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Pension Plans Put Under The Knife

Public pensions, on the chopping block in Detroit and Illinois We’ll look at the future of public finance and public pensions across the country.

Detroit city workers and supporters protest outside the federal courthouse in Detroit while awaiting the bankruptcy decision, Tuesday, Dec. 3, 2013. Judge Steven Rhodes announced Tuesday that the city the biggest city in U.S. history to enter bankruptcy. (AP)

Detroit city workers and supporters protest outside the federal courthouse in Detroit while awaiting the bankruptcy decision, Tuesday, Dec. 3, 2013. Judge Steven Rhodes announced Tuesday that the city the biggest city in U.S. history to enter bankruptcy. (AP)

If you have a public pension, perhaps you felt a chill last week. Big  pension cuts were approved  in Detroit and Illinois.  A once sacred social contract  with workers  now teetering. Blown up. With millions of retirees, owed trillions of dollars now facing a dicey retirement and very uncertain financial future. The whole country is watching this play out. Pension holders and Baby Boomers wonder where the cuts will come next. What’s the solution if the money just isn’t there anymore? Can these promises really be broken?  This hour On Point: Unpacking America’s pension pandemic.

Guests

Tim Jones, reporter for Bloomberg News in Chicago.

Alicia Munnell, director of the Center for Retirement Research at Boston College and professor of management sciences at the Carroll School of Management. Author of “State and Local Pensions: What Now?

Andrew Biggs, resident scholar at the American Enterprise Institute.

John Day, retired police detective for the Detroit Police Department.

From The Reading List

Chicago Tribune: Illinois lawmakers approve major pension overhaul — “Supporters hailed the bill as a solution that would ‘ensure retirement security’ for current and retired state workers, public school teachers outside Chicago, university employees and state public officials. They also said it would end the squeeze on state tax dollars that increased pension costs have placed on education and social services.”

Bloomberg News: Pension Threats in Illinois, Detroit Rattle Government Workers — “For generations, public employees accepted modest wages for the promise of a secure retirement. The decisions, coming after efforts to curb public-employee power in states such as Wisconsin, Indiana and Michigan, may embolden other municipalities, leave workers more vulnerable and prompt unions to new tactics of opposition. Retirees are already seeing reduced benefits in cities such as Central Falls, Rhode Island, where a judge last year approved cutting pensions to help it emerge from insolvency. In California, San Jose Mayor Chuck Reed is leading the push for an initiative that would let cities cut benefits already promised to employees.”

New York Times: Pension Cuts Must Be on the Table – “It’s easy to point to low average benefits for public employees, but these averages include workers who spent only a few years in government employment. In reality, public employee pensions are typically much – I repeat, much – more generous than those paid in the private sector. or instance, a full-career Detroit city employee would receive a traditional ‘defined-benefit’ pension equal to two-thirds his final salary, for which he contributed nothing. Detroit workers could voluntarily contribute to a 401(k)-styled ‘defined-contribution’ plan, on which the city guaranteed 7.9 percent annual returns even in bad times. In good times, both the defined-benefit and defined-contribution pensions received bonus payments. Add in Social Security, and it’s possible to earn more while retired than while working. It’s hard to argue that the typical Detroit taxpayer is doing as well.”

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  • JGC

    From the Bloomberg News piece above, “In California, San Jose Mayor Chuck Reed is leading the push for an initiative that would let cities cut benefits already promised to employees.” : It should be noted that Reed is a Democrat, and that currently, for example, San Jose law enforcement officers may retire at age 50 after 20 years service, and at 90% of their pay. The generous benefits were originally written California-wide during the 1999 tech run-up, before the tech crash a year later.

    • BHA_in_Vermont

      Yeah, this business of retiring after 20 years at 90% is a bit ridiculous. The company I retired from after 34 years was < 30% of the top 5 consecutive earning years. And that plan was capped in 2007 with retirement for years worked after that converted to 401K only. For anyone who was not eligible to retire within 5 years of 2003, it is 401K only. Just hope the market is doing well the entire time you are retired.

      • TFRX

        No, if the market’s not doing well, and your 401k is in the crapper, it’s your own damn fault.

        Just preparing you for what the common wisdom will be next.

        Haven’t you heard? Everyone who is convinced that SocSecIsBankruptYesterday also is in the 101st percentile on their own funds. A miracle, ain’t it?

    • 65noname

      so, because CA might or might not have put that pension in place, detroit retirees living on an average $27,000 year pension without medicare should loose their pensions?

      • JGC

        No, this is not referring specifically to Detroit. Within the Bloomberg article cited by On Point, they mention what is going on in California. Funding pensions almost in full after only 20 years of service, and retiring as early as age 50 (which essentially allows enough actuarial time to start a second career), is an unsustainable combination for the pension funds.

    • 65noname

      so, assuming whatever about the CA or any other pensions, please explain why retired detroit workers’ pensions, averaging $27,000 per year, without social security, should be cut?

      • JGC

        Uuhhh…I don’t think I said anything about the retired Detroit workers’ pensions needing to be cut. Again, I was making an observation specific to situations like California’s pensions, which were set up to be unsustainably generous. The topic, if I read it correctly at the top, is “Pension Plans Put Under the Knife: …We’ll look at the future of pensions across the country.”

        • 65noname

          Actually, I am qiute capable of reading the headline. But thanks for the offer of help.I still ask, Since the detroit pensions are “under the knife” how is the CA pension issue relevant to detroit? Or do you agree that the detroit retirees should not be loosing their pensions?

          • JGC

            Please see my additional comment under my name at the beginning of the thread.

            And now I’ll ask a question: why is so important to you that every person make a comment about the Detroit situation?

          • 65noname

            actually I don’t see any reference to detroit in your comment although I might have missed it. As for your question, I consider it important that people realize that the issue in detroit is not that retirees are receiving outrageous pensions while having retired at a ridculously early age as it is being characterized both here and in every discussion of the pension issue, either directly or by inference.
            And the main reason that this issue was the topic of the show was because a court o.k.ed the cutting of detroit retirees ‘ pensions.

          • JGC

            OK, I mean that the $27,000 pension due the Detroit workers is a totally different situation from the San Jose problem. The Detroit pension is not at all unreasonable, especially given that they (for whatever reason) do not have access to Social Security and Medicare benefits. (That seems like a poor negociation done on their behalf, back in the day).

            On the other hand, I do think the $95,000+ pension being paid to the San Jose police and firefighters is very hard to justify, going by the tax base specific to California (they cannot raise property taxes, as I recall).

            Gotta go scrape the snow and ice off my car, and pick up the kids from school. Hope this makes my position clear, Have a good day, now.

          • 65noname

            thanks for supporting the detroit retirees. have fun with your kids.

    • 65noname

      And, by the way, I don’t care which branch of the republocrat party any parrticular politican belongs to. thats a red herring.

      • JGC

        You don’t, and that’s fine, but some people do. Right, coastghost?

        • 65noname

          huh? who is “coastghost”?

          • JGC

            Coastghost is a commenter here (from South Carolina leaning conservative) who has made comment(s) today blaming the whole pension situation on Democrats being beholden to unions. I wanted to mention that there are Democrats who are trying to address the pension problems.

            Do you think cities like San Jose can afford to pay out pensions at 90% to 50-year-old people after only 20 years on the job?

          • 65noname

            well, I don’t know either the finances of San Jose or the amount of people who actually receive that sort of pension (or close to it). What I do know is that the first thing that happens when a govenrment entity decides to start cutting pensions and benefits is that the so-called experts, who are usually actually political think tank spin dudes, start in with the anecedotal tales of the police chief in CA who worked for 2 minutes and now receives over $100,000 in pensions. Dealing with those sort of issues is not the problem. They are rare and aren’t that big a share of the overall pension pie (although they are outrageous and should be stopped just as the multi-million dollar golden parachutes given to failed business executives should be stopped).
            What does matter to me is that in actuality, tens of thousands of retirees with very modest pensions are loosing them as a result of the national movement to cut all taxes and demonize all government employees. Thats why I think that its important to point out the real status government pensions rather than these antecdotal
            spin stories.

