QueenMe: Aguirre is telling truths about the pension burden. But there is more that must come out. The City is in a difficult financial situation. The other candidates are not telling the people about that. Best, Don Bauder

boemac: Don't just blame the unions. They are out to get all they can for their members. It was the San Diego government that granted them the excessive pensions. And the officials in that government are ALSO getting extremely excessive pensions.

It's the same with American industries (autos, rubber, steel, etc.) that got into trouble by granting excessive pensions. Managements should share the blame, too. They probably knew that some time down the road -- 40 years or so -- their companies would be in deep trouble because of excessive pensions. But by that time, those managers would have enjoyed fat pensions and died rich. Best, Don Bauder

Don, you wouldn't be referring to GM, would you? In the fall of 1970, the UAW (as was their practice) targeted GM for a strike while allowing Ford and Chrysler to continue operating. At that time, GM was most eager to roll out its new "import fighter" subcompact Chevy Vega. (Many, many auto writers and pundits have said that the best thing that could have happened to that car was never seeing light of day. Nonetheless GM and Ford--with some rumored pressure from the Nixon administration--wanted to get their new small cars out there. And while the strike continued, Ford was selling their Pinto "like hotcakes.") Finally, GM caved in to the demands, and to the dismay of many industry experts, signed a contract that would have many adverse consequences. But, if GM had continued to enjoy its dominant position in the US auto market (with over half of it, meaning that Ford, Chrysler, American Motors, and all the imports shared less than 50%) would not have found them too costly. Sadly for GM, 1970 was near the peak of its dominance, and its market share began to erode about that time, largely due to missteps, arrogance, and an assumption that it could write the rules of its market. But things such as guaranteed employment and retiree health benefits caught up with GM. Is it any coincidence that GM's BK filing came just a little less than forty years later? Remember that in 1970 it was seen as the absolute paragon of US industrial might and success.

A similar fate could befall these cities, counties, districts and states that have over-promised retirement benefits while underfunding them and making unwarranted assumptions about investment returns. But as governmental agencies, they will survive, but will the intended recipients of the benefits actually get them? That's the real question.

Visduh: That is an important story about GM. Yes, greedy unions are partly to blame for the decline of U.S. manufacturing. But greedy and stupid managements are also to blame -- ultimately, management calls the shots. Excessive wages and pensions verily invited the Japanese, Germans, Koreans and other countries with lower wage and benefit structures into the U.S. market.

A city, county or state cannot move its operations overseas, although some move certain functions, such as computer programming, to countries such as India. But there could be a wave of municipal bankruptcies. This will disrupt the municipal bond market and ultimately all markets.

I have looked at the Detroit situation. It does not appear that pension benefits are egregiously out of line. In fact, on balance they seem moderate. So there is a real balancing act between bondholders and employees if Detroit is going to get out of its bankruptcy. It will be interesting to watch San Bernardino and Stockton. Will out-of-line pensions be tamed? Best, Don Bauder

Maybe I should clarify here. In this instance, I blame GM management and board. They set themselves up with some things that came back to haunt them and set the stage for their failure. But they also, in making that settlement with the UAW, set the pattern for the contracts with their weaker competitors and for the industry for many years to come. The union was supposed to ask for many things, but in this case, I'm not sure the union wanted the things that GM accepted: I think the union just wanted a bigger hourly rate, and would have been satisfied with that. GM kicked the can down the road, and could have done that indefinitely if it had kept its market dominance. When their mismanagement cost them large chunks of the domestic auto market in the 70's, 80's and 90's, they could no longer afford it.

Visduh: You say Mike can't win. You may be right. But hopefully he will wake up the community. See the item I will post immediately below this one. Best, Don Bauder

Don: Aguirre already has my vote. To me, he is the best candidate by far.

aardvark: Aguirre is the only candidate telling the truth about San Diego finances. Best, Don Bauder

I too have heard it from a close family member that Aguirre has some real personality/emotional difficulties. But he's the only candidate who will stop the city from driving off a fiscal cliff. Is he insane, or is he just the one person on stage who is sane? Hard to tell. Time WILL tell, but if the voters get it wrong, the city will be much the worse for it all.

