Unfunded Liabilities

Economics 101

Published by Papa Giorgio

“One of the great non sequiturs of the left is that, if the free market doesn’t work perfectly, then it doesn’t work at all-and the government should step in.” — Thomas Sowell

  • JUMP to the minimum wage section below
  • JUMP to Socialism

No really! The Russian jeep carrying the ashes of the late Cuban leader

Fidel Castro broke down and had to be pushed for a period on Saturday.

SOCIALISM

Dennis Prager Series – Left vs. Right:

  1. How Big Should Government Be?
  2. Does it Feel Good or Does it Do Good?
  3. How Do You Judge America?
  4. How Do You Deal With Painful Truths?
  5. How Do We Make Society Better?

MINIMUM WAGE (>>> Main Page <<<)

What happens when politicians decide they are in a better position than business owners to know how much workers should be paid? We don’t have to guess. Cities like Seattle and New York have already done so with their $15/hour minimum wage mandates. Simone Barron, a lifelong restaurant worker, recounts how “helping” her impacted her wallet, her career, and her life.

Corporations can absorb this “do-goodism”, small business owners cannot!

“Any Econ 101 student can tell you the answer: ‘The higher wage reduces
the quantity of labor demanded, and hence leads to unemployment’.”
(Larry Elder)

[fbvideo link=”https://www.facebook.com/SWBAmpls/videos/753869208152531/” width=”690″ height=”400″ onlyvideo=”0″]

See more on their website, HERE.

  • Economists aren’t certain about many things, but on the minimum wage, nearly all of them (90 percent, according to one survey) believe that the case is open and shut. All else being equal, if you raise the price of something (for instance, labor), then the demand for it (for instance, by employers) will decline. That’s not just a theory; it’s a law.

James Glassman, “Don’t Raise the Minimum Wage,” Washington Post (Feb 24, 1998).

  • A majority of professional economists surveyed in Britain, Germany, Canada, Switzerland, and the United States agreed that minimum wage laws increase unemployment among low-skilled workers. Economists in France and Austria did not. However, the majority among Canadian economists was 85 percent and among American economists was 90 percent. Dozens of studies of the effects of minimum wages in the United States and dozens more studies of the effects of minimum wages in various countries in Europe, Latin America, the Caribbean, Indonesia, Canada, Australia, and New Zealand were reviewed in 2006 by two economists at the National Bureau of Economic Research. They concluded that, despite the various approaches and methods used in these studies, this literature as a whole was one “largely solidifying the conventional view that minimum wages reduce employment among low-skilled workers.”

Thomas Sowell, Basic Economics: A Common Sense Guide to the Economy, 4th Edition (New York, NY: Basic Books, 2011), 241. [Link to 5th edition]

  • …percentage of economists who agree…. A minimum wage increases unemployment among young and unskilled workers. (79%)

Robert M. Beren, Professor of Economics at Harvard University ~ (More: Wintery Knight)

  • Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense…

Jerry Brown (Reason.org)

Last Friday, I wrote about how 81% of economists agree that rent controls are bad policy. In a field so renowned for its fractiousness, this degree of consensus might seem rather surprising.

The same is true with minimum wages. In 2015 the Employment Policies Institute surveyed 166 economists based in the United States on the subject. They found that

  • Nearly three-quarters of these US-based economists oppose a federal minimum wage of $15.00 per hour.
  • The majority of surveyed economists believe a $15.00 per hour minimum wage will have negative effects on youth employment levels (83%), adult employment levels (52%), and the number of jobs available (76%).
  • When economists were asked what effect a $15.00 per hour minimum wage will have on the skill level of entry-level positions, 8 out of 10 economists (80%) believe employers will hire entry-level positions with greater skills.
  • When economists were asked what effect a $15.00 per hour minimum wage will have on small businesses with fewer than 50 employees, nearly 7 out of 10 economists (67%) believe it would make it harder for them to stay in business.
  • A majority of surveyed economists (71%) believe that the Earned Income Tax Credit (EITC) is a very efficient way to address the income needs of poor families; only five percent believe a $15.00 per hour minimum wage would be very efficient.
  • The economists surveyed are divided on the impact of a $15.00 per hour minimum wage will have on poverty rates, as well as the impact it would have on the spending level for public programs such as the EITC, TANF, or others.
  • At lower levels (under $11.00 per hour) of proposed federal minimum wages, economists are divided largely by self-identified party identification as to an acceptable rate with a majority of Republicans and Independents who responded favoring lower minimum wages ($7.50 per hour or less) and a plurality of Democrats who responded preferring a minimum wage between $10.00 and $10.50 per hour.