          • JGC

            Agreed. Absolutely.

    • JGC

      By the way, just found one more piece of information to put the California situation in context compared to the one in Detroit:

      Police officers and firefighters who have retired from the San Jose departments since 2007 take home average pensions above $95,000.

      Even with the higher cost of living (mainly housing) in San Jose, this seems to be way out of league compared to the $27,000 pension being mentioned by the Detroit retirees.

    • mjhoop

      If law enforcement offers retire at 50, I’m glad. I want young strong able people doing law enforcement in my neighborhood. They also each leave a job open for a younger person. That’s how it is supposed to work, but the system is upset by the medical community’s ability to keep so many of us alive beyond our natural life span. Tsk-stsk.

  • Fiscally_Responsible

    The fact of the matter is that exorbitant pensions for public employees at all levels of government including the amounts of the pensions and the ridiculously young or low number of years of service (epitomized by congress who I believe can receive a lifetime pension if they served only one term) is what is bankrupting cities like Detroit, states like Illinois, and the postal system. Just as companies that go bankrupt negotiate lower pensions with their employees as part of their bankruptcy restructuring, so should governments. Governments get away with it because politicians print money and give in to the arm-twisting tactics of the powerful unions, to whom they are beholden (especially Democrats) for votes. If the unions are unwilling to negotiate to a more reasonable level so that police and other services are not cut because pension obligations are squeezing out the ability to hire and pay current workers, then it’s time to get rid of the stinking unions.

    • 65noname

      dude,

      You’re entitled to your own opinions. but you’re not entitled to your own facts.

      The average pension for detroit city workers is $27,000. barely a living wage. and detroit city workers aren’t eligible for social security. And the city government of detroit does not “print money”. Only banks are allowed to do that with their phoney mortgage insurance scams.

      For years politicans have failed to vest and put money into the pension funds as they were supposed to do. that’s how they made up for the shortfall for the taxes they weren’t applying to industries that were making billions a year as well as government’s failure to make sure that the ultra-rich 1% were paying their fair share.

      now you want garbage collectors, cops, firepersons, streetcleaners etc to pay the cost. Next you’ll want to lower the minimum wage in order to get your garabage picked up twice a week.

    • RolloMartins

      That had little to nothing to do with Detroit’s bankruptcy. The Right is using Detroit as a lever for further eroding of unions. Why don’t you look into the role of an eroding population, the role that real estate played, and the role that large banks played? Hmmm? Or is your post mostly about “stinking unions”?

      • Fiscally_Responsible

        Of Detroit’s 28 billion debt, 8 billion or so is due to unfunded pension liabilities. You aren’t going to solve Detroit’s fiscal problems without taking an ax to what amounts to 30% of the debt. The alternative is that you get rid even more of the current workers (it already takes an hour for the police to respond to a 911 call now) so that the taxes used to pay current salaries can now be channeled toward pensions. Of course, when property taxes dropped because there are no fire fighters to put out the fires and no income taxes because everyone is dead or has left the city due to rampant crime, then you will no longer have a solution. The “stinking unions” refuse to face up to fiscal facts because they would rather get their pensions even if it means that the city ceases to exist. Their alternative is for the state or federal government to bail the city out.

  • Charles Vigneron

    From my library shelf, ‘Passing the Bucks- The Contracting Out of Public Services,’ AFSCME, Second Printing, February, 1984, foretells the story.

    ‘Age of Betrayal,’ Jack Beatty, Doris Kearns Goodwin’s book ‘The Bully Pulpit,’ about Teddy Roosevelt. The political corruption of elected officials influencing contracts. Early whistleblower legislation. Our current plutocracy/governance. OnPoint!

    ‘We Can’t Make it Here,’ McMurtry on the soundtrack this morning,

  • OrangeGina

    Not all pensions are this generous, or require no contributions. I hate to see public employees of modest means get lumped in with some of these over the top examples.

    • 65noname

      in fact the average detroit city pension is $27,000. and they’re not eligible for social security

      • http://www.findingourdream.blogspot.com Hal Horvath

        $27,000 seems more than that average Soc. Sec. draw, right? I mean you can look this number up, and see for yourself.

        …does 5 second search…

        wow!!

        Soc. Sec. only $1230/month in 2012, average

        You might say that’s a bit…cough….less than $27,000/yr.

        Makes the pensions look *very* rich.

        • 65noname

          dude,
          While its hard to figure out the whole of what you’re talking about my point is that when discussing the pensio cuts in detroit, “experts” are constantly mentioning anecedotal evidence of someone somewhere getting a $100,000 pension despite only working 5 years. but its the retirees in detroit who are having their pension cut and THEIR pension is only, on average, $27,000, not an outrageous amount. in fact, not even enough to sustain a middle class life style. AND, they aren’t even eligible for SS. AND, they are loosing their medical benefits even though they aren’t eligible for medicare.
          do your research, dude!!!
          And, as for your comment elsewhere saying who cares that they don’t receive SS, that’s in the past; well, first, the point is that it is important to understand that the detroit retirees HAVE NO OTHER SOURCE OF RETIREMENT PENSIONS. Get it???? And, of course by your thinking, their pensions should not be cut because, well, they were earned in the past.

          • http://www.findingourdream.blogspot.com Hal Horvath

            Totally agree do research. You shouldn’t presume you’ve done enough. I know I haven’t, so I limit what I say to be very narrow and not assert broad conclusions, for example to claim $27,000 isn’t much. Actually, it’s not bad at all. Just saying. And how? By comparing to actual reality — actual Soc. Sec. benefits actually being paid now.

            That *doesn’t* say anything about medical.

            To say something meaningful about medical, you’d have to do serous research and find out typical out-of-pocket annual maxes for Mediare vs the benefits to be compared. Then you’d have something substantial to present I think, one way or another.

            Oh, and my point was the opposite about Soc. Sec. ! Public employees that are excluded from it have been very ill used. Just read more carefully. :-)

          • 65noname

            well, I’ve read carefully enough to know that you don’t have any idea about what it takes to live in a major metro area, epsically for a retired person without medical insurance. Whether or not social security would pay more, they aren’t eligible for it. And, as the right constantly
            claims, social security was not meant to be a retirement pension but rather to supplement one. the detroit retirees are loosing their actual pensions, medical care AND don’t have social security.
            Try to read more carefully. And make sure that you have researched your story before you go national with it.

          • http://www.findingourdream.blogspot.com Hal Horvath

            sure, but….90% of people retiring have lived on less than when they worked since…well in all times and places. Not that it should be poverty, but it is just going to be a lot less than when working because that’s the way people have always lived except that scant few that save like crazy…
            For what it’s worth, I just wonder how many union members ever thought money would show up later when states started making big shortfalls. That’s just not realistic.
            Having said all that, the only viable solution is a *middle* way. Not a hard-nosed lawsuit way, but a compromise.
            And about the “story” we are talking in general, since the actual situations run the gamut from A-Z.

          • 65noname

            I think that most retirees actually thought that they had already made a good faith bargain. They had already negotiated a “middle way”. Now you want them to take less than the poverty level (check out the poverty level income for two adults) and you think that calling it something like the “middle way” makes it be a reasonable path of compromise. You’re wrong.
            nice to throw in a shot at unions also.

          • http://www.findingourdream.blogspot.com Hal Horvath

            I hope I don’t appear (wrongly) to take shots at “unions” as if they are all one and the same, without individual difference.
            I have the slightly unusual position of being neither pro- nor anti- union. Any organization can do good or bad, individually and in specifics.
            I see you were referencing automobile worker pensions? I was talking only about public employee pensions.
            For public employees only, I point out that many years ago the states/cities in question had big shortfalls in contributions to pension systems…… *That was when the real decision was being made, the irreversible choices, and decisions. That was when unions could have tried to change the outcome* Now it’s like closing a barn door after the horses are gone.

            I don’t know when the crucial moment (years before the crisis) happened at GM, Chrysler, etc. 2007? Earlier?

  • Charles Vigneron

    I’d imagine the greatest government numbers are disabled and retired military personnel. Survivors.