Visduh: I have worked with Aguirre since the early 1980s -- almost entirely on scams we were both tracking. Sometimes I wanted to wring his neck, and he wanted to wring mine. He is an amazingly quick study. He can grasp a complex topic more rapidly than just about anybody I have ever known.

He is a work addict; that may be the personality problem someone told you about. I am also a work addict. When my wife points that out, I always say, "Well, you could be married to Mike." Aguirre makes me look like a loafer. Best, Don Bauder

KLoEditor: I disagree 100% but you are certainly entitled to your opinion. As city attorney, Mike took on the establishment and got smeared for it. Best, Don Bauder

In San Diego, insanity in government is apparently telling the truth. If Aguirre is insane, let that kind of insanity run all over San Diego politics.

aardvark: Good statement: in San Diego, telling the truth isn't merely impolitic. It's considered insane. Best, Don Bauder

I think Aguirre's philosophy as city was attorney was that he worked for the citizens of the city of San Diego and his prime objective should be doing what's best for the city of San Diego. I think that many members of the city council felt that the primary objective of the city attorney should be to provide legal representation to the city council members. While in principle both of those objectives are part of his job at many times those objectives may be in conflict - especially if a city council member has done something unethical or potentially illegal.

As a citizen of San Diego, I feel Aguirre's priorities are the correct ones and I would support him as mayor.

ImJustABill: You have capsulized the dispute. Aguirre cited precedents showing that the city attorney should work for the citizens. Council members and the mayor thought the city attorney should work for the council and the mayor. Best, Don Bauder

... and that the City Attorney should provide opinions that supported what the Mayor and/or Council wanted instead of what laws & precedents would support.

jejula: Yes, the mayor and council wanted the city attorney, then Mike Aguirre, to be an echo. Correctly, Aguirre wouldn't do it. Best, Don Bauder

JustWondering: 'Twas ever thus. Best, Don Bauder

Psycholizard: Actually, City of San Diego pensioners who retired many years ago get very modest payments. It's the ones who gobbled up retirement benefits around the turn of the century that revel in obscenely high pensions. Best, Don Bauder

The perps in the scheme, the top brass that negotiated the pensions, are mostly retired now, and are now spending their plunder. Mayor Sanders covered their rear by sabotaging all legal efforts to fix things from the City side. The scheme was by insiders for insiders, a police chief is compensated over a million dollars for a single year on the job, should he live a normal lifespan. Because the rank and file don't share in this level of plunder, the unions might restructure the contract at a price.

Psycholizard: Yes, the topside administrators who cooked up this pension scheme -- not recognizing the seeds of destruction therein -- retired with very fat pensions. You are right: the scheme was by insiders for insiders. Best, Don Bauder

Don: My father retired in 1984 from the city. From what I understand, he had the option to continue SS payments that last few years he was with the city, and did so. When he retired, his pension wasn't huge at all, but when coupled with his SS benefits, it was more than enough to continue a comfortable living. It really was too bad that the city eventually pulled all city employees out of the SS system. I would think a much more modest pension, along with SS benefits, would have been enough for most people. But they also saved a great deal, which many people today don't even consider doing.

aardvark: A lot of people believe that move to put employees out of Social Security was not a good one. Best, Don Bauder

Duhbya: Amen. After all the scandal, San Diego has still not gotten rid of that 13th check. Best, Don Bauder

rehftmann: I think one can safely assume that the pension distributions, albeit unreasonably high, are generally spent in San Diego. That is a plus. But following that logic, janitors working for the City could be paid $500,000 a year on the theory that they spend it locally.

