What should States do with the pension system?

[borosp1]

They really need to get rid of the whole pension system.... Its the only reason why taxes go up and up every year. Not what the politicians tell you when they say its to save teachers jobs... Get a life its so they can hire thousands of more idiots on the govt teet for life.

"Some economists think the last straw for states and cities will be debt hidden in their pension obligations.

Pensions are debts, too, after all, paid over time just like bonds. But states do not disclose how much they owe retirees when they disclose their bonded debt, and state officials steadfastly oppose valuing their pensions at market rates.

Joshua Rauh, an economist at Northwestern University, and Robert Novy-Marx of the University of Chicago, recently recalculated the value of the 50 states’ pension obligations the way the bond markets value debt. They put the number at $5.17 trillion.

After the $1.94 trillion set aside in state pension funds was subtracted, there was a gap of $3.23 trillion — more than three times the amount the states owe their bondholders.

In Illinois, the state comptroller recently said the state was nearly $9 billion behind on its bills to vendors, which he called an “ongoing fiscal disaster.” On Monday, Fitch Ratings downgraded several categories of Illinois’s debt, citing the state’s accounts payable backlog. California had to pay its vendors with i.o.u.’s last year.

“These are the things that can precipitate a crisis,” Mr. Rauh said. "

article: http://www.nytimes.com/2010/03/30/business/economy/30states.html?pagewanted=1&partner=rss&emc=rss

 

[IronWing]

We can get rid of these pension liabilities when you agree that we can come to your house and steal all your stuff. Employees earned these pensions, they were part of their employment contract. We can phase them out for future employment but the debt that is owed to retirees and current workers is debt owed, not some social welfare program. The only "crisis" is that politicians chose to underfund the pension systems knowing full well that the piper would have to be paid someday. This is what happens when politicians manage to separate taxing and spending in the minds of the voters. "I'll give ya'll a big ol' tax cut if ya' vote fer me, der hey!"

 

[borosp1]

Is it really fair when some superintendent of a school district earns 300K+ year and in 20 years can have 80% of his salary for life. If pensions are guaranteed contracts then they need to cap the max payment to 50k/year adjusted each year for inflation.

 

[IronWing]

Is it really fair when some superintendent of a school district earns 300K+ year and in 20 years can have 80% of his salary for life. If pensions are guaranteed contracts then they need to cap the max payment to 50k/year adjusted each year for inflation.

Again, for future employment, states can make whatever offers they want and folks can choose to accept them or seek work elsewhere but that doesn't change the fact that employees earned the current pension liabilities. Changing the terms of employment after the work is complete, reducing compensation, is theft.

 

[Slew Foot]

Declare bankruptcy, void contracts, done.

 

[Hacp]

No more pensions for overpriced union members.We can't afford it.

 

[lothar]

We can get rid of these pension liabilities when you agree that we can come to your house and steal all your stuff. Employees earned these pensions, they were part of their employment contract. We can phase them out for future employment but the debt that is owed to retirees and current workers is debt owed, not some social welfare program. The only "crisis" is that politicians chose to underfund the pension systems knowing full well that the piper would have to be paid someday. This is what happens when politicians manage to separate taxing and spending in the minds of the voters. "I'll give ya'll a big ol' tax cut if ya' vote fer me, der hey!"

When last did California and Illinois implement tax cuts?
Aren't California and Illinois liberal bastions by nature meaning they rarely ever cut taxes and don't do anything besides spend, spend, spend to oblivion?

For those states(including California and Illinois), it's more like "I'll increase spending on useless gov't programs at the expense of pension liabilities if ya' vote fer me, der hey!"

 

[theevilsharpie]

I don't know about Illinois, but the big problem with California is that its much easier for the Assembly to spend funds than to raise them. Consequently, the state is deadlocked between assemblymen that refuse to increase taxes a single penny and assemblymen that refuse to cut any sort of government services whatsoever, and the state is stuck with a budget deficit that's continually increasing.

 

[Hacp]

I don't know about Illinois, but the big problem with California is that its much easier for the Assembly to spend funds than to raise them.

