark. Thrift and financial planning came to nothing. Also the inflation destroyed the value of hard work, as the earning power of my grandfather decreased even as the nominal value of his earnings ballooned."
Now, you have noticed that all state debts have increased, say the last 20 years. And were they not boom times? So, if the Republicrats could not find money to pay debts during 'good times', what makes you think they will now, or in the near future? Honest bet? They won't. So, the debts will continue until collapse, or they are like Weimar Germany,or ten years ago in the Soviet collapse with their pensioners, paid in junk money.
Sure he’s gonna say this...he’s on the government PENSION roll!
hmmm...looks like there is not complete agreement on that theory:
http://market-ticker.org/archives/2589-More-Ill-Noise-And-Other-States-PENSIONS.html
FYI
Well, at least I have the comfort of knowing that if my federal pension is inflated into oblivion, everyone will be in the same boat!
(although I also note my pension has automatic COLA coverage as well).
No, Daisyjane, that article is in full agreement with my theory. In fact, I read that article last week.
The article asserts that Illinois doesn’t have a contractual obligation to pay state pensions.
I simply note that this assertion, and the entire article, pertains to the state of Illinois only. My suggestion to fellow Freepers is: check out whichever of the 49 other states you have an interest in, to see what their pension obligation pension is, and what their state constitutions say.
Difference between state and federal, evidently.
That said, I wonder where the SCOTUS decision (of some years ago) that claims the gov’t has no legal obligation to pay SS benefits comes in. (?)
Good grief, what a mess we’re in.
Smirk all you want , we’ll give you your pound of flesh in worthless US Federal Reserve Notes ... While we earn our money in “New Dollars”. I sure hope you prepared by saving on your own,,, should have been easy for you as we paid you double what your worth for all those years and covered all your healthcare expenses.
“Thank God I’m a federal (not state) retiree.”
Well, you’re still a leech.
Notice the evil that followed the theft of the value of the ReichMark.
The same evil has potential to follow on the heels of the theft of the dollar.
That stolen value goes somewhere..only to those for whom there is never enough money or power.
Unless you’re ex-military, a state leech is better than a federal leech.
This could all be changed by reverting to the old rules. That is, before arrogant federal judges decided that they could *compel* State legislatures to appropriate money, States could just cancel debts like this—and did.
Historically, this usually happened when States made foolish bond issues for projects that that were unrealistic. They would just cancel the bonds, and the investors would lose their entire investment. This was called “risk”. And while the State couldn’t issue bonds for 10-20 years thereafter, because nobody would buy them, eventually its credit would be restored.
I keep hearing these numbers being thrown about. The first time perhaps five years ago. now more frequently. Could you provide us some references?
Yes, I feel that German history since Bismark had been one bad reaction against past errors...one after another.
I see us in this type of rhythm now.
http://www.shadowstats.com/
December 2008 - GAAP-Based 2008 Federal Deficit
US federal obligations are larger than the present US and the rest of the worlds GDP combined.
by the way, the UN was built on the site of a slaughterhouse.
Our elected representatives failed to represent us, failed to represent our interests, acted against our interests and sold our interests for the support and the votes of the public employees whose benefits became overly generous.
We disavow their actions.
We will maintain pension payments for public employees of financially unsound government pension plans, but, we will not require that support to insure 100% dollar-for-dollar of the overly generous benefits, if the fund can't afford it.
First - all such pension plans must be closed to all new public employees.
Second - the banking, insurance and investment industries must be encouraged to establish TIA-CREF style defined contribution private pension plans, many of them and enough of them to offer real competition to the likes of TIA-CREF.
Third - new pension contributions for public employees must be made into such plans, in which the pension account is theirs, the employee's, from day one and remains theirs when they go off to some new employer; it is never tied to their employer or to continued employment with that employer - it is theirs. And, most important, neither their employer nor their union nor the government gets any say so over which of the private pension plans the employee chooses to tell their employer(s) to where their employer pension contributions should be made.
Fourth - the laws must mandate the same open, worker owned, worker centric, private pension plans, and their open market for all employees as well, private as well as public.