The fact is that a certain group of retirees who left the payroll during a certain recent period are being paid an inordinately high sum, and that is inhibiting the City from doing anything about the rotting infrastructure. It is also forcing the City to sell bonds to rebuild the infrastructure. That's a false economy. Best, Don Bauder

I wish I could find the stat's to back my hunch that a dollar paid to a retired trash collector will probably mostly remain in San Diego, except for the part he spends at the stadium or casinos. I'd also be able to answer Visduh by saying we get more retire-to-San Diego dollars than we lose. As with the Detroit/GM or Alliant discussion, money being fungible as it is, there's no reason not to pay a janitor $500K a year if they do a good job and if (big if) the employer can afford it. Beats paying an executive that every two weeks who drives the company into the ground and then having to clean up their mess. San Diego's longterm structural budget imbalance can't fairly be blamed the tax-paying working people in between the indigent and the executives. How do the unions who struck over-reaching deals line up in endorsing our mayoral candidates? And how are those over-generous benefits distributed up and down the pay scale? Dealing with aggregate, bottom-line actuarial totals doesn't sniff out the budget busters. I don't see any politicians running for janitor.

rehftmann: In recent years, more people have left San Diego than arrived. I do think the majority of retirees probably stay, because they are likely to have paid off their mortgages. I don't know if more retirees leave than stay. San Diego is an expensive place to retire. The cost of living is much higher than the nation's.

You are right: San Diego politicians don't run for janitor. It's a pity, because such duties are all some of the pols are capable of performing. Best, Don Bauder

Of course there is a reason not to pay a janitor $500k a year - it means there is less money for other things. In the case of a private company, this might mean money for R and D, or profit, or paying off debt, etc. In the case of a public entity this means more money for goods and services for the citizens.

Any fiscally responsible employer certainly should attempt to hold down salaries and benefits. For a public entity, it is the job of the elected officials to negotiate with employees to spend as little money as possible for the best services possible. Within reason, it's public officials' job to pay public employees as little as possible - any other philosophy is grossly irresponsible for a public official to have. Maybe some of the money paid to public employees comes back to the municipality (I think that's what you are implying) but it's not 100 cents on the dollar so it's still a loss to the taxpayer.

I'm using Don Bauder's extreme example of paying a janitor to say that expense (labor, inventory, R&D, pension impounds, whatever) is only a function of income and, to a lesser extent, prevailing industry ratios in a market. It's interesting that people dismiss a worker being overpaid as a waste of money but accept the outrageous compensation top exec's and financial sector employees take, with no relation to actual value added. There's recognition and some outcry but they have the business end of the stick, so minimum wage, health benefits, pension and other worker compensation are automatically considered toxic to the "bottom line." What's missing is the fact that workers must accept the risk of poorly run companies (GM springs to mind), get blamed for the failure they had no say in, and that risk is passed on to the entire economy which depends on the consumers, who are the workers. Trickle down down down doesn't run a country. It surely isn't working in San Diego, unless you get a job building Mitt's new house.

(oops - double post)

I think you are making a "red herring" argument by bringing up CEO and financial sector pay - it's not dirctly related to public employee pensions. Personally, I think there have been some poor public policy choices at the federal level which have allowed CEO's and financial sector executives do make too much money and there should be changes. But that's not particularly relevant to the issue of public employee pensions.

I think what is common between CEO, financial sector compensation, and public employee unions is that many public officials have been unduly influenced by these groups.

ImJustABill: Good point. One of the worst aspects of outrageous top management pay is that others -- such as those in government -- believe they deserve such compensation. There is nothing -- absolutely nothing -- that can be defended about today's top management compensation. Best, Don Bauder

rehftmann: Trickle down economics has never worked anywhere. Usually, trickle down economics has a euphemistic name, such as supply side economics. And supply side economics has not worked, either. Best, Don Bauder

ImJustABill: Remember, though that the city employees got enormous pension benefits because the Golding administration had pulled money out of the fund to support the Republican convention, at which Golding, then eyeing the Senate, would be spotlighted. So as a sop, fat benefits were granted to employees. Best, Don Bauder

ImJustABill: On the other hand, it is NOT fiscally responsible to pay employees too little. The company may lose in productivity what it gains in low payrolls. Best, Don Bauder

