• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Accounting for Public Pensions?

Leo Kolivakis's picture




 
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Sat, 12/11/2010 - 11:03 | 798477 a1sinclair@aol.com
a1sinclair@aol.com's picture

It is a combination of things and it is going to prove to be imperative that government get more efficient if we are to regain our economic vitality.  Will this happen without radical change?  No.   I would do several things:

1.  Freeze all public sector pay until the employee signs a new contract with retirement based upon age 65 and discounts from that if they retire earlier.  Entities in the worst shape should freeze their retirement plans for all employees and start 401K type contributions.

2.  Medical care would not be provided for regular retired employees until age 65; if for fire and police, it would start at age 60.

3.  New employees would all be in a 401K.

4.  I would stop dealing with unions for pay and benefits; if the employee does not like what he is getting, he could quit and go to the next town, state, etc.

Sat, 12/11/2010 - 10:34 | 798461 Gene Parmesan
Gene Parmesan's picture

Another cut-and-paste masterpiece, Leo. I like the personal insight at the end; "no reason to sound the alarm prematurely" - priceless.

Sat, 12/11/2010 - 12:13 | 798561 El Hosel
El Hosel's picture

  "Another cut-and-paste masterpiece, Leo"

     I'll cut and paste to that.

 No reason to be bearish, no reason to sound alarms, no reason to address the future and certainly no reason not to "hope" reality remains obscured indefinatley. Just keep on hoping.

Sat, 12/11/2010 - 10:04 | 798440 boooyaaaah
boooyaaaah's picture

<
>>
You dip sh*t
They were promised you were not, you are stupid. It is not their fault.
Why did you not get into a ponzi scheme of your own and get a "guarenteed" pension, so you can retire in your mid 50's?
And get cost of living adjustments.
And health care.
And hunt on safaris and own vacation homes?
What's a matter you? You Stupid?
The key here is votes.
The Pols in both parties have to pozi-guarantee enough people in enough political blocks to insure re election.
And you have to outlaw profiling. Create a taboo. So all kinds of voting blocks are off limits to common sense scrutiny.
And the military is off limits. Because we are fighting a war.
Then you and your fellow ponzi schemers get elected and perpetuate the big lie. And you collect the pension, too

Sat, 12/11/2010 - 09:49 | 798431 ZackAttack
ZackAttack's picture

Frankly, no one except public sector employees care about what happens to public pensions.

Let 'em strike. There are a dozen behind each one who would gladly take that job.

Sat, 12/11/2010 - 09:45 | 798429 apberusdisvet
apberusdisvet's picture

The can being kicked down the road probably will hit the cliff within 2 years.  When there are announcements that troops are being rotated home, make sure you have the means to protect yourself from the marauders who will have nothing more to lose.  Local law enforcement friends of mine tell me that the incidences of parking lot robberies are way up but are being under reported by the MSM and the FBI statistical massagers.

Sat, 12/11/2010 - 06:13 | 798352 teotwawki
teotwawki's picture

Well here in Az. our public sector "heroes" get to retire after 20 years with a sweet ass pension-with full survivor benefits. If they sign on to stay another 5 years they receive a "special" lump sum payment somewhere on the order of several hundred thousand dollars. This kind of stuff tends to bother me, especially when all the local and state governments can do is bitch about how broke they are. New rule: you aren't a hero if you're getting paid to do something. Would they do it for free? Let's see how many sign on for an all volunteer fire or police department. I would sign up if I could quit losing money shorting the market and not have to work my normal shitty job.       

Sat, 12/11/2010 - 05:15 | 798335 minus dog
minus dog's picture

Adding to the political clusterfuck is the fact that pensions rank right up there with unicorns for most people under 35 or so.  We'll never see one, so we sure as fuck don't care if you get to see yours.

Ask public employees near retirement - DMV workers, pencil pushers, postal workers - what we should do about pension shortfalls and they'll talk to you with a straight face about shifting funds to and fro to cover the gap until they've collected all theirs.  They don't care what happens after they're gone, either to coworkers who come after them, or employees of other agencies, or to everyone as a result of debts incurred to "save" the system just long enough for them to get theirs.