  • andrewgarrett

    The inconvient truth is ignored by many of my fellow liberals.

    • Don_B1

      And what “truth” is that?

  • alsordi

    This is where Americans just don’t get it.

    They fail to understand what’s at the base of their economic system. A private bank (the federal reserve) creating money, and buying bad debt with more created money, along with a fractional reserve banking system that creates more false wealth from nothing.

    These generous pensions to retirees is no difference in productivity to a federal of state employee whose job is not needed, or overstaffed fire and police departments, or overstaffed military personal and their budgets with $100 dollar screw driver contracts.

    Its call TRANSFER PAYMENTS, be it for welfare recipients, do nothing government workers or pensioners. Transfer payments buy groceries and beer, pays rents and mortgages, buy cars and toys.

    As smirking Bush told the people… save the economy….go shopping !!
    This is America!! A very prosperous…but not very longer productive. The question is how much longer it will last.

    • John Cedar

      And yet the US dollar is the number one reserve currency in the world with a great track record for low inflation other than than since Carter. Must be the rest of the world is as stupid as ‘mericans. Or else the rest of the options are stupiter.

      • Labropotes

        Aren’t most countries (China, EU, Japan, Canada at least) printing money as fast or faster?

      • alsordi

        It’s a fiat currency backed by only by military force. The bankers took out Saddam for going Euro and Ghaddafi for going Dinar. $$$ 3 Trillion so far to strengthen the dollar. But they can’t take out everyone who strays from the dollar (russia, china, brazil, india, iran, etc), while the US decays from within like detroit.

        Stay tuned.

        • John Cedar

          We see the same future and quibble over how we are getting there.
          They can’t take out everyone who strays from the dollar? But that is how the dollar became the dollar.

  • Fredlinskip

    Since late 70′s the wealthy have waged economic War on the American worker, selling the country on the benefits of “supply-side trickle down economics”.
    The trickle up effect worked fine, working to perfection just before and after recent economic crash.
    Not to worry- it will start to trickle down in higher wage jobs any minute now.
    To believe otherwise means you’re a Comi socialist.

    • John Cedar

      That would explain why, since 1970, the American workers houses have doubled in size. The number of cars in their driveways have doubled and run twice as far.

      The number of bathrooms and KVA of their electrical feeders have doubled. The number of bathrooms and feet of kitchen cabinets have doubled. And the number of flat screens and available channels have doubled. The number of times they eat out has gone up ten fold.

      All those jobs Clinton sent to NAFTA and to most favored China with the help of unbridled corporate espionage and trade secret sales, are the jobs that democrats wouldn’t do anyway.

      • Ray in VT

        and many Americans have been financing that lifestyle with massive amounts of personal debt, as real wages have not allowed people to attain those things without the sort of over-leveraging that kicked us in the rear end in the not so distant past.

        • Labropotes

          Where do you think the responsibility for this should be placed?

          • Ray in VT

            For people running up personal debts?

          • Labropotes

            Yeah.

          • Ray in VT

            I think that people should pay the debts that they incur. There is a bankruptcy process that works for some, although my mother in law did not like the changes to the bankruptcy laws that went through a few years ago. I don’t think that people should incur more debts than they can reasonably expect to handle, but I also don’t think that the companies which enable bad behaviors in some consumers should get off the hook. I am also very much not in favor of certain business and loan practices that seem geared towards misleading potential borrowers, who may not be savvy enough to understand what they are getting themselves into, or which depend upon the sorts of interest practices that would have at one point been classified as usury.

          • Labropotes

            I agree. Thanks.

          • TFRX

            I don’t know how much I agree about forcing bankrupt people to pay back.

            Do you remember Neil Bush? Started an S&L, gave his friend keys to the vault, and when over half a billion went missing (yet insured by our tax dollars), declared it bankrupt.

            The rich have figured out, just like Max Bialystock, that there’s money to be made in failing, and there will be damn little moral scolding given to them for it.

            The rewriting of BankruptcyForPeople was covered like every person who thought of it simply went out on a credit card bender and then called their Visa bank and said “oh, it was stolen before all those purchases”.

            Of course, I don’t care about what you-in-particular think, as you’ve shown yourself to have some decent skepticism and judgment. But until our media and tastemakers get over their “bankruptcy is a strategic winner for corportations and rich people, but if poor people do it they’re losers who should go to the workhouses” stuff, I can’t get on board.

          • Labropotes

            Did Ray say that?

            In corporate finance one is taught to view a loan as a put option. Meaning that if the value of your assets ever drops below your debts, the smart thing to do is walk away.

          • TFRX

            Say “what”, what?

            I’m pointing out that when one is a white collar finance type, one gets to walk away without scorn being heaped on them. That bankruptcy is a strategic thing to do, and one gets to keep their Florida mansion (literally–last I checked those were not on the table).

            Bankruptcy for the riffraff is viewed by our media like it was going to be for George Bailey: Scandal, shame and prison.

            PS I hope your not talking about Neil Bush’s S&L. Cos that’s a “how rich people get to give money to their friends while still calling yourself an entrepreneur and not ending up in prison” moment.

            The stakes are soooo different for rich and corporations than they are for poor, and this is exacerbated by what our media reflects and amplifies.

          • Labropotes

            I’m agreeing with you. I wanted to be clear that in textbooks for MBA’s one is taught to walk away from underwater assets.

            The what what is I wasn’t sure Ray said the bankrupt should be made to pay. I think he accepts bankruptcy.

          • TFRX

            Thanks for the context and clearing things up.

            (This is one of those things which would be clearer in conversation than in pixels.)

            Now I have to get the image of Neil Bush as Mr. Potter out of my head!

          • Fredlinskip

            Certainly W and Greenspan didn’t do much to discourage predatory lending. During the worse of bubble years, they were all about instead promoting “ownership society”.
            Their “feed the rich” unregulated economic philosophy certainly decreased upward mobility.

          • TFRX

            Greenspan?

            Alan “I’m shocked the markets didn’t behave like in Atlas Shrugged” Greenspan?

            Anyone still booking that turd is beneath contempt.

          • Don_B1

            Mr. Greenspan has just had a new book published and is on the “book promotion” circuit of all the political talk shows (including Charlie Rose about a week ago).

      • Fredlinskip

        While I would have to agree Nafta was not Clinton admin’s finest moment, the Clinton years produced more jobs than Reagan, W, and W’s father combined as well as very strong growth of middle class, and lower national debt.
        Conversely, upward mobility decreased and national debt increased during GOP admins.

        Maybe we can get Bill to run again?
        Or.. or… How about his wife?

        • John Cedar

          I fear she is tainted too much after joining the radical left corrupt Obama administration.
          Who knows…maybe the voters will say, “what difference does it make”.

      • alsordi

        Sure Mr. Cedar, with two (2) paychecks, overtime and lots of debt. What world do you live in??

      • Don_B1

        Your mileage data are out of date:

        Both the average individual miles driven and the total miles driven by Americans has been dropping in each of the last eight years, the years when workers’ incomes have been under the most stress, rising less than 0.5% each year, while the wealthy had income gains of up to 30% peryear:

        http://dc.streetsblog.org/2013/02/27/for-eighth-year-in-a-row-the-average-american-drove-fewer-miles-in-2012/

    • http://www.findingourdream.blogspot.com Hal Horvath

      No, just the “market” alone is enough to get this outcome of stagnate and declining employee wages (in inflation adjusted terms).

      When we went for “free trade” we put American workers into global competition…on wages.

      Just that simple.

      No conspiracy needed.

      Solution: don’t allow China “free trade” favored status so long as it continues to manipulate its currency to subsidize its exports.

      Just that simple.

      • Don_B1

        The manipulation of its currency by China has in practice come to a near end (down from a peak of 10.7% current account in 2007 to 2 percent a year ago):

        http://www.washingtonpost.com/blogs/wonkblog/wp/2012/10/22/five-facts-you-need-to-know-about-chinas-currency-manipulation/

        Item 3) is the most pertinent for this discussion, but the whole post applies and should be incorporated in everyone’s thinking.