This isn’t surprising. After all, as I’ve written before, the balance of empirical evidence suggests these things to be true…..

John Phelan (AMERICAN EXPERIMENT)

TeXaS vs CaLiFORNia

 

Jerry Brown Just Destroyed California’s Economy (SB 32) |UPDATED|

Published by Papa Giorgio

California’s annual statewide greenhouse gas (GHG) emission inventory is an important tool for establishing historical emission trends and tracking California’s progress toward the goal set by the Global Warming Solutions Act of 2006 (AB 32).The law set a target of reducing emissions to 1990 levels by 2020.

[….]

Governor Edmund G. Brown, Jr. recently established a 2030 greenhouse gas reduction goal of 40 percent below 1990 levels, an interim target toward meeting the 2050 goal of reducing emissions 80 percent below 1990 levels.

(California Air Resourse Board [CARB] — see more in the APPENDIX)

John and Ken discuss how Governor Jerry Brown may have just bankrupted California.

Some main points about the bill:

➤ The new SB 32 requires a massive 40 percent cut from 1990 levels, with a deadline of December 31, 2030. The Bee reports that the new measure gives CARB extended authority to force the extreme reductions upon Californians without setting the parameters of those regulations …. Two related bills, AB 1550 and AB 2722, set out the wealth redistribution piece of the regulatory scheme, taking moneys collected in fines and through extorting businesses and forcing those funds to be spent in districts represented by many legislators voting for SB 32… (BREITBART)

➤ According to author Brad Plumer: “It’s hard to overstate how ambitious this is. Few countries have ever achieved cuts this sharp while enjoying robust economic growth.” The only countries (France and Sweden) that have achieved this, he wrote, did so by increasing their use of nuclear power — something off the table in anti-nuke California. “It will mean reshaping virtually every facet of the state economy, from buildings to transportation to farming and beyond,” he added. “California is essentially offering itself as a guinea pig in the world’s most important policy experiment.”…. What’s really troubling, however, is what these measures will mean for the state’s economy. The additional costs imposed by CARB bureaucrats will make it tougher to keep manufacturing and agricultural jobs from fleeing. Additional land-use edicts mandating fewer suburban developments and an end to major freeway construction will mean higher home costs and more congestion. Radical policies will lead to radical results. This isn’t scare mongering. It’s just the truth. (AMERICAN SPECTATOR)

➤ But it was driven by legislators in poor communities who are critical of the current cap-and-trade system that, according to the Capital & Main blog, “allows big polluters to pollute as long as they pay for credits or offsets purchased in other parts of the state or country. AB 197 requires that the (CARB)… target direct reductions at both stationary and mobile sources in those communities.” Another apparent goal is to force CARB to spend money from the cap-and-trade system more equitably in poorer legislative districts. (IBID.)

Jerry Brown 300 CLEAR

Energy prices, food prices, car costs, etc., will all go up. As California becomes more expensive as a state to do business in, MORE businesses will leave and jobs will be lost. It will leave only the giants in business being able to pay for the extra costs, thus, whittling out competition. California will have a few large corporations left in it as well as a few large unions… all subsidizing the Democrat Party to force competition out of their markets.

The L.A. Times notes this as well:

…“You’re going to be increasing the cost of moving goods through California ports,” said Jock O’Connell, a trade expert at Los Angeles consulting firm Beacon Economics.

Feisty competitors on the South and East coasts have been eating into Los Angeles-area ports’ business, and in June the Panama Canal opened wider channels that may divert more traffic away.

“At some point [importers] reach a tipping point where they say it makes more sense to send goods through Houston, or Charleston,” O’Connell says.

That could be a threat to the hundreds of thousands of Californians who are directly or indirectly employed by port business. “You wind up jeopardizing an awful lot of blue collar workers,” O’Connell said.

Brown dismissed the concerns of business leaders as “very dubious”. This, despite the fact an analysis cited in the article indicates that implementation could cost the state over 300,000 jobs.