And they utterly fail to comprehend why you suddenly look like you're going to throttle them when they explain why we should fuck over everyone who isn't them, just for their benefit.

Sat, 12/11/2010 - 03:20 | 798289 Pike Bishop
Pike Bishop's picture

If this makes some kind of sense, then why the fuck wouldn't it make sense for the dealer/bankers to mark their shit to market? And the Fed get audited?

The entire financial system is running on horsefarts and mirrors.

And the bastards who saw to it have suddenly got religion over pensions?

Just let me fuckin' guess who is on the short side of this.

Sat, 12/11/2010 - 02:34 | 798263 ebworthen
ebworthen's picture

Pensions and 401K's and IRA's have provided capital for the Banksters to leverage and skim, and a big pool of cash for the Politicians to tax. 

Millions and millions of people with "money" in the "markets" but a great many of them never really getting the money or using it.  When they die it gets taxed and blown, if the kids ever get it or their is an heir.

Ponzi schemes 101 - create a lie big enough for buy-in, and keep the lies and the buy-ins going. 

Why do you think they bailed everyone and everything except the individual out?

Why do you think Obama suddenly "capitulated" and there is "compromise" over extending the "tax cuts" (not increasing taxes) and unemployment?

The Ponzi must be maintained at all costs.  Money must be forced back into equities. 

Confiscation or entrapment of retirement funds are next, withdrawal limits, higher taxation rates, and when the old boomers start to kick off 50%-75% estate taxes to redistribute the money or keep it on the craps tables.

Sat, 12/11/2010 - 10:31 | 798456 GreenSideUp
GreenSideUp's picture

+1

Wonder what false flag will be used to confiscate/entrap retirement funds for our own good?

Why do you think they bailed everyone and everything except the individual out?

Once I disabused myself of the notion that the Political Class or Elites care anything about any of us (except to steal from us), it all made perfect sense. 

Sat, 12/11/2010 - 09:40 | 798427 boooyaaaah
boooyaaaah's picture

Good point

The defined benifits are a lie

As well as state paid tuition (where is the state getting all of this money)

But the students in Britain will riot for this lie

And the roits in Greece and Portugal are state workers demanding that the lie be made true.

 

Sat, 12/11/2010 - 03:25 | 798294 CustomersMan
CustomersMan's picture

If foreign governments were able to sue or threaten to sue the largest banks and brokerage firms in the U.S. and get their principal back, then why not the U.S. pensioners?

 

Get the legal basis and copy it and go after these U.S. firms immediately,

while there is still money. PRONTO.

Sat, 12/11/2010 - 01:49 | 798221 Buck Johnson
Buck Johnson's picture

The states will eventually have to cut pension benefits, no other choice.  Also I don't know that you know this but states or municipalities can't put off their pensions in case of bankruptcy (if they are allowed) to the PBGC it's not allowed Federally.  This is because all states would shed their pensions for the Fed to fund and they won't allow it. 

Sat, 12/11/2010 - 01:20 | 798183 Clinteastwood
Clinteastwood's picture

People whose main goal in life is to retire (Maynard G. Krebs) deserve their fate; i.e., their retirement income will go away.  You don't get a free lunch in this world.  If you don't work, you don't eat.  Think about it, you who are still young.  When you get old you better be smart enough to have a job you can work at 'til you're old--and that ain't a labor break your back, knees, and hips job------it's a desk job.

 

Get smart  and reposition yourself to get old and still be able to work.  There's a freight train coming at you.  It's called "getting old."  You better get outta the way.

Sat, 12/11/2010 - 01:24 | 798191 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

There are plenty of free lunches out there...just not for us.

Sat, 12/11/2010 - 00:57 | 798149 Seasmoke
Seasmoke's picture

i am ready , the only problem is im not sure who has hurt me the the most...the politicians , the bankers or the public unions......i would guess the easiest enemy to target are the public employees as they stick out like sore thumbs in their uniforms, so i guess it starts with them.....amazing that they have pushed the private sector to hate them as much as the bankers .....fools !