        • http://www.findingourdream.blogspot.com Hal Horvath

          Great, so there are no more currency controls? Chinese exporters can hold dollars and use them, etc.?

          ?

          Not.

          When they can, just like a US exporter can hold Euros, use them, etc., then it will be a new day indeed.

        • http://www.findingourdream.blogspot.com Hal Horvath

          When currency controls end, then the Yuan will rise significantly.

        • http://www.findingourdream.blogspot.com Hal Horvath

          When currency controls end, then the Yuan will rise significantly.

          By the way, Klein is usually good, but he presented a very deceptive table of data. Check for yourself a “graph China foreign reserves” (look at images) and compare it to Klein’s referenced 29% !

          I haven’t caught Klein in such a sharp error of conclusion before, but it can happen when you post as much as he does I think. That’s why it pays to *never* rely on just one independent source to confirm a preferred idea.

          • http://www.findingourdream.blogspot.com Hal Horvath

            In fact, you should do the opposite of trying to confirm an idea you like.
            You should try to shoot it down…. That’s how you get solid in your thinking.

  • John Cedar

    It will be interesting to see how the totalitarian branch of our guvmint responds. Considering that public pension insolvency only happens in democratically controlled cities and states, where the judges are appointed by the same wholly owned subsidiary party of the unions.

    When NY’s black govneror Patterson tried to control costs with furloughs, the court quickly ruled that he had not exhausted his options of taxing New Yorkers at 100% income and 100% assets. It ruled that these contracts the elected entered with the racketeers, had to be followed even if it involved taking extraordinary revenue generation.

    Then Obama called him and told him not to run because he was too honest to be a real democrat. And they tried to get him for taking free Yankees tickets. Trumped up charges since those tickets are worthless and he could not see even if he wanted to. As SNL never let us forget he was legally blind.

    • hypocracy1

      We all know is very Republican not to honor your contracts… take the debt ceiling debate for example.

      • Fiscally_Responsible

        speaking of honoring one’s commitments, “if you like your doctor, you can keep your doctor. PERIOD. if you like your health insurance plan, you can keep your health insurance plan. PERIOD.”

        • jefe68

          Until the insurance company drops you or refuses to cover what you thought you were covered for.

          • Fiscally_Responsible

            I’m not the one who told the lie ..I mean made the promise.

          • jefe68

            Again, all the health insurance companies routinely dropped people all the time for years, were are you as outraged by that or is it just the issue of Obama not being forthright in his comments about the ACA?

          • TFRX

            Don’t interrupt his Gullible Gulch fantasy. It makes for such good storytelling to the kids around the Christmas tree.

          • Don_B1

            The wording was really unfortunate as Democrats are acknowledging, but the real issue is in this post:

            http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/07/obamacares-real-promise-if-you-lose-your-health-care-plan-you-can-get-a-new-one/

            And that part of the promise is real and will benefit 10 people for every one hurt by the literal belief in the President’s promise.

        • nlpnt

          And ohhh, how consevatives would’ve whined and screamed “communism” if any attempt had been made to enforce that on the insurance companies!

        • Don_B1

          How many people do you think believe President Obama was promising that their doctors would not die, retire or move to another distant location or give up their practices for some other reason?

          But most of those who have had policies “cancelled,” there are policies that the canceling company simply did not tell them about, some of which are cheaper and others that do include their current doctors.

          The big problem is that many insurance companies generated new policies after the PPACA became law which left them ineligible for grandfathering but they were sold without a mention of that issue.

    • 65noname

      what does his skin color have to do with it?

      • John Cedar

        A: Nothing.

        Ethnicity is only and always a factor in opposition postured by Teapublicans.
        If Obama had a son, he would not look like Paterson. Er…I mean his skin color wouldn’t.

        • 65noname

          I’m still wondering why you mentioned paterson’s skin color. as in “NY’s black govneror Patterson”

          • John Cedar

            I dunno…maybe because I’m a racist and didn’t know it. To answer would require too much uncomfortable introspection.

            I would rather you answer why you pretend to think the fact that he is black is irrelevant? I would rather examine why a party that pretends to advocate for certain groups who receive the short end of the stick, had its leader go out of his way to participate in sabotaging a successful black politician. Not only did Patterson deserve better treatment than he received from Obama and his fellow democrats, he deserved the same type of inappropriate affirmative action Obama took in defending professor Gates and Trayvon Martin.

            Why would you think race is not relevant? Are you in denial or just disingenuous?

          • 65noname

            1. glad to see that you admit that you are a racist. 2. I don’t “pretend” “to think the fact that he is black is irrelevant”. I know that it is irrelevant to the “court ruling … ” about the tax issue that you raised. Unless you are asserting that the court ruling was based on his being afro-amerikan. 3. As for your issue with whatever “party” that you referring to, I leave your nocturnal emissions to yourself. 4. what in the world could you have against anyone being sympathetic to an unarmed person being shot down by someone who went on in the future to demonstrate his propensity to pull his gun whenever it was irtritated at someone. 5. As for your reaction to obama, perhaps it is because of the racisim that you seem to admit to. be that as it may, obama is not my dude and I have no need to, or interest in defending him. 6. you have it wrong. If you think that somethink is relevant, supposedly, you have a reason. Just as if you had mentioned that he has a toothache; supposedly it would be because you thought that it is somehow relevant. 7. Are those my only options? Or was it really only a rhetorical question?

  • creaker

    The reality of these pensions is finally coming to fruition – they were agreements made knowing that they were just kicking the can down the road and these agreements really aren’t worth the paper they were written on.

    Wait until the same is done to Medicare and SS.

  • SamEw

    There will definitely be comments here about how this is about rich people taking advantage of poor. Keep in mind though the people getting pension cuts are actually probably more wealthy than those who aren’t getting their trash cleaned up, dealing with police and firefighters unable to respond to their problems or traffic lights the city can’t keep on. I feel for those who have had pension cutbacks but there’s also real serious problems in Detroit that need to be taken care of and aren’t. Also, in case your thinking this isn’t about city services and functionality, Wall Street debt holders are losing money because of the bankruptcy also.

    • Don_B1

      The big rule of investing is to diversify your money across multiple companies in different sectors of the economy. So no one on Wall Street should be suffering cataclysmically due to Detroit’s bankruptcy, which is a strong possibility for many of Detroit’s pensioners, if the cuts in the pensions go as deep as some are proposing.

      • SamEw

        You’re absolutely right the point was no one is ‘winning’ from the bankruptcy other than maybe a few attorneys.

  • creaker

    So do these pensioners get to turn around and tell those they owe money to that things have not panned like they planned so they’ll only be paying a portion of their debts?

    • SamEw

      They do if they file bankruptcy but I’m sure as is the case with the city it wouldn’t a first or even fifth option.

    • http://neilblanchard.blogspot.com/ Neil Blanchard

      They may have agreed to lower wages, based on their pension being there when they retire. This is a cruel bait and switch.

      • TFRX

        Nobody’s mentioning that. Well, except those pinko lefty bloggers.

        “I hired a guy with a hammer to refinish my cabinets. Why are they in splinters?”

  • creaker

    We’ve shown ourselves to be a society where it is acceptable to steal from the elderly to maintain our own comfort.

    • http://www.findingourdream.blogspot.com Hal Horvath

      Not so simple.
      You can just as easily (more easily!) show that the younger generation of 20 somethings is getting taken to the cleaners by baby boomers.

      • Don_B1

        If it is so easy, why didn’t you at least point out the major paths for showing that?

        Hint: it takes a lot of deceptive false assumptions to “show it.”

        • http://www.findingourdream.blogspot.com Hal Horvath

          Read for yourself (if you like….) about the ratios of Soc. Sec. and Medicare payouts to current retirees vs. their contributions…..

          If you like.

          I like the old adage: you can lead a horse to water….

  • MarkVII88

    How awful or underpaying are the State/Municipal public sector jobs such that the only way to get people to do them is to offer a long-term retirement pension that puts the fiscal future of the city or state at risk? Why should anyone expect the taxpayers to finance their retirement? Should that not be the responsibility of the employee (403b, 401k, IRAs, other investments)?