(LEGAL INSURRECTION)

This is really a back-door way to implement the previously failed SB 350 and more in order to tax people for California’s unfunded liabilities. JOHN & KEN previously discussed SB 350 noting the harmful effects it would have.

In an excellent article over at the WASHINGTON TIMES, we read this:

Fleeing California: A hostile business climate sends more companies to friendlier states

More than a century ago, Roy Farmer, 20, went door-to-door in Los Angeles with his bags of home-roasted coffee beans. By the 1930s, Farmer Brothers was selling coffee to restaurants throughout the nation. Today the company employs 1,200 men and women and generates $200 million in annual sales to restaurants, convenience stores, hospitals, hotels and universities.

But after surviving depressions, recessions, earthquakes and wars, Farmer Brothers is leaving California, finally driven out by high taxes and oppressive regulations.

The company says it’s fleeing in search of a place where business is appreciated. Relocating its corporate headquarters and distribution facilities from to a friendlier location, Farmer Brothers expects to save $15 million a year. Company executives are looking at Dallas and Oklahoma City. The relocation will bear real consequences for California. Nearly 350 workers will lose their well-paying jobs in Los Angeles alone….

Of course I have been talking about this for years (CARL’S JR. as one example), and posting audio on this issue for years as well…

When California makes it too expensive for alternative energy companies to survive in this state… you know the chickens are coming home to roost!

APPENDIX

The question my wife asked, very astutely, is what are these numbers we are talking about. Here they are:

…Getting to the 2030 and 2050 cuts that California seeks will require steeper cuts than the state has yet experienced over an extended period. Reducing greenhouse gases to the 2020 levels ordered by AB 32 requires a cut of 5.5 percent between 2010 and 2020. Brown’s executive order requires a 40 percent cut below the 2020 target by 2030. That means, in theory, that California would need to reduce emissions about 7 times as quickly between 2020 and 2030 as between 2010 and 2020. 

In practice, however, the acceleration may not be quite so dramatic. That’s because most experts expect California to come in below its 2020 targets. If, for example, California’s emissions come in at around 400 million metric tons of carbon dioxide equivalent in 2020, rather than at 431 (the figure needed to exactly meet its 2020 goal), California would need to cut emissions roughly three times faster between 2020 and 2030 than during the preceding decade.

Between 2030 and 2050, emissions will also need to decline much more quickly than has been the case in recent years.

These calculations come with one slight caveat: the state has specified its long-term goals only in terms of percentage reductions, rather than in terms of exact emissions figures. But the exact numbers, when they are formulated, are expected to be roughly what the percentages suggest (eg, around 260 million metric tons of carbon dioxide equivalent for 2030, and 85 metric tons in 2050).

(CALMATTERS)

Here is page one of a more bullet pointed and graphed path (click it for the PDF) to these reductions that are impossible and is only a way for the state to gain more monetary resources to pay for their B.S.

  • A mere 2% of the carbon emissions credits that the California Air Resources Board (CARB) put up for auction in May were sold. The quarterly auction raised only $10 million of the $500 million that CARB projected. That’s awful news for Democrats in Sacramento who planned to spend the windfall on high-speed rail, housing and electric-car subsidies. (WSJ) 

According to the Vermont Senator’s website, the Democratic Party draft platform reads:

  • “Democrats believe that climate change is too important to wait for climate deniers and defeatists in Congress to start listening to science, and support using every tool available to reduce emissions now.” (Global Warming Is Too Important To Wait For Democracy)

Too important to wait for Congress? Which is why stuff like the above have to be passed via executive order — like Jerry Brown did. Whether on the state or federal levels, Democrats love growing government and regulating every aspect of the citizens life… by fiat. King George is back. It is merely “King George” forcing policies the public would never approve of:

Brown appears bent on forcing cap-and-trade on Californians, stating last month that “they’re going to plead for a market system called cap-and-trade so they can respond in a way that’s more beneficial to their bottom line.” The Bee reported that Brown also lambasted his opponents in Sacramento, calling them “Trump-inspired acolytes,” but concluded that “they have been vanquished” with the passage of SB 32.

(DONALD TRUMP POLLS)

THERE MAY BE A FAIL-SAFE HOWEVER!