You mean the Assembly would rather spend funds than cut the budget...

 

[theevilsharpie]

You mean the Assembly would rather spend funds than cut the budget...

Either interpretation works.

 

[boomerang]

Again, for future employment, states can make whatever offers they want and folks can choose to accept them or seek work elsewhere but that doesn't change the fact that employees earned the current pension liabilities. Changing the terms of employment after the work is complete, reducing compensation, is theft.

That's not going to work. They're going to have to introduce a freeze with a sliding scale into the mix.

For example, an employee with five years under their belt will be eligible for, say, 1/6 of a pension. 10 years, 1/3. These numbers are just for example. In addition, the minimum age to retire will have to be raised, the length of service will have to be a minimum of 30 years and the payout itself will have to be lowered. The closer an individual is to retirement, the less sacrifice they'll have to make.

Pensions have been proven to be unsustainable. States, municipalities, schools and the like are going to have to adapt and bring their benefits into line with the public sector. It's a foregone conclusion.

Phase this stuff in over a period of time to minimize the pain. It has to be done.

 

[rudder]

Make them all Federal employees. Problem solved.

 

[Sloper]

At what point can a state declare bankruptcy and rewrite their entire constitution?

 

[CycloWizard]

The government promised something it can't deliver? I am astonished!

 

[Greenman]

Again, for future employment, states can make whatever offers they want and folks can choose to accept them or seek work elsewhere but that doesn't change the fact that employees earned the current pension liabilities. Changing the terms of employment after the work is complete, reducing compensation, is theft.

While I agree with you in principle, the reality is that it's not going to work that way. The money to pay those people doesn't exist, and in most cases can't be obtained. What will happen is the Feds will once again step in and assume those liability's, and they will be added to an already staggering national debt.

 

[borosp1]

Again, for future employment, states can make whatever offers they want and folks can choose to accept them or seek work elsewhere but that doesn't change the fact that employees earned the current pension liabilities. Changing the terms of employment after the work is complete, reducing compensation, is theft.

unless you tax people to death there has to be something to give... Change the pension liabilities for current workers or be taxed to death.

 

[Hacp]

Again, for future employment, states can make whatever offers they want and folks can choose to accept them or seek work elsewhere but that doesn't change the fact that employees earned the current pension liabilities. Changing the terms of employment after the work is complete, reducing compensation, is theft.

Just take the funds from SS and Medicare "reserves". Then cease the programs and stop taxing people for it. That was the generation that awarded the generous pensions so that is the generation that has to pay.

 

[UberNeuman]

Just take the funds from SS and Medicare "reserves". Then cease the programs and stop taxing people for it. That was the generation that awarded the generous pensions so that is the generation that has to pay.

Just for my own jollies I'll ask you this - what happens to the people dependent on SS and/or Medicare/caid services...

\I've got a bet going on your answer, so... don't let me down.....

 

[Mxylplyx]

I tell you one thing, being able to retire knowing you will have a decent fixed income until the day you die would be sweet. You might be fucking your grandkids, but you'll be dead by the time they know better. Times are a changin. This whole American idea that old retired people can live in their own households and support themselves for 20 years is going to come to a quick end, especially now that pensions will soon be extinct outside the public sector.

 

[OutHouse]

No more pensions for overpriced union members.We can't afford it.

ignorance just drips from you.

 

[ShawnD1]

Declare bankruptcy, void contracts, done.

Government bonds would go from a AAA rating (low interest) to something like an F- rating (very risky, very high interest). This would actually make your taxes go way way up since the interest payments on bonds would go up. This would be like the government missing a credit card payment and suddenly their interest rate goes from 20% to 30%. They move to a higher risk bracket so the interest rate goes up.
http://en.wikipedia.org/wiki/Bond_ratings

You might be fucking your grandkids, but you'll be dead by the time they know better. Times are a changin. This whole American idea that old retired people can live in their own households and support themselves for 20 years is going to come to a quick end, especially now that pensions will soon be extinct outside the public sector.