    • Jack

      They’re pretty underpaying, I can vouch for that. But, I hasten to add, I contribute to my pension, and I’m not on the taxpayer dole, either, since the agency I work for also must make defined contributions to my defined benefit plan. Of course, looking at a 401K and IRAs, given how well they performed recently, I would much rather take a lower paying job now and have a secure retirement than get to retirement and have my investments tank like so many of the boomers.

      • TFRX

        But in insisting on someone else honoring your contract you leave yourself open to being lumped in with “greedy people”, don’tchaknow.*

        Ask yourself “What would CNBC’s Rick Santelli say?” and genuflect before the Chicago Board of Trade. Or to whichever right-wing fluffer is taking care of “Neutron Jack” Welch’s need to get his ego stroked.

        (Don’t ask yourself what Rick Santelli would do with his own money, because 1) he never has to make that decision and 2) he is at the 99th % of investing, so anyone pointing and saying “Rick Santelli can do it” is full of it.)

        (At this point do I have to say I’m kidding here?)

        • Don_B1

          Only the wealthy have the recognized right to have their contracts enforced when it is to their benefit.

    • 65noname

      because the government signed a contract with these employees and they worked 30 to 50 years for wages based on those contracts. Or are contracts only sacred wwhen they benefit corporations?

      • Don_B1

        That only contracts that favor the wealthy need be enforced appears to be the way the Very Serious People view the world!

        Remember the pushback to the people horrified by the $multimillion bonuses being paid to big bank employees after the financial crisis and its “rescue” by TARP despite “moral hazard”?

  • James

    So politician A makes lucrative deals with interest group B, using tax payer dollars. This interest group organizes and helps to fund said politician’s reelection campaigns.

    And we’re supposed to feel sorry for these people?

    • Jack

      The politicians, no. But the civil servants who are on these plans, and have no other retirement income (because this was supposed to be their income and because this was what they paid in to rather than a 401K), yes, we should feel both pity for them and outrage. How would you feel if a judge said a company could have a share of its 401K contributions back because of bankruptcy? I don’t think anyone would support that, but this is essentially what is going on here.

    • 65noname

      well, you’d have to define who “these people” are.

  • AlanThinks

    Boston has joined the list of cities with unsupportable financial obligations. The city council just awarded patrolmen a 25.6% pay increase to the tune of @ $80M. The cost will increase as the award is provided to the non-patrol officers, and followed by the firemen whose contracts are up soon. What is not reported is the pension obligations that accrue with these raises. Officers typically retire after 25 years at 75% of the final 3 years of their pay. Meanwhile, residents of Boston – who have not received any pay raises, or are unemployed – struggle with average wages less than 1/2 the average cop. And watch as the city is forced to lay off more workers and unable to afford school reforms. The new Mayor, who did not ask the councilors to vote no on the contract, has failed to lead even before he takes office.

    • TFRX

      unable to afford school reform

      I thought school reform saved money. That’s what the Rheeists keep telling me.

      • Labropotes

        ERheese to the top!

  • Coastghost

    “Crisis”? pension plans reaching sudden turning points? Chicago Public Schools has been operating with budget deficits of OVER $200 million annually since the early 1990s. (over $700 million at last report)
    “Crisis”? who in Illinois was choosing not to see the actual costs of operating budget deficits for the past twenty-five years? The “sudden revelation” being heralded here today suggests that since people haven’t cared for decades and more, they have little room for complaint now.

  • Jeff

    I think this always comes down to a basic math equation…pensions are set up to promise more than is ever put into the system. Defined compensation packages just make a whole lot more sense when it comes to determining what each individual should receive during retirement. Wouldn’t the individual workers really have money in the bank, in an account, in their name rather than a massive account which is out of your direct control (as an individual worker) and someone has to “manage” the account besides you.

  • creaker

    So – going forward, how many times will cities and states get to go to the well? There’s no guarantee this will only happen to a pensioner once, it could happen over and over.

    I also wonder if we’ll see a cycle of pension cuts followed by tax cuts followed by needing more pension cuts, etc?

  • James

    2900 a month aka 34,000 a year, aka much more then Social Security

    • 65noname

      but much lowwer than is needed to support a moderate middle-class retirement. plus no medicare.
      Get a grip

    • Don_B1

      But most people getting Social Security also get a pension; why do you conflate the pension of these workers with only Social Security?

      Because you don’t mind leaving these workers destitute?

  • Jack

    The simplest method to solve the pension problem is to raise taxes but, given the absolute opposition to any sort of revenue increase by most people, it is decided that it is better to give the shaft to public workers who spent their entire careers underpaid and under-appreciated than case any minor discomfort to high wage earners.

    • Fiscally_Responsible

      People are already paying high taxes for very limited, unsatisfactory services. The liberal answer is always to raise taxes rather than make hard choices regarding limiting government spending.

      • Jack

        Taxes aren’t that high, and if the services are limited and unsatisfactory, well, you get what you pay for…

        • Fiscally_Responsible

          That’s because too much of the tax money is going to pay ridiculous wages and benefits such as pensions instead of current employees to provide those services due to the obscene power of stinking unions.

          • Jack

            That’s an assumption that is unwarranted. In my state, there are no unions, and the highest wages are paid to political appointees of supposedly fiscal conservatives. My pension is the only real benefit I get from my employer; while I get medical insurance, I pay more for premiums and have a higher deductible than those in the private sector. Sorry, but your assumptions don’t match the experience of living under and working for so-called “fiscal conservatives.”

          • TFRX

            Good points.

            Oh, and if you like correcting assumptions which are unwarranted, you will have a buffet with this guy.

          • jefe68

            True that.

          • 65noname

            do you really call the detroit average $27,000 per year pension (and no social security or medicare) a “ridiculous …. pension”?

          • jefe68

            Yep, he does. You’re dealing with social Darwinist here.

          • Don_B1

            So you want to make cuts in the funding of pensions so they will be underfunded and then you can “pull a fast one” and say that because the pensions were underfunded, they are not required to pay out what was contracted to be paid to retirees?

    • SamEw

      In the case of Detroit this is just wrong. Detroit already has the highest legally possible property tax rate and a city income tax.

  • ToyYoda

    I still don’t get it. 80% funded is still less than 100% funded. And I thought the discussion in Detroit was to cut some pension but not all of it?

  • Labropotes

    One simple absurdity embedded in public pensions is a discount rate of 8%, which is about the norm across the country. In essence, it is the rate of return one expects on his investments. It is impossible presently. Why allow this assumption?

    • Andrew_MN

      They use that return because it allows the fund to look better than it may really be – kicking the can of their responsibilities further down the road.

  • Jeff

    Just a question for public sector workers…would you be willing to give up your pensions to join a 401k type program where the state/city contributes a set amount to the account just like a private sector worker receives? That caller seemed to prefer that option.

    • Jack

      Not me; at least, not without significant increases in salary to bring my pay up to the equivalent of a private sector employee. I wouldn’t be able to save enough for retirement without increased wages. This, of course, won’t happen as I haven’t even seen a cost of living raise in the last decade.

      • Jeff

        Hmmm, I suppose it depends on the specific type of job but the large majority of jobs in government don’t really offer lower compensation than the private sector (i.e. teaching). I would also include a lump some contribution for those who have already contributed to that type of system. It would just make individual workers more responsible for their own savings rather than putting it into a large fund and assuming their payments will never change (ignoring the reality of the stock market).

        • Jack

          It is difficult to compare teaching to the private sector, which doesn’t really have an equivalent of, say, a university professor. But, just for fun, the average salary for a corporate trainer is $54K; for a teacher, it’s $30K.

          • James

            $30K? For an entry level teacher sure. For a catholic elementary teacher or a day care worker it’s probably less. Can’t imagine anyone who spends any time as a teacher isn’t making more then that.

          • Jack

            Not much more…not in my state, anyway…

          • mjhoop

            Ditto mine.

          • Jack

            I should also hasten to add that, in the public sector, one must suffer the indignity of enforcing rules and regulations and then, when the public comes against a rule they don’t like, immediately reach to the “I pay your salary” argument. I can’t tell you how many times I’ve heard a student say they deserved an A because they paid for the course.