In an excellent post at CLIMATE UNPLUGGED, it is noted that this signing into law by fiat would still need to pass a “California appellate court will soon rule as to whether it violates Proposition 13”

In 2006, the California Legislature enacted AB 32, which mandated that statewide greenhouse gas emissions be reduced to 1990 levels by 2020.  California’s cap & trade auction system followed. Last week the Legislature passed SB 32, which extends and deepens AB 32’s original mandate, requiring the state to further reduce emissions to 40% below the 1990 level by 2030. This is ambitious, to say the least, in a state where all of the “low hanging fruit” (cheap emissions reduction) has presumably been harvested.

None of this is news. Nor is it news that the legality of the entire cap & trade structure is on thin ice. A California appellate court will soon rule as to whether it violates Proposition 13 (yes, that Prop 13, for those of you who remember it) insofar as AB 32 did not pass both houses of the Legislature with the requisite 2/3 vote needed for tax increases. And even if AB 32 survives, few lawyers expect the new, post-2020 authorization to pass the forthcoming Prop 26 challenge. Enacted after AB 32 (and so not applicable to it), Prop 26 was explicitly designed to close the many loopholes the politicians exploited to get around Prop 13’s vote requirements.

The “good” news for California is that if its cap & trade system gets overturned, the Air Resources Board must still hit the 2020 and 2030 targets. The bad news is that it will have to achieve truly massive emissions reductions at a breakneck pace solely via pure command and control regulations….

I hope the court sees the unconstitutionality [California’s constitution] of this and kills it all!

California’s Unfunded Liabilities

Published by Papa Giorgio

Via Moonbat!

Uh oh. California is drowning in red ink:

A financial report issued by state auditors finds that the state of California is in the red by an unsustainable $127.2 billion.

The report says that the state’s negative status increased that year, largely because it spent $1.7 billion more than it received in revenues and wound up with an accumulated deficit of just under $23 billion in fiscal year 2011-2012, the Sacramento Bee stated.

The response of the liberal bureaurats responsible for creating this crippling debt was both appalling and predictable:

A state panel on Wednesday approved a 5% pay raise for Gov. Jerry Brown, legislators and other state elected officials…

The panel’s action boosts the salary of Brown from $165,288 to $173,987 in December, and increases legislators’ pay from $90,520 to $95,291 at the same time. Raises will also be provided to the state attorney general, state treasurer and other constitutional officers.

By putting the cartoonishly irresponsible Jerry Brown back in office, California voters elected to go over the cliff; over the cliff they go. This happened because the population of the erstwhile Golden State has been permanently transformed by massive (and largely illegal) Third World immigration. Now that whites are a minority, whoever is most likely to keep the looting spree going right up to the point of total economic collapse is assured of election. Applying this phenomenon nationwide is the purpose of the current amnesty bill.

And the Sacramento Bee ended with this chilling outlook:

…The report listed the state’s long-term obligations at $167.9 billion, nearly half of which ($79.9 billion) were in general obligation bonds, with another $30.8 billion in revenue bonds, many of which were issued to build state prisons, whose “revenue” is lease payments from the state general fund.

The list of long-term obligations did not include the much-disputed unfunded liabilities for state employees’ future pensions, nor the $60-plus billion in unfunded liabilities for retiree health care. The Governmental Accounting Standards Board and Moody’s, a major bond credit rating house, have been pushing states and localities to include unfunded retiree obligations in their balance sheets and were they to be added to California’s, it could push its negative net worth down by several hundred billion dollars.

…read more…

Remember this older upload about Cali’s unfunded liabilities:

The Author of “Pluder” Interviewed from Papa Giorgio on Vimeo.

HotAir nails it!

Since it’s not a web ad featuring a super cool, hipster-celebrity making suggestive analogies about President Obama’s oh-so-dreamy and glamorous political qualities, I doubt it will get nearly the same traffic as Team Obama’s recent Lena Dunham ad — which is most unfortunate, because rather than a cotton-candy, war-on-women appeal to the youths, we actually see the real-world effect that Obama’s policies have had on hardworking, middle-class Americans.