Sat, 12/11/2010 - 00:02 | 798047 Dburn
Dburn's picture

If memory serves, defined pensions were available to 46% of the private sector in 1991. By 2010 it had dropped to 21% and most of those are in telecoms which are doing away with them as fast as possible. However they are still a big part of all public sector employees.

I do recall making a statement that public sector employees benefits were not being counted in pay differentials with private sector employees, then commenting negatively on a 20 year and 30 year retirement plan as compared to the private sector. 

I got a big FUCK YOU from one commenter followed up by "You try to buy big ticket items on a 20 year pension". Big ticket items? Like what? What would I expect to be able to buy if I had retired at 38-42? They get those benefits with COLA for decades and decades while the private sector employee may last a decade on social security. 

Public sector employees  are allowed to work other jobs with no limit on income. They can also  double, triple and quadruple dip into other retirement plans. Oh yeah. The biggie : the gold plated health benefits package that's not available at any price to private sector small companies or small company owners, also follow them until they are eligible for medicare.The health care packages 75% subsidized by tax dollars.

Contrast that with someone forced to retire at 62 now and getting up to 75% of his $24,000 a year  but with no medicare and a limit on what they can earn of $17,000.00. Magazines breezily advise readers they should have at least $250,000 saved up when they retire just to cover extra medical expenses. Of course someone retiring at 62, until it's no longer allowed, usually doesn't have $250,000. In fact since housing has gone bust the old downsizing trick of selling the big house to free up that $250,000 is now gone also. More than likely there is a big ass first and second on it and they are under water.

Not in the Public Sector though, which until further notice is truly the land of milk and honey. I wouldn't say that they are slaves to the elite. I would say they are enablers to the elite so they will be well rewarded. The bill contemplated in this article will never make it through. Public sector employees at the federal level never have to worry about losing their job. The state level will be more worrisome, but somehow I think a 11K job loss in one month at the state level probably were probationary employees.  Nor do they really have to worry about saving. When they retire post 20 years of service they are guranteed a check that is 50% of their pre-retirement income (Including the 1000 hours of OT they work a month) and if they retire at 30 years , say in their early 50s, then they get 75% plus the heavily taxpayer subsidized health insurance.

To me it's just a rotten deal when the taxes that are paid in from low wage earners subsidize all of this while at the same time most safety nets for private sector employees on the lower end of the pay scale are virtually non-existent.

Extended UI benefits, while given a lot of press by conservatives as a form of welfare and the end of the free world as we know it because they just know that everyone on them are keeping their cable, their $100 a month cell phone plans and drinking at Starbucks while ignoring those $10.00 job opportunities , don't really take into account that those $10.00 jobs they keep talking about aren't as plentiful as they make it sound, unless of course one wants to a little depression era type traveling and only if your between the ages of 30 and 50. Before that and after that, forget it. No jobs for the young or the old except minimum wage at fast food places. There is nothing in minimum wage that says it must provide for a place to sleep. Good luck getting 40 Hours and good luck taking care of someone on that $720 a month take home.

Aside from the fact that UI benefits are tiered and only available to people who are in hard hit states with unemployment over 8.7%, it gets real difficult when arguing against that if one is arguing for tax cuts for the wealthy of 3% that would pay for those UI benefits many times over. There is where the slavery is at. Pressing the $10.00 /hour veritable ocean full of  of jobs out there that are apparently being ignored in favor of UI benefits while pressing for tax cuts, suggests that once a educated person enters the lowest tier of employment, they will never get out which means companies owned by those who got tax cuts will not have to go through the 24 hour agony of a flight to foreign lands where outsourcing exists which really doesn't save that much but it is a terrific tool of leverage to keep employees wages down from the Professional class all the way down to the day laborer. At the same time pushing more and more wealth into the hands of the vaunted 1% with a wink and a nod from their govt accomplices who are guaranteed the middle class benefits once enjoyed by most Americans.

One has to wonder if Conservatives would scream or kill someone if corporate welfare stopped at the same time extended UI benefits are stopped.

The short form:  Fuck em all and see which ones live. Arbeit Macht Frei and all that. 