          • Labropotes

            The other students deserve that they not.

          • TFRX

            So the “absolute dumbest thing to say to a traffic cop to get out of a speeding ticket” has experienced mission-creep to teachers?

            Surprised it took so long. Caveat: I don’t know what age kids you’re dealing with, but teenagers do get mouthy and full of themselves.

          • Jack

            I teach at a public university, so theoretically, I teach adults. Because I do deign (as some of my colleagues might put it) to teach evening courses, I have a lot of returning adult students and who readily give me the “taxes pay your salary” response; the “I paid tuition” comes from more traditional students. My spouse, who works at the same university in program administration, has received that very argument (“my taxes pay your salary”) on a number of occasions as well.

          • Jeff

            The average salary for public sector teachers in my state is $50k+/year and they get summers off, winter break, spring break…great pensions, oh did I mention they can easily retire before age 60?

          • Jack

            Well, sign me up! When can I move to your state and get one of those jobs?

          • Jeff

            You’ll just have to deal with below zero temps for the next few days here in Minnesota…you’re more than welcome to stop over in the state.

          • Jack

            It beats the violent mood swings we get in my state; in the 70s one day, freezing the next. At least you can play basketball indoors ;)

          • TFRX

            More of that “all those days off” crap.

            They just show up, like any factory worker, punch the clock?

            I don’t have to buy paper and pens for my office job. I don’t have to bring papers home to correct.

            You don’t know any teachers, do you?

          • Jeff

            My dad is a teacher, along with my sister.

          • TFRX

            And they don’t have to buy paper and pens for my office job. They don’t have to bring papers home to correct. This “oh boy, 180 days of work a year” stuff.

          • Jeff

            That doesn’t happen in the private sector? I’ll remember that when I’m writing software for work on a computer I purchased at home outside of the 40 hour work week or when I get sent on a business trip to Kazakhstan for a month working 50-60 hour weeks.

          • Don_B1

            And what is their response when you throw comments like the one you just did above at them?

          • Jeff

            They stopped doing the teaching thing a while ago…although my dad who is 66 and still working probably wished he had stayed in the teaching profession since he wouldn’t be working any longer.

          • mjhoop

            Bully for your state. Try looking at some other states. NC comes to mind. And the teachers I know take summer jobs to make up for the loss of income in the summer. Or they spread out their monthly pay across the full 12 months to keep things predictable. And maybe do both.

          • Don_B1

            Also, most public sector workers have more education than private sector workers so comparing average wages across all of each sector workers is comparing apples and oranges.

            Many science teachers leave teaching for private sector jobs where the salary and pension/health benefits are much better. It is typically those that really like teaching and, unfortunately, some of those teachers who are not the best that remain teachers. So low teacher salaries work against better education for the nation’s students and future workers.

        • 65noname

          you ought to provide some documentation for your claim that public sector jobs pay the same as the equivlent private sector jobs.

          • Jeff

            Sure…here’s a nice article:

            http://www.cleveland.com/business/index.ssf/2013/09/public_sector_workers_make_mor.html

            Directly from the story:
            “Employees in private industry received an average of $29.11 per hour in total compensation..that included $20.47 in salary and $8.64 in benefits. State and local government workers averaged $42.09 per hour in compensation. That included $27.16 in salary and $14.93 in benefits.”

          • Ray in VT

            This article http://www.sj-r.com/x66784260/Comparing-pay-of-public-vs-private-employees-Pick-your-study/?tag=1 also cites that report as saying “Differences between these sectors stem from factors such as variation
            in work activities and occupational structures,” the report says.
            “Manufacturing and sales, for example, make up a large part of
            administrative support occupations but are rare in state and local
            government. Professional and administrative support occupations account
            for two-thirds of the state and local government workforce, compared
            with one-half of private industry.” and the article also says that “The federal data show that total compensation — salary, benefits, sick
            days, vacation days and retirement — of private workers at firms with
            more than 500 employees (a number of employees comparable to those
            employed by most state and local governments) averaged $40.75 an hour,
            nearly the same as average total compensation for state and government
            workers, which was $40.76.”

          • Jeff

            Haha, the big companies, that have 500+ employees, have compensation equal to what the government workers make? Most of the people in the private sector work for small businesses in the United States and on top of that the big businesses usually provide the highest pay. From my article: ”
            Workers at larger companies tended to have higher compensation than those in small businesses. Employees at companies with fewer than 100 workers had hourly compensation of $23.91, $17.70 of which was salary. Those at companies with 500 or more employees had the highest compensation at $43.15 per hour, $28.29 of which was salary.” So you are comparing government workers only with the highest paid segment of the private sector…most likely the jobs that are filled by the most in demand individuals with specialized degrees like engineering!

          • Ray in VT

            It’s probably not a great idea to compare a municipal water or sewer worker with a sandwich artist at Subway, but if you want to compare all of one type versus all of another despite warnings against such comparisons by the very people that wrote the report in question, then feel free to do so.

          • 65noname

            of course, the comparison in the article was a simple comparison betweeen overall salaries in private and public sector. It was NOT between EQUIVILANT jobs. We all know that a cop makes more than a MacDonalds worker. but those are not equivilant jobs.

    • Jo Bleaux

      The trouble is the cuts won’t affect people who are still working — they effect people who are already retired and in no position to start over from scratch.

  • Andrew_MN

    The bigger problem, and this is has been alluded to already in some of the program, is that the pension funds can be extremely volatile depending on what assumptions the pension’s actuaries and accountants make. It’s unrealistic to assume that pension assets will return 8-9% year after year, but if you try to put a realistic estimate into the model the pension fund looks grossly underfunded.

  • BHA_in_Vermont

    I was going to post that $2,900 a month wasn’t so bad until Mr. Day said he is not eligible for SS or Medicare. Unless Mr. Day and his fellow retirees get a really cheap retiree medical plan, that $2,900 will not go all that far.

  • TFRX

    Act like you’re rich, pensioners. Preach “creative destruction”.

    Nobody bats an eye when rich people grab every cent they can. In fact, they’re celebrated for it in their glossy stroke books.

    Caveat: It’ll take a lot of repetition to get through the Beltway Media, who go from the gamut of crazed righties to “Third Way”ers spouting GOP talking points. Y’know, for “balance”.

  • Coastghost

    Is it fair to generalize among Democratic city and state officeholders, that they have led both in offering generous public employee pension plans while defunding or underfunding these pension plans year after year, decade in/decade out? Detroit has been a Democratic stronghold for decades, same for Chicago and the County of Cook.
    We can guess already at Republican motivations: but why oh why have Democratic officeholders been so poor at managing critical public employee pension plans?

    • Fiscally_Responsible

      Because Democrats are hooked on crack cocaine in the form of running printing presses, issuing unsustainable debt, and general fiscal irresponsibility in order to make their union puppet masters happy.

      • Labropotes

        Could the same not be said of the other party? Maybe it’s us, the American people who buy the crap and vote them both back in.

    • Jo Bleaux

      Maybe pressure from constituents who want something for nothing and balk at paying taxes.

    • Don_B1

      You might want to read of other forces that did a lot more to create the conditions for Detroit’s problems:

      http://www.salon.com/2013/12/06/joe_scarborough_doesnt_get_it_how_gop_and_big_banks_sabotaged_detroit/?source=newsletter

      But, of course, you can’t let facts get in the way of your ideology.

      • Coastghost

        “70% of mortgages in Detroit were sub-prime: so the banks are all guilty, right?” –so says Salon: but let’s give credit to Federal regulations that encouraged banks to offer so much sub-prime credit, and let’s give credit to borrowers who had no good business securing such loans, except that Federal policies were encouraging such loose lending.
        And let’s investigate a bit further those unstated policies that undermined the Detroit tax basis over a period of almost fifty years: that appeared gradually enough to see coming, what were Detroiters and Michiganians NOT doing, seeing, thinking in the 1960s, 1970s, 1980s, 1990s, and 2000s? (Salon NEVER wears ideological blinders.)