The government, union, big-corporation pension plans have always had a big negative aspect to them; no matter what they appeared to do for the employee. They are of even greater benefit to the employer, than the employee, by making benefit-slaves of the employees who continue in a job, fear to leave a job, fear to try something new, fear to expand their horizons, fear to end their dead-end position, due to the government-tied, employer-tied, union-tied benefits they will lose; benefits tied to “years of service”; benefits, or some portion, that in the segregated employer, union, government plan they might have given up if they had less than X “years of service”.
In a nationwide, fully private pension market, the contributions, and future value, for each year of service has left the employers’ hands as soon as their contributions hit the employees’ private pension accounts.
At retirement, that account may have had any number of employers that paid into it, and they may have paid in at different rates of the employee's annual compensation. Those will be the result of decisions the employee makes, including what terms they seek, and are able to obtain, from each of their employers. Regardless, at retirement, they have an account and a pension that belongs to them; a defined contribution pension to be paid out by the rules of the plan(s) the employee chose to build their pension account(s) in.
The crony-capitalist corporate giants will at first oppose this along with the unions (how many new information technology entrepreneurs would leave the likes of Intel, Microsoft, or Apple if they can take their personal pension accounts with them). The big employers and unions won't want to lose the power given to their institutions - in the benefit plans - to keep the employee tied to them. But there is also a big plus for them (and investors), as well as the taxpayers with the plans described above. The “liability” of the employer is to pay the contributions to the pension plan as nearly regularly as they pay the wages - end of liability.
Watch now, as some politicians start stealing my ideas and claiming them for their own.
All government workers should Forfeit their Retirements into Social Security and go into that system. Its only fair since the Government sqandered all the Social security money. They should be reminded THEY ARE THE SERVANTS and Not the Masters
Ballplayer ,,
You are 100% correct , Federal employees pensions and retirement savings should be confiscated and placed in the Social Security coffers. We can’t have all the people that paid the Feds salaries all these years go without. My father and his older brother both worked for the gov’t after WW2 , by the mid 1960’s my uncle out-earned my father , who was an IBM branch manager , even while his job duties evaporated.. he used to joke that he just read the newspaper the last 20 years he “worked”...
tired1 ,,
The Federal machine will first tax all tax deferred retirement savings at your current income tax rate and they will place an annual fee , maybe only 1 or 2% , on what remains. They like to “boil the frog” ..
I’m not sure if the display is as meaningful as you intended.
GDP is an annual figure, and all the figures for all government “debt obligations”, U.S. and otherwise, are the totals for long term obligations, to the maturity date of those obligations - 1,2,5,10,20 & 30 years into the future - not just this year, or next year.
Measuring the total of the obligations against the annual (current) GDP, is like measuring the total principal for your mortgage on your house against your annual income.
If GDP is to be used as a comparison against government “debt obligations”, there are only two valid comparisons.
One would be the annual interest being paid on the debt plus any brand new debt issued (in a given year) against the annual GDP. That would be like comparing your annual income against the annual sum of your mortgage payments plus any new “home equity” loans added to the debt on your house that year.
Of course, in addition to all the interest the treasury has been paying, Obama has greatly added more brand new debt the past two years, so the GDP comparisons for those two years would still be extreme in an historical sense.
The other would be the total of the debt obligations against a projection (estimate, based on current trends) of what would be the accumulated GDP over all the years until all the current debt’s redemption dates would come due. That would be near to a comparison of your mortgage, total principal and interest, to the point at which it will be paid off, against the sum of your annual income for all the years until the end of the term of the mortgage.
Either one would not paint an image as dire as the one you supplied.
Am I trying to say the debt level is no big deal? No.
I am saying that comparing the total of the debt against annual GDP bears little on how paying that debt will be realized; which will never be trying to pay the whole thing in one year. Ergo, it doesn’t inform the debate as much as it simply makes a chart that projects a certain, false, image about the meaning of the size of debt.
The numbers are so big, what would you compare them to?