Also for the screamers about the abuses of extended UI benefits. How about some data? Eh? Also while your at it, why not a some data on the ocean of $10 per hour job opportunities. What skills and what age groups can get these benefit-less jobs.? Finally if someone offered a screamer $800 a week or $320 a week. Quick which one would you take? Kinda reminds me of the abortion argument. Do anything to save a unborn babies life, but hey if they find a few one year olds frozen to death in a dumpster, fuck em. No welfare.

This country hands out more welfare to corporations and to public sector employees by several orders of magnitude than what is given to the lower portion of the $46,000 median income in the US 

 

Sorry had to get that extra rant of my mind even though, as a small business owner, I'm not eligible for any of that.

 

Sat, 12/11/2010 - 09:34 | 798422 boooyaaaah
boooyaaaah's picture

A few things I would Like to Know

1) How much are federal and state retirement plans costing the taxpayer present dollars and future dollars --- we get the expense of social security trotted out, and layoff off police when ever government costs are questioned.

I would like to know what the big lie of Defined benifit pensions are costing the taxpayer.

Also throw in the private union pensions beause I think they are guaranteed by the taxpayer.

 

Sat, 12/11/2010 - 01:28 | 798197 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

Enablers to the elite. Well said. As another small business owner who pays for all this socialism for others I salute you.

Fri, 12/10/2010 - 23:57 | 798036 treemagnet
treemagnet's picture

I will gladly pay you tuesday for a cheesburger today.....

Fri, 12/10/2010 - 23:09 | 797945 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

I will probably miss some of the nicer points of socialism though, but gold platted public pensions I will not cry for.

Fri, 12/10/2010 - 23:08 | 797944 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

Rocker I understand your frustration, but the taxpayers will not allow the public sector to have privileges that they do not have.   This should help once and for all to sign the death warrant for socialism, long term.  It proves George Orwell's point that some are always more equal than others, and the taxpayers won't stand for it long term.

Fri, 12/10/2010 - 23:57 | 798011 rocker
rocker's picture

Biggus, I don't understand your confusion. I am not frustrated. I just play the hand I am dealt. Taxpayers are taxed without knowledge. Most do not understand the Fed, what they do, or how they do it. I guess one must define the public sector and the rich. Surely, you do not think a million dollars of assets as being rich. My comments are about the markets and possibility why, just maybe, one should:

"Buy the Fuckn Dips".  

Sat, 12/11/2010 - 01:33 | 798203 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

I just thought your comment about 'slaves to the elite' meant that you were a public sector worker mad at getting dissed.

Fri, 12/10/2010 - 22:22 | 797865 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Public sector will feel the wrath of outrage of the poor working class who have no pensions.  You can't print jobs or growth.

Fri, 12/10/2010 - 22:53 | 797917 rocker
rocker's picture

I have given much thought to the markets for a while. Thinking about the Bernanke's quandary. I believe that this is the reason for his wanting much higher asset and equity prices.  Interesting if one thinks about this dilemma.

Why would the markets go up? POMO, don't fight the FED. Who does it help ? The rich, the poor can not participate. Who gains ?  The bankers, (the elite primary dealers, IE: GS, C, JPM, etc), doing God's work. LOL on that one.

Under what disguise do we make it even cheaper? Print, most people do not understand QE anything. Some actually believe the FED is part of our government.  They really believe demand is the only reason Oil and Gas keeps going up.

Yes, the public sector will be slaves of the elite. Mission accomplished.

Sat, 12/11/2010 - 09:19 | 798413 boooyaaaah
boooyaaaah's picture

Also, after inflation pensions will be paid in cheaper dollars so a 100,000 $/yr pension will buy you one Toyota corolla.

And the key supporters of inflation and debasing the currency are first the debtors -- they pay back in cheap dollars

And second who gets the money first

Un pensioned workers are way down on the totem pole

Banks and prime brokers are right up there with government agencies

Sat, 12/11/2010 - 02:11 | 798245 penisouraus erecti
penisouraus erecti's picture

Slaves to the elite, and so long as they keep entertaining them with crap like DWTS and WOW they'll never complain.......or even know.

Fri, 12/10/2010 - 22:22 | 797867 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I said print, but I forgot, he doesn't print.  Monetize.  You can't monetize growth.  Pull a rabit out of a hat much?

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