      • mjhoop

        Thanks for this link. It’s an informative read and shows how complex are the issues. Blaming one group for this mass suicide is just simpleminded hogwash. Too bad so many people need simple, one size fits all explanations of complex situations.

  • Jo Bleaux

    I’d like to hear from a pensioner who doesn’t sound relatively young. Who still is able to keep a part-time job. What about all the pensioners who are too old or too ill to work? What are they supposed to do to make up the difference? They were promised the money. They based their planning on that promise, and it’s the worst kind of bad to cut the rug from under them when they don’t have other choices to make money.

    • mjhoop

      Reducing interest rates into the cellar was cutting the rug out from under those of us who planned to use interest, not chancy stock market returns, as one of our retirement streams of income. The work of turning us all into serfs started years ago.

  • David White

    It would be nice if the legislators responsible for underfunding the funds were deprived of whatever pensions or benefits they receive before the state’s workforce.

  • Labropotes

    Suppose the management fees were about 2%, maybe twice what would be reasonable, or 15 to 20% of expected returns. Allowed to compound for 15 years, the 1% above “fair” fees amounts to a 19% less in a retirement account. A fifth is not a trivial impact.

    • BHA_in_Vermont

      Given the size of the assets, if management fees are even 0.5%, they are way too high.

  • Coastghost

    Are state or municipal pension plans protected by something akin to re-insurance in the insurance industry? (to absorb losses sustained by risk-tolerant pension investment schemes, that is) Why were pension accounting standards engineered to be so low to begin with? why was such high-risk/high-return portfolio management tolerated? what kind of actuarial expertise were state insurance regulators routinely ignoring over the decades it took for this “crisis” to be revealed?

    • BHA_in_Vermont

      All very good questions

  • J__o__h__n

    Once again a right wing think tank member is “balanced” with journalists and academics.

    • TFRX

      Time for another round of NPR’s favorite Game Show, “Spot the Liberal”.

      • J__o__h__n

        Cokie Roberts was at her false equivalence worst this morning.

        • TFRX

          I’m calling shenanigans on you! I don’t know if you even heard her.

          Because anyone can say that about Cokehead every day and it’ll be true 4 days of 5.

        • Labropotes

          As an aside, I think very little of Cokie Roberts. She exudes establishment entitlement. Mme Lefarge has taken note.

      • jefe68

        Followed by the Right Wing Meme show…

  • John_in_VT

    The four lowest forms of life are, in descending order, car salesmen, insurance salesmen, investment bankers and politicians. Pensions are a confluence of three of the four. And you wonder why we have a problem with public pensions? Really??

  • Coastghost

    The Feds have no Constitutional requirement to “save our cities”, do they? Even if such power is awaiting exercise, Detroit has been bailed out many times? (with the earlier Chrysler bailout, with the more recent GM and Chrysler bailouts . . .)

    • TFRX

      “bailed out many times?”

      At least you phrased it like a question.

      Answer: No. Bailing out a corporation and a city are not the same thing. Corporation’s stockholders, dealers, far-flung factories and suppliers, to name just a few, all benefitted greatly from not bean-counting the American auto industry to short-term death.

  • Jeff

    The US government has a pension fund compensation program, they’re already bailed out!

  • Dia Bubalo Kleitsch

    As for Illinois, where is the responsibility for the politicians who decided to take a “pension holiday”? Are their pensions, health benefits and cost of living in retirement being slashed?

  • BHA_in_Vermont

    You don’t lose the SS you already paid into from jobs not related to these public sector jobs that do not contribute to SS. The recent caller’s husband is just not adding more to SS. When he hits retirement age, he will get to claim SS even if he is still working as a teacher.

    • Labropotes

      True, but maybe much less than if he hadn’t spent the last X years of his career as a public school teacher.

      • BHA_in_Vermont

        Correct, I just want to make sure people don’t think they lose what they paid in to SS. Since he worked 25+ years at a “good salary” he will get a decent amount of SS.

  • rich4321

    Obviously, the is a financial mis-management on the part of the official, someone was making good money by ripping the state off and that someone is rich now. Why in the world should the government or the tax payers have to bail them out? The state officials have to find the remedy for their mistakes.

    • Jack

      Because the state/local governments are the ones who hired the thieves in the first place. Government acts in the place of the people, ergo if the government hires a thief, it is the responsibility of the people to remedy the error. We theoretically could have gotten the same result by going to the courts…well, until Detroit’s bankruptcy, anyway.

  • alsordi

    I see how NPR framed this conversation with a State and Local perspective. This is a global issue. Its about the end to US exceptionalism and US dollar hegemony.

    The people working their butts off in India, and elsewhere, for two dollars a day are finally realizing what a party less productive Americans have been having as result of a distorted exploitative monetary system backed my military strength.

    • 65noname

      actually, US workers are the most productive in the world. the fact. productivity should be based on how a worker produce not how much they are paid. otherwise any slave or indentured worker society would be judged the “most productive”

      • alsordi

        “productivity” implies that something is “produced”.

        Many people around the world do not believe that US workers are productive.

        For instance, the highest wages and standard or living is in the Washington DC Beltway. What do they produce ?

        What does Homeland Security Produce. How about Raytheon and General Dynamics? I guess they produce…. things that destroy cities and kill things. Depends on what you mean by “produce”.

        • Labropotes

          alsordi, in case you get droned tonight, I enjoyed your comments today.

      • truegangsteroflove

        “Most productive in the world” is conventional wisdom, but as we have seen over the years, conventional wisdom is often conventional error. Productivity per worker is measured in output per man hour, and depends on the ratio of capital (equipment) per worker. According to one measure (http://forumblog.org/2012/09/the-global-competitiveness-report/) the “U.S.” is number seven. Switzerland, of all places, is number one.

        It’s kind of pointless to brag about “American” productivity when the economy is headed for collapse. If you don’t believe it is headed for collapse, all I need say is wait two years. Then we will see if you are bragging about “American” worker productivity. Suffice it to say that we have a corrupt, maldistributed system that depends on infinite growth to survive. It can’t grow forever, and therefore will collapse.

        • The poster formerly known as t

          All modern industrialized economies are headed for collapse because they require cheap energy to operate and that’s one thing we’re running out of. Right now, economic growth is constrained by oil supply and price but no one will admit that.

      • 65noname

        you miss the point. I wasn’t bragging, I was saying. And I was responding to a dude that was trying to say that amerikan workers care getting what they have coming to them because they don’t work hard and aren’t productive. In fact, even by your measurement, they are very productive.

  • truegangsteroflove

    This situation is a perfect example of the fragmented society turned on itself. There was a time when it existed in relative harmony, from the end of World War II until November 22, 1963.

    After Kennedy was assassinated the “incursion” in “Vietnam” was escalated into an undeclared war. It could have gone on indefinitely, except one fragment of society – the military industrial complex – was putting its “interests” ahead of everyone else, especially young men of draft age.

    The situation with police pensions is strangely ironic. On one hand we are reading stories every day where police are doing things that place them ad odds with the greater society – shoddy work, wrongful arrests, spying on the public, over the top paramilitary operations, killing innocent people, etc.

    On the other hand, we are seeing a abrogation of responsibility in regard to public pensions, most glaringly the pensions of police. By itself this would be an indication of a problem in society, but generalized across society it indicates a breakdown of the social contract.

    It isn’t as simple as the banking sector being a parasitic force on society, though it is. If we have a trend of parasitism, of everyone trying to feed off everyone else, then chaos will soon ensue. Add in a touch of climate change here and there, and we have a recipe for societal breakdown.

    And, of course, we have an irresponsible and parasitic mass information media infrastructure to fuel the flames. We can change all this. We almost certainly won’t.

    • http://www.findingourdream.blogspot.com Hal Horvath

      Nice history.

      Let’s look even deeper: back to the single most cogent statement by the greatest of all liberal Presidents:

      FDR:

      “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service,” he wrote. “It has its distinct and insurmountable limitations when applied to public personnel management.”

      Roosevelt didn’t stop there.

      “The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations,” he wrote.

      • truegangsteroflove

        Food for thought, but Roosevelt was President at a time when unions were in their infancy. Though he may have been a great President, he wasn’t a god, and his statements on this or that needn’t be taken as sacred writ.

