Econ 101

Half A Trillion Dollars in Debt (California that is)

Published by Papa Giorgio

This entire article is imported from American Thinker, and even though it is dated, maybe many Californians missed this HUGE problem prior to the election?

California’s Half-Trillion-Dollar Pension Fund Mess: Blame Jerry Brown

By Jane Jamison

California is the nation’s shameful example of what happens when Democrats influenced by big-government labor rule the statehouse for forty years.

With 12.5% unemployment (up from 4.5% a mere three years ago) and a “recognized” budget deficit of $21 billion, California has just found that out it is in much, much more financial trouble than anyone, especially a Democrat, really wants to admit.

California’s governor Schwarzenegger commissioned a study by Stanford University, which has found that California’s three public employee pension funds (The California Public Employees’ Retirement System [CalPERS], California State Teachers’ Retirement System [CalSTRS], and University of California Retirement System [UCRS]) lost $109.7 billion in portfolio value in one year (June ’08 to June ’09) and are currently in shortfall of “more than half a trillion dollars.”

By law, California taxpayers are required to pay the public employees’ pensions shortfalls that may occur. Local governments cannot “print money” as the federal government does to cover budget deficits.

What should have been considered a huge scandal in the state pension fund system in the past year got little attention but is more pertinent now: The two largest plans, CalPERS and CalSTRS, were reportedly near bankruptcy in 2009 after it was learned the funds had lost from 25%-41% of their value due to risky investments in real estate and the stock market. Former employees of the state plans were accused in January of getting huge fees to direct pension investments to certain banks or ventures.

There are outrageous examples of abuse in the California public pension system.

PensionTsunami.com, which has been tracking the pension fund liability issue for five years, has found that 9, 233 retired members of CalPERS or CalSTRS receive more than $100,000 per year in retirement benefits, amounting to more than a billion dollars a year.

The retired city administrator of Vernon, California, Bruce Malkenhorst, receives an annual pension of $449,675 from CalPERS. Vernon, a Los Angeles suburb, has 92 residents.

California’s state employee pension fund liabilities have ballooned for years with increased numbers of state employees, many of whom can retire at age 50, can “spike” their last years’ income with overtime to increase their retirement, and can then move on to other government or private jobs without losing their pensions.

Why should Californians care about this confusing, complicated budget problem with a huge, unfathomable invoice attached? David Crane, writing for the Los Angeles Times, says that today’s pension fund shortfall is tomorrow’s budget cut to something some Californian is likely to miss.

In California’s case, past pension underfunding means reduced funding of current programs. This explains why pension costs rose 2,000% from 1999 to 2009, while state funding for higher education declined over the same period.

Californians are feeling the pain of the budget crisis, but they often misplace their criticisms.

Let’s go to the videotape this year of the many demonstrations on the many University of California campuses, where students have rioted against proposed 32% state tuition increases and program cuts.

Approximately 22,000 California teachers have just received “pink slips” indicating that they may be laid off due to budget cuts next fall. An additional 20,000 were laid off last year. California is cutting “live” teachers out of classrooms in order to pay for retired teachers.

California schools have gone from number one in the country in the 1970s to at or near the bottom in performance and funding.

Who is to blame for this ticking-time bomb of unfunded public pension liability?

“Thank” Jerry Brown. As Governor “Moonbeam” of California in 1978, he signed the “Dill Act,” which gave California public employees the right to collective bargaining.

Brown, who has been governor, Oakland mayor, and attorney general, now wants to be California governor…again. Four big, grateful government labor unions are backing him…again.

Speaking recently to the Service Employees International Union, Jerry Brown “the populist” said he was proud to have given state employees “the choice” to belong to unions in the ’70s, and he will “take a look” at the pension funds to make sure that they are actuarially sound. Big applause line.

Speaking to another union group in Sacramento, Brown was caught on videotape asking the labor leaders to “do the dirty work” and “attack” Republican candidates who oppose him in the governor’s race. (Hear it here.)

Who else is to blame?

Since Brown gave them a green light in the 1970s, public employee unions have become a muscular, dominating force in California politics. State employee unions spent a whopping $31.7 million on state races just from 2001-2006, according to the California Fair Political Practices commission — higher than any other group, including corporations. The majority-Democrat California legislature has voted accordingly.