President Obama’s policies have been brutal to the business world, and small businesses in particular. An onslaught of red-tape regulations, ObamaCare, the threat of higher taxes, generally poor economic growth — none of these have been kind to entrepreneurs or owners trying to grow their outfits. Despite the Obama administration’s several showy moves to come to the aid of small business, their vital signs just haven’t picked up, via Bloomberg Businessweek:

The measure estimates employment at independent companies with fewer than 20 employees that use Intuit’s online payroll product. Companies with fewer than 20 workers make up nearly 90 percent private employers in the U.S. …

Companies with fewer than 20 employees have actually shed jobs during the economic recovery; the Intuit Small Business Employment Index was 0.9 percent lower in October 2012 than in July 2009. Moreover, since May, the index has moved in the opposite direction from BLS estimates of overall employment, with Intuit reporting a loss of 10,000 small business jobs in each of the last two months alone. …

Compensation and hours are similarly weak. Adjusting for inflation and seasonality, monthly compensation for all employees (including the owners) at businesses with fewer than 20 employees is 10.2 percent lower than when the president took office.

California is in a worse boat that Virginia, for instance, we [California] have ranked dead last 8-years in a row as far as a business friendly environment goes:

Editorial (OC Register): CEOs rate California dead last for business, again

It was alarming the first three or four times California was ranked last among 50 states for business environment. Now, Chief Executive magazine’s annual ranking, based on a survey of 650 chief executives on taxation, regulation, workforce quality and living environment, again places California dead last, 50th of 50 – for the eighth year in a row.

Eight years in a row ceases to be alarming. It now is a defining status.

[….]

Gov. Jerry Brown insists those who say California is unfriendly to business are wrong. But Mr. Brown, of course, is not the chief executive officer of a private business. He is the top executive of a deficit-burdened, intrusive, bloated government bureaucracy that has perfected squandering other peoples’ money while botching delivery of services such as education and lavishing public employees with unaffordable pay and benefits.

California public school teachers are the nation’s highest-paid, while their students’ performance ranks among the worst. The state’s various unfunded pension and retirement health care benefits promise to bankrupt the already overextended government.

As chief executive opinions go, Mr. Brown’s are considerably less credible than CEO magazines’ private-sector leaders.

“California’s enduring place of perpetual decline continues in this year’s ranking,” the magazine said. “Once the most attractive business environment, the Golden State appears to slip deeper into the ninth circle of business hell.”

The CEOs aren’t alone in their harsh critique. The state got an “F” grade in January from Thumbtack.com and the Kauffman Foundation in a survey of 6,000 small businesses across the nation, and the Tax Foundation ranked California 48th worst on business taxes.

There is little prospect of improvement. Despite finding itself in a hole, state government keeps digging. This week the state Senate Judiciary Committee killed a California Chamber of Commerce-sponsored job-creator bill to protect employers from inappropriate litigation.

Mr. Brown’s Air Resources Board is ratcheting up costly new regulations and preparing an ill-advised cap-and-trade carbon-emissions auction to coerce private energy providers to do things the government’s way. The governor and other Big Government champions also are advancing proposals for the November ballot to extract upwards of another $20 billion per year in taxes.

As CEO magazine’s poll shows, the state’s failings are obvious to business people. But Mr. Brown and California’s other governmental leaders just don’t get it.

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.

Jane Jamison is editor news/commentary blog UNCOVERAGE.net.

Adam Smith and John Stuart Mill on `Ruination`

Published by Papa Giorgio

Tom Bethel, “Ruination,” The American Spectator, December 2013, Vol. 46 (no. 10), page 44.

….Over generations the U.S. has accumulated plenty of capital (and I don’t just mean our assets). Subconsciously, the president and his allies seem to have decided: “Let’s go ahead and spend that capital for our own political advantage.” The country will survive. “Social justice,” meaning equality, is what they say they want. If getting there means blowing some capital, well, only heartless right-wingers will object.

Here are some recent figures published by Robert J. Samuelson of the Washington Post:

✦ In 1955, defense spending was 62 percent of federal outlays and spending on “human resources” (the welfare state) was 22 percent. By 2012 the figures were reversed; welfare was 66 percent, defense 19 percent. Medicare, Medicaid, food stamps, Pell grants and Social Security’s disability program are all postwar creations.