        The appropriateness or inappropriateness of unions, I have found, is very ad hoc. I have been a member of four unions, and in each case was better off than I would have been otherwise. Still, my longest employer, and the one that provided for the bulk of my retirement, had no union. It had a visionary founder, and his business practices were customer and employee oriented. They also were very rare, and have eroded since he sold the company shortly before his death.

        Try as we might, attempts at absolute principles in the comment section to a website for a radio show are fraught with difficulty. We live in an ambiguous, relative Universe. Just when you think you’re looking at a particle it turns out to be a wave.

  • Labropotes

    Reminder, if you pay FICA, you are a member of an underfunded pension plan. Er, unfunded. There is no money in the Social Security Trust Fund. Shhhh. Don’t tell Burnie.

    • jimino

      So T-bills backed by the full faith and credit of the USA are worthless? A lot of wealthy people and institutional investors who bought them as the safest investment on the planet are really going to be pissed off.

      Or are you suggesting that we selectively default on those securing our own citizen’s Social Security while at the same time honoring those owned by wealthy Chinese and other global investors?

      And maybe you don’t know this (and I hate to be the one who breaks the news to you) but that bank where you think you have your life savings doesn’t really have the cash there. In your world that must mean your deposits are worthless.

      • Labropotes

        The trust fund does not hold any marketable assets. But I get your points. Particularly that your bank account is a claim on a common pool of assets, just like SS. In general, I would say America is too busy debating their claims to notice the pool is rapidly depleting.

      • Andrew_MN

        Backed by the full faith and credit of the USA to be paid back with what? Dollars that don’t buy anything? This is the problem with fiat currencies. Sure will honor our debts by paying the face value in dollars, but we’ll have to print those dollars and in doing so will continue to devalue the currency to the point where it isn’t worth anything.

  • http://www.findingourdream.blogspot.com Hal Horvath

    Should have negotiated for *higher salary/pay* and also *higher employee contribution* — offsetting amounts, equal. It’s obvious. You get the same total package, but *the money actually gets contributed to start with*.
    As soon as Unions negotiated for states to have *future contributions* of course this outcome was written in stone, totally visible if you do math, and just paid any attention at all even 10 years ago when the states were NOT making full contributions….
    And a state isn’t a person, some particular person, it is a changing popular politics.
    Unions get full and complete responsibility for setting up this years ago, and it was visible as it unfolded in slow motion.

  • http://www.findingourdream.blogspot.com Hal Horvath

    Interesting. I wonder if back in 2006 even it was readily apparent that either taxes would have to be raised drastically or benefits scaled back? Of course, people that have bought expensive houses don’t feel they have room to pay significantly higher taxes, etc. Neither do they want to see roads and schools crumble, etc.

  • Labropotes

    I’m confused. It is your role to opine on the actuarial soundness of a pension fund. Your client is not adequately funding its pension. Barring a miracle, people relying on those funds for future security will be let down. And you say nothing because it would cause resentment. Do I have that right?

  • Labropotes

    I imagine you’ve gotten pretty rich reasoning like this on behalf of your taxpayer-funded and taxpayer-deceiving clientele. The SocSec reform passed under Reagan was supposed to, in part, move the program away from pay-as-you-go because there was a giant wave of baby boomers coming and the (then) future workforce would not be able to support it. The powers that be, the baby boomers themselves, proceeded to spend the entire sum collected (in the name of avoiding that crush) on cool stuff like war and vote-buying. Now the future is upon us. The money is spent. The only asset available to fund SocSec is the right to tax the worker bees. That’s not how it was supposed to be.

  • Bluejay2fly

    One aspect about public employees that is not mentioned. How many people end up in public service after their private sector job or their private pension evaporates? I work for NYS and I see people coming into state service at age 40, 50+ just for that reason. More importantly, we should honor all public employee retirements BEFORE handing out welfare and foreign aid. People who work should get paid first, then comes the charity for people who have NEVER contributed. I am also tired of hearing these journalist/propagandists cherry picking certain attributes of a pension plan to incite antipathy towards public employees. I know in my state service for every great benefit that is given there is often a sacrifice or dark side that never gets mentioned. I will admit that every now and again an example can be produced where a person winds up with an overly generous plan, however, that is a man bites dog story. If one were paranoid they might think these stories were deliberate plants by the government to foments discord towards public employees thereby fortifying the government’s stance in contract negotiation years ,and have the added benefit of distracting the masses away from the corporate cleptocracy that exists in America. Well done, comrade.

  • http://www.findingourdream.blogspot.com Hal Horvath

    To me it was immediately apparent when I read about shortfalls in state contributions many years ago that the entire funds would never be contributed, and likely only a small (less than half) part of the shortfall would at most be contributed, and more likely a much smaller part. So for instance if an Illinois pension was “70%” funded, I’d guess it might eventually be “75%” to “80%” funded at most, but just as likely would end up with something close to that same “70%” and then a redefinition of what the benefits would be (this last part is just now happening). I mean just that it was immediately obvious to me just from the nature of politics. Way back when they had significant shortfalls *that is when* they made the *real* decision….

  • StilllHere

    Pension plans should be converted to lump sum 401(k)s, enough is enough.

  • The poster formerly known as t

    The stagflation was caused by the Arab oil embargo, growing economic competition worldwide, and perhaps the U.S. government moving off the gold standard. The U.S. also reached peak oil at the time stagflation began. Experts suggest that the U.S. standard of living should have declined after it reached peak oil and became a net importer of oil.

  • The poster formerly known as t

    You lost all credibility as an objective observer when you said the U.S. is on the way to be a net exporter of oil. The oil consumption patterns of the U.S. are still far greater than what the non-conventional oil reserves will produce. The U.S. can only become a net exporter of oil if internal consumption decreases significantly in the future ,and I don’t see that happening anytime soon. You either don’t know anything about oil shale or you’re deliberately lying about it. Not sure which it is.

    Our enemies you refer to the countries in which our corporations and military have targeted for resource imperialism. The U.S. has created its own enemies by deciding to act like an empire. The U.S. or its corporations regularly install puppet governments in certain countries to make sure the majority of oil production is at the desired level. We’ve also flooded the Middle East with lots of cheap food, and arms contributing greatly to the overpopulation there that fuels terrorism.

    Thanks for showing your neoconservative bias–a view that is not complete with limited understanding of energy markets.
    You are dismissed.

  • CoSoCar58

    I paid 6% of my gross salary into a state pension fund throughout my entire career in state government until I retired from service at age 52. After throwing in unused annual and sick leave to add to my pension, it pays 55% of my highest three years’ salary. I could have made much more in the private sector. The public is paying for the diligent service I gave them at a modest salary in part by paying for my pension. Fair is fair.

  • http://www.findingourdream.blogspot.com Hal Horvath

    Interesting. Thanks for commenting. It’s a good point the differences in public employee pension systems.

  • Regular_Listener

    From my direct observations and stories I have heard, government workers are overcompensated. I am certain that many are not – but there are those who are. Like the so-called teacher I know of, who due to his seniority in the system, takes home a six-figure salary – but has given up the stressful work of teaching students and works as a hall monitor instead. There can be no doubt that he is counting the days until his 20 years are up so that he can retire at over $60k per annum in taxpayer funds. There are too many like him.

    And the behavior of the teachers and other public employees unions – they are super quick to sell out their junior members and recent hires if it will protect their pensions. I know that people don’t go into education and government service to make a lot of money, but once they are in the position of fighting to hang onto a salary and pension, their idealism falls away and they become as greedy and selfish as the big business types they seek to shift the blame onto. A lot of people can work for 20-25 years, retire at 55, and then collect comfortable pensions for decades, much of it paid for by people who are taking home less money than these retirees.

    I am not sure what the answers are, but some things heed to change. Possible solutions: raising the retirement age, raising taxes on the wealthy, shrinking the distance between top salaries and lowest salaries in the unions, requiring workers to contribute more to pension plans, providing better pension plans for workers in other sectors, putting a cap on how much any individual’s pension plan can pay out.

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