What can be done?

Jerry Brown the rerun, who is running technically unopposed by any other candidate in the Democratic primary, has been oddly silent on his state’s dire budgetary woes. His campaign site news releases do not mention budget problems.

At the same time, it has been noted by the tabloid media that Jerry Brown has been weirdly over-involved as California’s attorney general, his current job, in the celebrity death investigations of Anna Nicole Smith, Michael Jackson, and Corey Haim. His office spent several months investigating ACORN employees who were caught in a videotape sting organizing houses of prostitution in government housing. Brown has just determined that there will be no prosecution of ACORN in his state.

Brown also went to the unusual extra step to seal his gubernatorial records from his 1970s-’80s term for fifty years. (U.S. presidents can seal records only up to twelve years for national security purposes.)

Brown refuses to join with fourteen other states’ attorneys general in challenging the recently-passed health care reform law, even though it will mandate billions more in unfunded expenses to the financially-strapped California Medicaid program. He says that to challenge Obamacare would be to engage in “poisonous partisanship.”

Republican gubernatorial candidates are tacking the pension fund liability:

Steve Poizner says he supports a “two-tier” system for current and new state employees but doesn’t think that a new governor will be able to come in and “steamroll” the unions.

Meg Whitman has campaigned on cutting state employee rolls and advocates “401(k)” style pensions for government workers and higher retirement ages (from age 50 to 55 or 65).

What can California do?

The U.S. Constitution technically does not allow for states to go bankrupt. Vallejo, California was the first city in the country to go bankrupt and has been establishing new “tiers” of retirement plans for police and fire employees.

The newly-elected governor of New Jersey, Chris Christie, is tackling government employees’ unions to some effect. Christie has announced his intentions to cut substantially from government executive positions, privatize other state jobs, and cut positions.

There has been criticism of increased funding and budget overruns for state prisons due to the influence of the California prison guards’ union.

The Citizen Power Campaign seeks to “unplug” the public employee unions and is endorsed by many of the conservative candidates for office in California, including Republican Steve Poizner for governor.

One thing California clearly does not need is the déjà vu “hair of the dog” in the person of 1970s retread Democrat Jerry Brown.

Willful Ignorance of History (Obama and JFK)

Published by Papa Giorgio

The American Spectator has a great post about Obama’s destructive behavior and the success of JFK and Reagan in cutting taxes on the rich and its affect on job growth (Red Planet h/t):

With 15 million workers unemployed and another 11 million underemployed, President Obama recently decided that the answer was to hit the road and throw some anti-rich red meat to some friendly stadium audiences.

At a Labor Day rally in Milwaukee, Mr. Obama declared that the United States “didn’t become the most prosperous country in the world by rewarding greed and recklessness.”

He didn’t say whether we became the most prosperous country via income redistribution and mandatory wealth spreading.

He also didn’t say whether the “greed” accusation applied to folks like Jay-Z and Lady Gaga or just to the regular capitalists and entrepreneurs who run America’s car repair shops and jewelry stores on Main Street.

He also didn’t say whether his definition of “recklessness” includes the nonstop and decentralized risk-taking that’s inherent in a free enterprise economy, a system rooted in what Austrian economist Joseph Schumpeter called “creative destruction.”

[….]

Mr. Obama also declared that “anyone who thinks we can move this economy forward with a few doing well at the top, hoping it’ll trickle down to working folks running faster and faster just to keep up — they just haven’t studied our history.”

In fact, the history of the 1960s and 1980s, under Democrat and Republican presidents, shows that the benefits of cuts in top marginal income tax rates clearly trickled down to help “working folks” in the form of more jobs, less unemployment, less poverty, less inflation, and higher wage growth.

The John F. Kennedy income tax cuts of 30 percent that were enacted in 1964, cutting the top marginal federal income tax rate from 91 percent to 70 percent, were followed by several years of 5 percent real GDP growth per year, dropping the unemployment rate from 5.2 percent in 1964 to 3.5 percent in 1969, a lower jobless rate than the 4.0 percent unemployment rate that’s generally defined as “full employment.”

Similarly, the Ronald Reagan income tax cuts produced real average annual GDP growth of 3.2 percent from 1981 to 1989, a higher growth rate than existed before and after the Reagan years — the 2.8 percent average real annual growth in the pre-Reagan years from 1974 to 1981, or the 2.1 percent growth in the post-Reagan years from 1989 to 1995.