The current job market wisely considers "pay" in dollars as a dwindling aspect of compensation. Not just a corner office or awe inspiring title, the rest of the deal, especially for younger people, is far more complex, including time for professional development or pro bono work, travel expenses, flex time, a book allowance, and basically, a more personalized set of values. Especially for younger workers, promising them security in old age sinks low on the list. Unions and institutional employers are slow to catch on and slow to attract employees. Walmart's ham-sandwich and no-free-lunch attempt to lure top e-commerce talent is a classic example of not getting it. So setting the $500K janitor or exec' aside, let's consider the current pension problem large but limited. The problem going forward is the extent to which good people won't go into government. The greediest may become overpaid executives, but they'll be in Walmart's sinking boat. Compared to the attractiveness of Apple or Amazon (wild contrasts in profitability), money isn't the most important thing anymore. I hope.

I'm not sure that anyone should assume that most or nearly all of that pension money is spent locally. Many municipal retirees, and they can afford to do so, move to states like Nevada that have no income tax, and can have a lifestyle they could not afford if they stayed here. More and more retirees with whom I talk are looking to move out of California, due to high taxes. And when they leave, they take all their income with them, leaving the state even poorer than before.

Visduh: You are right. I didn't mean to imply that all the money stays in San Diego. I suspect that most does. By the time they retire, a high percentage of these people have paid for their homes, so they aren't hit with the high real estate prices and taxes. But you are right: some are moving to low-tax cities with low real estate prices -- places like Nevada and Texas. Best, Don Bauder

Psycholizard: The county and city pension funds already hire money managers to handle the funds. Would you replace them with insurance companies? Or add insurance companies?

Frankly, I would simplify pension funds management greatly. Study after study shows that investors are better off with index funds than parceling out the money to various managers, each of which takes a cut. A pension fund should go with a low-cost operation like Vanguard, and give employees a few choices of the kinds of funds they want to be in. Costs would be extremely low and performance would be better. Best, Don Bauder

There's got to be a better way to manage risk than the way it's been done. I think you are on to something although I don't know what the exact financial mechanism would be. Even for private companies I think the incentives for prudent risk vs. reward decisions have been distorted a lot in recent years by bailout-mania.

ImJustABill: I would use no-load index funds both for 401k accounts and for the money in defined benefit programs. Say, for the latter, the committee could decide on adjustable guidelines for asset classes (say, 40 to 50% equities, 35% to 45% fixed, etc., flexible on domestic and foreign) and put money in low-cost funds. Avoid hedge funds and private equity gambling.

Committee members should be informed enough to adjust those percentages as conditions change, even though market timing really doesn't work. But committee members could do it as well as some highly paid manager. Best, Don Bauder

I feel that the people making these decisions don't consider risk vs. reward adequately. Everyone always wants to hit some big home run and see 25% returns. But I don't think this is wise in the long run. In general I tend to believe in Bogle's principles - with the exception of a few geniuses (Buffet, etc) or inside traders most fund managers do no better than wide diversification. Except that diversification has a lower management fee. So the investment strategy should be geared towards how to diversify funds in a way to minimize risk. What you suggest seems like it would be a pretty good baseline formula for a city like San Diego.

Psycholizard: Maybe that is something that should have been done years ago. But it doesn't solve the current problem of too many workers with excessive pensions. Best, Don Bauder

Sjtorres: Any mayoral candidate that doesn't recognize the pension problem, and doesn't promise to try to do something about it, is not qualified for the job. Best, Don Bauder

Don: I believe that alone should disqualify 3 of the 4 major candidates.

aardvark: Agreed. Beste, Don Bauder

Psycholizard: Not only was Sanders lying about the problem, he was fattening his own police pension. Best, Don Bauder

ImJustABill: The problem, as Psycholizard points out, is that the issue is complex and people just don't want to hear about it. Best, Don Bauder

Psycholizard: If Aguirre doesn't win, at least he will have advanced the education process. Going after the pension mess led to him getting smeared when he was city attorney. Best, Don Bauder

Psycholizard: That is certainly true in San Diego. Best, Don Bauder