Cutting state pensions and fairness.

[futurebird.livejournal.com]

Pensions are a huge cost for many states a despite the fact that these are biding legal contracts in some cases cuts have already been made. This, naturally has unions up in arms.  To protect the more vulnerable workers (when cuts happen they have a tendency to harm those who can least afford it most since  those people have less political power) I propose a federal cap on potential cuts to state pensions. Something like 12% each state can cut up to this much but no more. The cuts would be to the total value of the pension and it can only happen once in the next 9 years.

This would let states shed some of the financial burden, while making the changes finite for retirees and state workers. Part of the problem is it is very scary when it seems like the cuts might have no end. Like you could lose everything. This measure along with higher taxes can make states solvent. I think higher taxes are a must-- Everyone tends to support cuts and taxes that will hurt someone else, but when it comes to paying our own fare share we duck responsibility. I will not support a pension cut unless it comes with a commensurate tax increase.

Lastly, financial organizations who have sold states complex bond deals with huge fees and no upside should only be able to collect HALF of those fees. The profits from these things are obscene and it is clear that the bankers have been less than honest about the risk to states. Like the rest of us, banks can take a hit to help us return to solvency.

Comments

[caerfrli.livejournal.com]

Then no one would ever work for a state or lend it money agian.

[futurebird.livejournal.com]

the pension cuts have already stared--

[gunslnger.livejournal.com]

Sounds like a win-win...

[ygrii-blop.livejournal.com]

It's true. Liberals are very generous with other people's money. Yeah, yeah, I know things have to be paid for. But when the U.S.A. spends more money on its military than the rest of the world combined, I have no sympathy for this argument. Cut the goddamned military. Pay for it that way. I can't afford to pay more taxes. Not right now.

[futurebird.livejournal.com]

I do think we should make some cut to the military IN ADDITION to what I mention in this post.

[rasilio.livejournal.com]

You cannot.

As much as the US spends on the Military it spends FAR more on Pensions (in this case I am including Social Security as a form of Pension).

You could cut the US Military Budget by 80% and not make a dent in the underfunded pension problem in this country.

The States alone are carrying 1 trillion in unfunded pension liabilities, The Federal Government has about another 4 Trillion in unfunded pension liability and about 13.5 trillion in unfunded Social Security liability. Municipalities add to that but I can't find any numbers on the scale of that problem quickly (my guess it is comparable to the States since local government pays for teachers).

All totaled that is somewhere in the vicinity of 18 trillion.

The Military budget for 2010, including the cost of operations in Iraq and Afghanistan as 660 Billion. 80% of 660 Billion ~ 525 Billion

18 trillion/525 Billion = 34 years to close the gap.

Of course that assumes you could cut the military budget by 80% and lay off some 8 - 10 million (about 1.5 million soldiers, Sailors, and Airmen plus another 2 million or so direct support personnel and defense contractor employees would make up the rest) people overnight and not replace that spending with other government spending or tax cuts and somehow not decimate your GDP and therefore tax receipts.

This of course also assumes you don't spend any money in responsibly cutting the Military budget. No safely demilitarizing bombs, just discharge all the soldiers put a padlock on the gate and abandon the base. Realistically though in order to scale back out military to 20% of it's current size you'd need to spend about half our current military budget for 5 - 7 years just decommissioning things safely.


In other words your "Cut the Defense Budget" mantra may sound nice but it won't do a damn thing to halt the collapse of public pension plans.

Um... I don't think so.

[futurebird.livejournal.com]

You could cut the US Military Budget by 80% and not make a dent in the underfunded pension problem in this country.


I'm gonna need to see a source for that, budddy. M-kay.

[sandwichwarrior.livejournal.com]

In strict dollar terms this is true, we spend more on our military DOD/DHS. However that is still only 6 - 8% of our GNP wich proportionally is about average.

That doesn't mean we don't spend a lot of time/money on shit we don't need though.

[korean-guy-01.livejournal.com]

As far as pensions & Social Security, we should end where in the death of a beneficiary the spouse will get x% of the benefit.

[futurebird.livejournal.com]

I think cutting people off like that is the worst idea.

[korean-guy-01.livejournal.com]

Those who currently benefit from such an arrangement can stay on. More like a "from this point forward" recommendation.

The notion where a man is the sole breadwinner is quickly becoming outdated. Furthermore, the current liberty those programs have are unsustainable. It's the most fair option as opposed to increasing taxes on younger people who have no guarantee that they will ever benefit from these programs. A company (or government) should not be responsible for the responsibilities that its workers take on.

[merig00.livejournal.com]

And of course working in the boundaries of the budget is not an options?

