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Today's (Sept. 11) New York Times has an op-ed piece that should shake up the home state. The lead paragraph states, "New York's pension system is underfunded by tens of billions of dollars and...as a result, the state is essentially insolvent." The author is chairman of the group that oversees New Jersey's pension system. That state, at the insistence of the Securities and Exchange Commission, recently agreed that it would never again fraudulently hide its underfunding of its pension system. One problem, says author Orin Kramer, is that the SEC can only force a state to follow budgeting rules of the Governmental Accounting Standards Board, and these rules "allow governments to base their budgets on economic fictions."

Corporations measure their pension funds' assets based on real market prices. But public pension funds measure assets based on average values "looking back over a period of years," says the author. (That's true of San Diego's funds.) If one uses government accounting standards, U.S. state and local governments are underfunded by $1 trillion. If one uses corporate accounting standards, the shortfall is $2.5 trillion. If one assumes corporate standards are too lenient, as economists generally do, then the shortfall is $3.5 trillion, or one-fourth of the U.S. economy's total annual output of goods and services, or gross domestic product, says Kramer.

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SurfPuppy619 Sept. 11, 2010 @ 8:09 p.m.

The pension systems boards are stacked with public employees-including our Calpers where 65% of the board seats are held by public employees.

They will lie and fabricate until the system collapses and then say " who could have precited that" !!!!!!

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Don Bauder Sept. 12, 2010 @ 7:18 a.m.

Response to post #1: I do not believe that the seriousness of state and local government finances -- particularly the pension disaster -- has yet sunk in across the country, particularly with those who claim to be economists. Best, Don Bauder

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SurfPuppy619 Sept. 12, 2010 @ 8:55 a.m.

Don, I am pretty sure it has sunk in with the citizens. The media attention to the issue has been off the charts the last 2 years. Full court press. The only people I see doing otherwise are gov employees and their elected officials. The major universities (U of Chicago, Stanford, Northwestern) have all put out White Papers thoroughly documenting the problem (wild unsubstantiated ROI in highly speculative and risky investments).

The problem is we have the pensions funds and the gov's downplaying the problems, claiming there are no problems. I see that virtually everyday from gov employees and elected officials Sanders) who are in their pocket. Heck, we have JustClueless posting that nonsense here on a regualr basis, that "there is no problem", as soon as the economy comes back the issue will go away. The # of gov emplpoyees receiving 6 figure pensions in their 50's is rising at a rate of 500% per year......

We have yet to see CUTS, or even caps, in compensation for gov employees. As the private sector has been wiped out, gov employement has actually increased. Vallejo went bankrupt yet still gave their PD and FD 7% raises. Our own SDPD received 11% raises. This in the middle of the worst downturn in 80+ years.

No, we are going to have to completely, 100% implode before the elected officials take action I am afraid.

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Founder Sept. 12, 2010 @ 10:41 a.m.

Reply to above post I think SP is "more" correct about the denial of our economy:

Our Public Leaders are now protecting their own CU$H pensions and also all those of their loyal UNION $UPPORTERS! It's a vicious circle!

Put another way, for all you pilots

Our climbing economy, that first went into a "nosedive" is now in a "flat-spin" because of poor piloting skills and the only folks with "golden" parachutes are the one that are "frozen" at the controls!

We are just along for the ride and we are going down...

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Don Bauder Sept. 12, 2010 @ 1:44 p.m.

Response to post #3: I wish I could agree with you, but I don't know. The fact that public pension systems, states, and municipalities are insolvent is recognized, but except in states such as California, has not really sunk in. There are so many other horrifying statistics that people's eyes just glaze over. Best, Don Bauder

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Don Bauder Sept. 12, 2010 @ 1:46 p.m.

Response to post #4: All of which is another way of saying you expect a crash. You could be right. You could be wrong, too. Best, Don Bauder

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Founder Sept. 13, 2010 @ 7:23 a.m.

Reply #6 What we need to have happen ASAP, to avoid a "crash" is for our Leaders to accept that the economy which they are controlling is "about" to crash and accept some advice from others as to how to avoid it; before it is too late to do anything about it!

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Don Bauder Sept. 13, 2010 @ 7:45 a.m.

Response to post #7: However, there is a dilemma: the politician who explains to the public that we are living beyond our means loses the election, and doesn't become a leader. Best, Don Bauder

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Founder Sept. 13, 2010 @ 12:01 p.m.

Reply #8 I guess that is why our Leaders, are "the politician" that smiled and have "spun" their way into Office and work to pad their retirement benefits so they can enjoy themselves later on, somewhere else...

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johnsd Sept. 13, 2010 @ 11:08 p.m.

Don, I am pretty sure it has sunk in with the citizens.

We are going to have to completely, 100% implode before the elected officials take action I am afraid.