Following the Reagan cut in the top marginal federal income tax rate from 70 percent to 28 percent, unemployment was cut in half, from 9.7 percent in 1982 to 5.3 percent in 1989.

And the impact on the poor? The real income, adjusted for inflation, of the poorest fifth of U.S. households increased 12 percent in the Reagan era, reversing a 17 percent decline in their average real income from 1979 to 1983 before Reagan’s pro-growth tax cuts kicked in.

The poverty population in the U.S., after growing by 7 million in the late 1970s, dropped by 4 million in the 1980s. The real median income, adjusted for inflation, of African-American households increased by 17 percent from 1982 to 1989, reversing a 10 percent decline from 1978 to 1982.

Obama’s strategy? Ignore the aforementioned history and raise taxes on “the rich” during a recession, for “fairness.” That’s a clear policy of economic and political “recklessness,” a strategy that will keep millions of people needlessly unemployed.

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Coo-Coo for Co-Co Puffs~AFL-CIO President

Published by Papa Giorgio

BigGov h/t:


 

  • The AFL-CIO is one of the single largest contributors to President Obama and the Democratic Party
  • They reap enormous, direct benefits from the ever-expanding size of the federal government
  • The AFL-CIO ran itself insolvent in the 2008 presidential election–spending millions more than the union had taken in from dues, and later engaged in “creative accounting” to conceal their financial hardships
  • The AFL-CIO has pledged to spend upwards of $53 million in the waning days of the midterm election
  • Mr. Trumka has also said that he “watched (tea party protesters) spit at people, I watched them call John Lewis the n-word,” even though he is nowhere to be found on any of the videos of the alleged incident
  • Mr. Trumka has also said, in reference to the Tea Party Movement: “There are forces in our country that are working hard to convert justifiable anger about an economy that only seems to work for a few of us into racist and homophobic hate and violence directed at our President…”

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Viral Anthony Weiner Rant Unfounded

Published by Papa Giorgio

Hyscience wrote a good response to this “viral temper tantrum” that has Democrats apparently proud… even though Weiner is upset about hiding legislation. One must keep in mind that it was the Democrats who chose to require a two-thirds majority. They could have passed it with a simple majority if they so chose. They wanted a bunch of other bills passed with it, so they chose to go the two-thirds majority route and didn’t have  all the Democrats on-board. That’s number one. Number two is that the The GOP only wants to make sure the bill is paid for before it passed. This, apparently, is not important to the Democratic party. I have a checking account, does that mean just because I have no money in it but still have blank checks I can write as many as I like? Well?

According to the NY Post, King, a key backer of the bill, had moments earlier accused Democrats of staging a “charade” (emphasis added):

The rift developed over how the bill was put before the chamber.Democratic leaders opted to consider it under a procedure that requires a two-thirds vote for approval rather than a simple majority. The move blocked potential GOP amendments to the measure.

King said Democrats were “petrified” about casting votes on amendments, possibly including one that would ban aid from going to illegal immigrants sickened by trade center dust. King said the bill was more important than “a campaign talking point.”

Also via Eye Blast, Weiner’s attack wasn’t limited to just the house floor because he was also freaking out of Fox News this morning. This debate, or shouting match, between him and Peter King (R-NY) actually better explains exactly why Weiner was all worked up and exactly who he was screaming at the whole time.


….As pointed out over at The Hill, King defended his objection by saying:

“Anthony can rant and rave all he wants on the House floor, he did not answer one point that I made last night,” he said. “I’ve done everything I possibly can. The fact is this should not be a partisan issue, I have been very, very critical of the Republican Party.

“The bottom line is the Democrats control the House and they pulled a procedural gimmick starting ten days ago, and they lost the nerve to bring it to the floor on a real vote,” …

Here’s a take home message for Mr. Weiner. Follow House procedures and stop trying to finagle funding for illegal aliens – then you won’t have to throw embarrassing temper tantrums on the House floor. And, by the way, the American people deserve to know if the bill requires American taxpayer dollars to be paid to illegal aliens – and we deserve to know in “advance” of its passage.

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Well said Hyscience! Well Said