POWIP Piece of Work In Progress – Former Abode of Dan Collins

The Debt Is Too Damn High, Public Finance News 13Mar2011

Let me expand my view a little larger than public pensions right now. They're not the only ones breaking the bank.

SOCIAL SECURITY

The Social Security Trust Fund is not only a lie, but may be worth less than zero. But that's only if we treat it like it were something other than zero. If we ignore all those slips of paper in a building somewhere in West Virginia (or wherever they're warehousing it now), and =poof=, they're worth zero. In case you're curious, here is what the trust fund has been doing since 1957. Some interesting patterns, ne?

What is the color of the sky in Mr. Lew's world? "Social Security does not contribute to the deficit in the medium term"....okay. Sure. How did you get your job, again? Look, it does not contribute to the deficit only by those projections. Remember those projections that were supposed to say the cashflows wouldn't reverse til 2016? And they reversed starting last year? I think you need to redo your homework, young man.

A look at possible impacts of raising the retirement age.

Former Bush adviser says there's no chance of Social Security privatization in the near future.

Social Security Myths:

Myth: Social Security didn’t create the deficit — and shouldn’t be cut to close it
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Myth: Social Security benefits are earned; reducing them amounts to confiscation
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Myth: Social Security is funded until 2037
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Myth: The trust fund is invested in Treasury bonds, the most secure investments in the world. To suggest that the trust fund wouldn’t pay is blatant fear mongering
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Myth: Social Security is an easy fix

I agree that there are no easy fixes to Social Security, but there are lots of simple fixes. It's just that many will be politically unpopular. So the complicated, half-assed "fixes" is what we'll likely have in the near term.

Boehner makes noises about considering entitlement reform. More on legislative debate, complete with Mr. Lew's idiotic remarks.

Karl Denninger says we need to stop lying about Medicare and Social Security.

Robert Samuelson pisses people off by calling Social Security middle-class welfare. While I don't agree with his definition of what constitutes welfare, I do believe SocSec will eventually become out-and-out welfare for older folks, as opposed to the blanket program it is today.

PUBLIC UNION PR

Threatened boycotts are always a great way to win friends and influence people. Solidarity, bro! Oh, and maybe you want somebody else as the public face of your union.

Union myths from Tom Sowell

From Ann Coulter, a profile of that working-class hero: the government bus driver pulling down 6 figures.

Rural areas in Wisconsin driving public union resentment in the state?

Why collective bargaining for public employees is a fiscal disaster. I don't think this is the driver, and the next link will show that.

A look at a study comparing the richness of the pension benefits against the collective bargaining power of the public employees. They don't seem to be connected, and that's hardly surprising in the public sector. The public employee power comes electorally, in funding campaigns and getting out the vote -- not in the ability to negotiate particular contracts. If you've bought your politician, what need is there for strikes and official bargaining? They'll get you what you want.

THIS IS WHY WE'RE BROKE

Math is hard. Aren't there rich people we can tax? Wait.... it wouldn't even plug one year's worth of deficit?

You first: President Obama criticizes legislators for not doing something that he's never done-- proposing entitlement reform.

Richard Posner (from last December) does a run-down of our public financing crisis.

At its core, many of the problems stem from demographic issues -- as illustrated by Europe. And a look at what is going to be happening to the generations in the U.S. in their different experiences of expected and actual retirements. I plan to work til I die.

Busting retirement myths. Now, I'm very pro-annuity, but they are correct about issues with fees. And there are reasons for that, though - it's a very thin market. If people valued the benefit more and we had more money going into that market.... we might be able to see some competition. As it is, it's a niche.

The "social insurance" federal programs make up 35 percent of personal income in the U.S. now. For such a cruel society, we sure to spread the wealth around a lot. Look at it from the perspective of the federal budget, and it's 40%. And this ain't the insurance biz, as well you know, Prof. Bainbridge (thus his scare quotes) -- this is just wealth transfer from the young to the old, and in many cases from the poorer to the relatively richer. Huzzah.

And of course, nobody wants to see their goodies cut.

Just for fun, take a look at this list of government departments/bureaus and see all the waste.

What would state bankruptcies accomplish?

PUBLIC PENSIONS

Just show us the numbers:

As for your city, your school districts, your county, your mosquito abatement district: How often does one of the 7,000 local governments in Illinois tell you how much you and other taxpayers fork over just for pensions? Our guess is, never.

That will change if Congress passes an excellent bill that's roiling the world of public finance. U.S. Rep. Devin Nunes of California, with help from several dozen other House and Senate Republicans, would require every government body in every state to regularly disclose to the U.S. Treasury the detailed status of its pension assets and liabilities. Great! These governments finally would show us citizens the numbers.
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So far, only one congressional Democrat has spoken publicly in favor of Nunes' Public Employee Pension Transparency Act: U.S. Rep. Michael Quigley of Chicago. Why the silence of the Dems? Because unions aren't wild about spotlighting the dire condition of so many government pension systems. Union officials fear, logically, that if taxpayers realize how much pension debt they hold, they will demand lower benefits, later retirements and other economies.

Bill Zetter looks at who is paying what in Illinois pensions, but come on, Bill -- you know all that money is coming from the taxpayers. The issue is whether the employees get their total compensation boosted by taxpayers beyond what was originally expected (when the pension fund does poorly, or when crazy things happen to benefits). Holding total compensation to a particular level would mean that when pension fund contributions increase, yes, the cash-in-hand-right-now would decrease for employees. Okay, I know people aren't all that interested in these semantic games, but it is important: all the money is coming from the taxpayer.

A look at some of the generous terms under which Florida employees can retire.

The State Pension Time Bomb from Veronique de Rugy.

A conflict of interest problem in public pensions: judges could block pension reform.... reform of pensions that also cover themselves. Not sure how that should be handled.

John Bury looks at public pensions spin from government reps.

No, really, everything is fine -- public pension costs have peaked (in the UK). That is unlikely, I think. I'm not so delusional as to think that the 50-year projections I made for TIAA-CREF were going to be able to show that the annuities would do what we wanted ... though I had fun telling them that they wouldn't know if I had made a mistake for 20 years. The difference with a private company is that they won't let these mistakes compound over decades the way a government body can and does.

More on public pensions in Europe. They are looking at having to cut as well. Wisconsin reactions are low-key compared to the angst that has been going over there on this topic. More on UK public pension reform. UK unions are not happy, duh.

Next up for the Evil Party: cutting public pensions to zero, entirely. Or, rather, no longer footing the longevity and investment risk of the employees' retirement savings and income. But the author has it correct: switching new employees to defined contribution plans won't fix the unfunded liabilities that are from current employees and current retirees. But it won't compound the problem, either.