Two real life examples how it can be done:
1199 SEUI at Mt. Sinai Hospital decided to freeze salaries for 3 years in order to maintain the pension fund at the required level.
UJA Federation decided to cut 10% of pension contributions in order to keep salary raises.

So how about tweaking salaries or pensions in the means of the current budget?

[futurebird.livejournal.com]

Many stats have already cut pay and fired tons of workers. We probably need to do BOTH.

[merig00.livejournal.com]

Do you have enough money in your house budget to get your salary cut and pay more taxes? I know that I don't have that luxury.

Greed is Good

[enders-shadow.livejournal.com]

"The profits from these things are obscene"

There's no such thing as obscene profits.
Haven't you heard?

Re: Greed is Good

[merig00.livejournal.com]

how about including height and width limitation in your img src tag?

Re: Greed is Good

[futurebird.livejournal.com]

Well, now he CAN'T since you can't edit a comment after someone responds. (If he could edit at all that is)

[rasilio.livejournal.com]

Raise taxes on who?

The Rich?

Can't be done.

As a practical matter taxes on the Rich in almost every state in the country are close to as high as they can get. Increasing the rate will generate no measurable additional income because it will just push said rich into more tax avoidance strategies (and this includes just stopping working) or moving to a lower tax state.


Everybody else?

In this economy? Yeah that's a really good idea. Get ready to spend most of your new taxes funding soup kitchens.

In fact this is a good point to bring up that whole "Paying their fair share" argument.

Look here...

http://www.downsizinggovernment.org/images/charts/blocks/dfg-govt_spending_gdp-big.png

As you can see government spending has outpaced growth of the economy for the last 100 years and in the last 50 years a significant part of that growth has been in paying for increased public employee pay and benefits.

In fact so much of it has been going to increased employee costs that State and Local services have been cut to the bone. When I was a kid, water, Sewer, Trash removal, all paid for directly out of your city taxes. Today, well your tax rate is up even after adjusting for inflation and you get a separate bill for each.

It seems to me that it was the Public Employees who have not been paying their fair share.

How about this. All public Employee Pension Benefits are cut by 40%. But we won't be cruel about it. The first $25000 in annual pension benefits are protected from the cut and then you get a progressive cut above that starting at 40% + 10% for every 10K beyond that.

So this would result in a reduction in pension benefits of

40% of each dollar between $40K and $50K
50% of each dollar between $50K and $60K
60% of each dollar between $60K and $70K
70% of each dollar between $70K and $80K
80% of each dollar between $80K and $90K
90% of each dollar between $90K and $100K
100% of each dollar over $100K

So a person who had a $60,000 a year pension would see their benefits reduced by $9000, a person with a $100K pension would loose $39K and the maximum pension benefit anyone would be getting would be capped at $61K per year.

[enders-shadow.livejournal.com]

"As a practical matter taxes on the Rich in almost every state in the country are close to as high as they can get."

LOL!

http://www.flickr.com/photos/dirich111/3361071764/

I deny your claim.

[futurebird.livejournal.com]

He's not good with numbers.

[reality-hammer.livejournal.com]

Here's an idea: hold the people who agreed to the horrible deals accountable.

Fire them and put new leaders in their place. Maybe they will be more careful with other people's money.

You know, if Sarbanes-Oxley was such a great idea let's hold government workers, including politicians, to the same standards. Pass a law that blows up and costs $$$$? Go directly to jail! (Yes, we're talking about you, Mr. Frank and Mr. Dodd!)

Yeah, like that would ever pass. :P

[futurebird.livejournal.com]

Fire them and put new leaders in their place.

Governor Pataki retired.

[merig00.livejournal.com]

SOX put so much strain on smaller companies it's not even funny. They should be first in line...

http://www.nysscpa.org/cpajournal/2004/204/essentials/p36.htm

[root-fu.livejournal.com]

Doh. Raising taxes doesn't cure overspending.

Say you own a dog that's over-weight. Your dog eats more than you can afford. You pass a bailout bill to fund your dogs over-eating habits and go further into debt.

You can raise taxes, but it won't make a difference as long as your spending is greater than your income you'll continue into debt. Likewise, if your debt grows at a faster pace than income.

Social security, medicare, etc are currently growing at a much faster pace than income/GDP/etc. Raising taxes now, will only mean we'll have to raise taxes again in 5 years or so. And, 5 years after that. It doesn't solve the issue, only results in us digger a deeper and wider hole for ourselves.

[futurebird.livejournal.com]

Doh. Raising taxes doesn't cure overspending.

This is a theory. The question is at what point in the course of repeated tax increases with it kick in? At some point the tax will do just what you describe. I don't think we are at that point yet.