I’ve heard that at present yearly deficits, in nine years, ALL income tax will be for interest on the debt.
Do you think at present rates of taxation, there will be any business or service that can be shipped out, that will not be shipped out of the US?
I can see all engineering, most back office law, accounting, architecture being done in China or India.
Who, what person, or industry, or service is supposed to just service the debt?
Maybe we can go to the late stage Roman taxation racket where you get a bill based upon your potential to earn income.
Yeah.
I would not compare an amount (the total federal debt) that is due (must be paid) over the course of the next 30+ years, to the annual GDP, any more than I would compare the amount of your mortgage, principal and interest, to your annual income. No one expects you to pay your mortgage in one year, and no one expects the total federal debt to be paid in one year either. Thus, the GDP/annual-income vs long-term-debt/mortgage comparison does not tell us much about what is bad about the size of the debt.
As I tried to say to you all ready, my point is not to minimize the importance of the problem of just how big the debt is, only that the total-debt to annual GDP comparison is not a very helpful one, because it is not a very valid comparison of the total debt to how much, and over long a period of time, it can take to pay it down.
"I’ve heard that at present yearly deficits, in nine years, ALL income tax will be for interest on the debt."
The amount of the annual budget "deficit" does not bear a one-to-one relationship, in terms of it going up and down, with the annual cost of "paying" for what had been borrowed to fund the deficit. The primary cost is in the interest that must be paid on the debt.
For fiscal year 2010, that amount is said to be $375 billion. From 1988 to 1998 it averaged about$298 billion/year. From 1998 to 2008 it averaged about $368 billion/year, however, in the five years from 2004 to 2008, it average about $392 billion, with 2008 alone at $451 billion. [http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm ]
And, income tax revenue (for 2008) was running at about $1.125 trillion (45% of $2.5 trillion) [ http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm ]
So, is it NOT likely that in "nine years, ALL income tax will be for interest on the debt" . There is no current basis for anyone to project that as a reliable figure, given that current income tax revenue is about three times as much as annual interest payments on the debt. All kinds of other predictions, good and bad could be made, but they are all dependent on too many unknowns, maybes, "what-ifs" and estimates projected from such uncertainties.
BUT, the importance of the amount of interest on the debt IS the increasing amount of the total federal expenses that it is becoming.
That is part of the real problem, that the interest payments on the debt (not the total debt) plus entitlements (social security & medicare) ["mandatory" federal expenses] taken together, without very large corrections and soon, can crowd out the ability to fund the essentials of government (defense and the like) as they consume an ever large share of the federal budget, and the GDP.
http://www.heritage.org/budgetchartbook/entitlement-interest-spending-squeezes-federal-spending
That - what it costs us each year (not the debt total) - the interest expense on the debt, plus entitlements, annually and projected into the future, is the valid comparison to annual GDP. As the interest expense increases and the "baby boomer" entitlement payments increase, they consume an ever larger share of the economy, which means an ever larger share must be sucked out of the private sector to pay for them.
http://www.heritage.org/budgetchartbook/entitlements-consume-economy
Again, as you can see, I am not trying to minimize the debt. I am only trying to get folks to use valid comparisons that educate us instead of selecting comparisons and graphs for some image they present, when the image, due to the type of comparison it makes, does not really inform, because it uses a rather worthless comparison.
I would tell every one of these bums and leeches to screw off. We are broke and can’t afford this insanity.
Who are you going to inform? The more than half of Americans that couldn’t do a fraction if their lives depended upon it?
What place does accuracy have in a innumerate citizenship?
Who do you expect to have any popular traction when you might as well be speaking in some dead language?
No pensions, state or federal, transfer them to SS and let them draw the same as SS.
No reason to give them any more.
“Who are you going to inform?”
Apparently not you.
“What place does accuracy have in a innumerate citizenship?”
I am to include you in that category as well?
“Who do you expect to have any popular traction when you might as well be speaking in some dead language?”
Not nearly as “dead” (useless, meaningless, uninformed, empty of material content) as the graph you selected.
Knowledge problem bump.
(snicker)
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