It is a bit weird. I can understand people retiring because they're too old to work anymore, but retiring at 65 really does mean 20 years of not working. I don't think that was ever the intention.

 

[cubby1223]

When last did California and Illinois implement tax cuts?
Aren't California and Illinois liberal bastions by nature meaning they rarely ever cut taxes and don't do anything besides spend, spend, spend to oblivion?

For those states(including California and Illinois), it's more like "I'll increase spending on useless gov't programs at the expense of pension liabilities if ya' vote fer me, der hey!"

The state income tax in Illinois is a flat 3%.

But, what you say doesn't even begin to scratch the surface of the problems of Illinois...

Actually the problem in Illinois is we had Blagojovich as our Governor, have you seen him on Celebrity Apprentice? What a brain-dead idiot! He was elected Governor because at the time there was high anti-Republican hate which led to electing whomever had a D next to his name, regardless of his intelligence level.

Blago ran around the state legislature all the time and just implemented all sorts of new programs on his own. An unfunded children health care program which we cannot pay for. Declaring seniors ride free on public transportation in Chicago, of which tax monies have not been able to make up for the lost revenue, the transit system is in deep debt. There was something else major he implemented without the legislature but can't recall. I know he also went around the legislature to set up a Canadian prescription drug purchase program, grossly overbought H1N1 vaccines that went bad.

Our candidate on the D side to run for Obama's Senate seat was in charge of a government program to save & invest money from the public to pay for college tuitions, of which they royally screwed up that program and parents were left with 50 cents on the dollar to cover tuition costs.


Chicago does have one of the highest, if not the highest, sales tax rate in the country, which is driving shoppers to go outside of the city to buy things. The sales tax hike caused revenues to decrease. The revenues were supposed to go to funding hospitals, but while hospital funding has not increased at all in recent years, government officials paychecks keep going up and up and up and up!


Getting to the subject of pensions, the city of Cicero, neighboring Chicago, is a perfect example of the corruption we face but can never get rid of. They have set up a pension system that covers all government employees for life and with other full benefits medical/dental. Those in power appoint their family and friends to various positions, certainly not based on qualifications, but to hook them up with taxpayer funded benefits. They even make up imaginary positions to appoint people to. It's a tremendous burden for residents, and certainly the taxes that hit businesses.


And don't even get me started on the unbelievably corrupt system of Aldermen Chicago has...




It's massive corruption and massive incompetence on an incomprehensible scale...

 

[EndGame]

It is a bit weird. I can understand people retiring because they're too old to work anymore, but retiring at 65 really does mean 20 years of not working. I don't think that was ever the intention.

Really? That's interesting.......Off the top of my head I know 8 people in the last 10 years that had journeymans cards in construction trade unions by the age of 21. Out of those 8 I know all of them were fully retired by age 65. As of today, actually last August, none of them are alive and the most any of them drew their pension or SS was 9 years!

So, what you're saying is, even if you paid into a system for 40+ years, a median payout of 5.7 years is unacceptable???? I find this amazing! Hell, even 15+ years.......what's the problem? Pay in for 40+ and you're not entitled??????

 

[ShawnD1]

So, what you're saying is, even if you paid into a system for 40+ years, a median payout of 5.7 years is unacceptable????

Where did you get the figure of 5.7 years? According to the CIA, life expectancy in the US is 78 years. (link). That would put the payout at roughly 13 years (78-65=13).

And no you are not entitled to 15 years of unemployment benefits just because you are old. The pension is there so you won't starve to death when you're no longer able to work. If you're able bodied and choose not to work, I put you in the same category as people who are 20 and choose not to work. Able bodied is able bodied.

 

[Carmen813]

Where did you get the figure of 5.7 years? According to the CIA, life expectancy in the US is 78 years. (link). That would put the payout at roughly 13 years (78-65=13).

And no you are not entitled to 15 years of unemployment benefits just because you are old. The pension is there so you won't starve to death when you're no longer able to work. If you're able bodied and choose not to work, I put you in the same category as people who are 20 and choose not to work. Able bodied is able bodied.

And here I dared to dream there was more to life than work and money. Damn it....