The metastasis of the welfare state has been enabled by something that would have amazed Adam Smith. Earn a decent living and you will pay thousands of tax dollars into the Treasury, and have one vote. Receive food stamps, housing subsidies, and child support from the government, perhaps to the tune of tens of thousands of dollars, and you too will enjoy one vote. You probably won’t owe any income taxes either. It’s a formula for instability.

John Stuart Mill saw the danger of a system like ours as far back as 1861:

✦ The receipt of parish relief [welfare] should be a peremptory disqualification for the franchise. He who cannot by his labor suffice for his own support has no claim to the privilege of helping himself to the money of others. By becoming dependent on the remaining members of the community for actual subsistence, he abdicates his claim to equal rights with them in other respects.

And remember, Mill was the big progressive of his time. If a politician made that comment today, it would qualify as a hate crime. Yet we keep hearing how far to the right we have moved.

Mill couldn’t have known how much worse things would get, both in Britain and in its former colonies. Consider the U.S. budget. For 51 of the last 60 years the government has spent more than it has taken in; in the latest year, $700 billion more. Total debt now exceeds $17 trillion, and unfunded liabilities (including such details as future Social Security payments) run into the hundreds of trillions. The Ponzi scheme is sustained by printing money to keep interest rates low. It is an unstable structure, to put it mildly….

Round Two (*Ding* *Ding*): Bill Cunningham vs. Tamara Holder

Published by Papa Giorgio

The first encounter wasn’t pretty either, if you remember. Here are the “lovebirds” again… and Bill is right… this isn’t a game. His numbers are right as well, 220-trillion in unfunded liabilities.

`Rotting, Decaying, and Bankrupt!` ~ Detroit (Democrat Controlled Future)

Published by Papa Giorgio

“Rotting, Decaying And Bankrupt – If You Want To See The Future Of America Just Look At Detroit,” Via Gay Patriot

1 – Detroit was once the fourth-largest city in the United States, and in 1960 Detroit had the highest per-capita income in the entire nation.

2 – Over the past 60 years, the population of Detroit has fallen by 63 percent.

3 – At this point, approximately 40 percent of all the streetlights in the city don’t work.

4 – Some ambulances in the city of Detroit have been used for so long that they have more than 250,000 miles on them.

5 – 210 of the 317 public parks in the city of Detroit have been permanently closed down.

6 – According to the New York Times, there are now approximately 70,000 abandoned buildings in Detroit.

7 – Approximately one-third of Detroit’s 140 square miles is either vacant or derelict.

8 – Less than half of the residents of Detroit over the age of 16 are working at this point.

9 – If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.

10 – According to one very shocking report, 47 percent of the residents of Detroit are functionally illiterate.

11 – Today, police solve less than 10 percent of the crimes that are committed in Detroit.

12 – Ten years ago, there were approximately 5,000 police officers in the city of Detroit.  Today, there are only about 2,500 and another 100 are scheduled to be eliminated from the force soon.

13 – Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.

14 – The murder rate in Detroit is 11 times higher than it is in New York City.

15 – Crime has gotten so bad in Detroit that even the police are telling people to “enter Detroit at your own risk“.

16 – Right now, the city of Detroit is facing $20 billion in debt and unfunded liabilities.  That breaks down to more than $25,000 per resident.

A Liberal Democrat Governor Of Hawaii Talks Unfunded Liabilities And Democratic Spending Habits ~ ReasonTV

Published by Papa Giorgio

From Video Description:

“When the special interests become too powerful,” warns Ben Cayetano, “the voter only has the collective conscience of the people who are in public office.”

Cayetano was a popular two-term Democratic governor of the state of Hawaii who held office from 1994 to 2002. In 2012, Cayetano became alarmed by what he saw as out-of-control spending and special interests run amok. He came out of retirement and made a failed bid to become the mayor of Honolulu, Hawaii’s largest city.

Cayetano opposed the city’s $5.26 billion rail project, which he says costs too much and will not address Honolulu’s traffic problems. The massive system and inevitable cost overruns, he fears, simply piles more debt on a government already straining under unfunded liabilities for public-sector pensions and benefits. “They are going to end up raising taxes,” Cayetano told Reason TV. “Or the city will go bankrupt.”

In a wide-ranging conversation, the 73-year-old Filipino American discusses the Aloha State’s fiscal mess, the trouble with Hawaii’s one-party government, and why he believes social issues are distracting voters from more pressing economic problems.

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.