I sure hope you are right. Unfortunately I doubt it has sunk in with the majority of voters, or at least it becoming the primary reason on whom to vote for--assuming there is a real choice on this topic. Voter intensity on an issue can be more important than having majority support that is of secondary or tertiary importance. When any endorsement or political advertisement by a public sector union, or "association," becomes the primary reason to not vote for a candidate or proposition, that is when this will start to change without insolvency/bankruptcy. That is not to say that police/fireman unions are not necessary to protect its members.

Unlike a private corporation where management has a self interest in controlling costs. The management in the public sector has a significant conflict of interest in controlling costs, and particularly retirement benefits, because they personally benefit from having very generous benefits. Government is a monopoly but most of the media never questions the need for their first claim on society's wealth because it is for the "public good" and the "public servants" are not greedy like those in the private sector. The excesses of the retirement and medical benefits are shedding light on these abuses and will make this propaganda more transparent.

Like most things regarding government, there are two sets of rules: one for the government employees and another for those who pay them. Private sector pensions/retirements, where they still exist, can be changed (reduced) fairly easily. What happened to the United Airline pilots was terrible. That is not the case for our illustrious public employees: you can only change things to increase the benefits, but it is "unconstitutional" to return the benefits to the same level as before.

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Don Bauder Sept. 14, 2010 @ 2 a.m.

Response to post #8: Being a politician or bureaucrat used to be called working in public service. Now these are simply paths to quick, dubious riches. Best, Don Bauder

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SurfPuppy619 Sept. 14, 2010 @ 7:37 a.m.

Being a politician or bureaucrat used to be called working in public service. Now these are simply paths to quick, dubious riches

When you have ff's and cops "retiring" at age 50, 51, 52 or 53 or 55 with pensions valued at $8 million-$10 million, MORE than the CEO's of 90% of the Fortune 500, then you have problems. BIG problems.

And yes, there are multiple examples of this happening in gov- the most recent being the police chief of San Jose who is retiring at age 51 with a pension valued at $8 million-and is now a finalist for the police chief job in Dallas.

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Don Bauder Sept. 14, 2010 @ 8:30 a.m.

Response to post #12: That's egregious, if true. I would hope Dallas would look at the San Jose caper. Best, Don Bauder

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SurfPuppy619 Sept. 14, 2010 @ 2:57 p.m.

Well, I was wrong, the San Jose PD Chief is actually 50 not 51, and yes, he is interviewing for the chief job in Dallas!

Now everyone knows why we are BK in every muni, county and the state itself.

When someone with no college degree can be promoted from within up the chain of command of a municipal police department, not even in the top 3 in the state for size, and then "retire" at age 50 with an $8 million pension at age 50 the system is very broken.

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Visduh Sept. 14, 2010 @ 9:41 p.m.

The irony of this is that a state that was never tax-averse, New York, is in just about the same financial mess as California. I say this because California has been described for a long time as tax-averse. New York never had anything like Prop 13 and in some areas its property taxes were near-confiscatory. (The voters in fun-spots such as NYC and some other urban cesspools were more than happy to vote for taxes and to vote for politicians who promised give-aways and soak-the-rich taxes. Many of those voters knew they would never pay the taxes themselves.)

Does any of this sound a little like California in recent years? Despite the reputation, Californians have have embraced higher taxes. But in neither state has taxation prevented pension penury. The two states seem utterly different in their politics, yet the result, insolvency, is the same.

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Don Bauder Sept. 14, 2010 @ 10:24 p.m.

Response to post #14: If the facts are as you state them, they are certainly very bad omens. Tragically, this is being repeated in a number of cities and states. Best, Don Bauder

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Don Bauder Sept. 14, 2010 @ 10:29 p.m.

Response to post #15: Good point. Look at the home ads in the Wall Street Journal. Look at the tax rates and compare them with similar pre-Prop. 13 homes in California. Amazing what they pay in property taxes in much of the East. Best, Don Bauder

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SurfPuppy619 Sept. 15, 2010 @ 8:30 a.m.

Tax revenue did not decrease with the passage of Prop 13, what happened was "fees" in other areas were increased -much as what is happening today with our water costs in San Diego - to make up any "tax" shortfall in funding.

So even though we had Prop 13, the tax and fee revenue still increased to the state.

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Don Bauder Sept. 16, 2010 @ 2:06 p.m.

Response to post #18: I don't know if property tax revenues decreased under Prop. 13, but if not, they certainly did not increase to the extent needed to cover expenses. Best, Don Bauder

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SurfPuppy619 Sept. 16, 2010 @ 4:52 p.m.

From the date Proposition 13 took effect in 1978 until now, property tax revenue has increased 580 percent. You read that correctly: 580 percent.

During that same time, California’s population went from about 24 million to 38 million, an increase of only 58 percent. In other words, government revenue under Proposition 13 has grown 10 times the rate of population growth.

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Don Bauder Sept. 19, 2010 @ 9:06 p.m.

Response to post #20: That is an assertion that should be scrutinized very, very carefully. Best, Don Bauder

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