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Old 04-07-2016, 09:33 AM
 
633 posts, read 463,567 times
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Quote:
Originally Posted by John1960 View Post
The US government has nowhere near enough money to pay retirees.

According to credit rating agency Moody's state, local, and federal governments are about $7 trillion short in funding upcoming pension payments.

https://www.yahoo.com/finance/news/u...153435525.html

This is largely a local/municipal problem though.


If Muncie Indiana has to declare bankruptcy and restructure it's pension debt, that's not really an issue for the Federal Government or the American people as a whole.


State debt is different- there is no procedure by which a state can declare bankruptcy- but states are sovereign entities perfectly capable of raising whatever capital they need via taxation or issuing bonds. The only question is the political will to do so. My state (Pennsylvania) is in the middle of this right now. A plan was enacted in 2011 to fix the pension debt, and the current legislature is doing everything they can to weasel out of it and delay payment, because "taxes bad!" nevermind that the 2011 plan was necessary in the first place because they delayed payment on the pension debt for the same reason.


Social Security? Same thing. There's an arbitrary cap on Social Security contributions that tops out at $118,500. Any revenue after this point is simply exempt. Remove the cap and the SS issue solves itself. But congress doesn't want to, so they'll kick the can down the road until they find a better option or are forced to do so.


"the government could fix these things, but doesn't really see the need to." is the long and short of it. not really much of a story here.
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Old 04-07-2016, 09:37 AM
 
Location: Tennessee
23,614 posts, read 17,598,460 times
Reputation: 27693
Quote:
Originally Posted by Burger Fan View Post
This is largely a local/municipal problem though.

If Muncie Indiana has to declare bankruptcy and restructure it's pension debt, that's not really an issue for the Federal Government or the American people as a whole.

State debt is different- there is no procedure by which a state can declare bankruptcy- but states are sovereign entities perfectly capable of raising whatever capital they need via taxation or issuing bonds. The only question is the political will to do so. My state (Pennsylvania) is in the middle of this right now. A plan was enacted in 2011 to fix the pension debt, and the current legislature is doing everything they can to weasel out of it and delay payment, because "taxes bad!" nevermind that the 2011 plan was necessary in the first place because they delayed payment on the pension debt for the same reason.

not really much of a story here.
A state may be able to tax its way toward revenue growth over the short term, but over the long term, those being taxed move on. Look at Chicago. The metro's growth is retarded by the taxation and regulation over what it would otherwise be.
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Old 04-07-2016, 10:33 AM
 
6,822 posts, read 5,155,795 times
Reputation: 3729
Quote:
Originally Posted by Jumeby View Post
The government retirement system was designed to fail, and they want it to fail. The plan all along was to implode our current financial system.
agreed.

People claim conspiracy "theory" as if it's even in questions now.

I find it VERY hard to believe that the general public sees the problem as the White House with all of it's resources over the past 3 or 4 decades now has ignored/overlooked elementary financial issues.

What's really sad is the status quo has been elected over these decades.
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Old 04-07-2016, 10:39 AM
 
633 posts, read 463,567 times
Reputation: 1103
Quote:
Originally Posted by Serious Conversation View Post
A state may be able to tax its way toward revenue growth over the short term, but over the long term, those being taxed move on. Look at Chicago. The metro's growth is retarded by the taxation and regulation over what it would otherwise be.
you're not talking long term revenue growth. you're talking making up for a pension shortfall. Those are short term problems, not long term structural ones.


The current plan for PA has tax increases to make up for the pension deficit until 2017, at which point they'll decline back to "normal" levels as the pension ends up hitting "fully funded" status.


The only reason this was necessary in the first place is because Pennsylvania decided to contribute exactly zero dollars to the pension fund for over a decade, assuming that market growth would just take care of the state's contribution. (edit: it's worth mentioning that the employees were still mandated to make regular payments even though the state as the employer was NOT) Then the market declined in 2007/2008 and they were caught with their pants down. This is a common problem with defined benefit pensions- the municipality is required to pay out in the long term, but not required to contribute in the short term. So politicians play games with funds and push it off on later legislatures. Then you have a "crisis" when the bills come due as employees retire.


Double edit: there's also no need to look at Chicago- the tax increases for the PA pension plans (they're gradually escalating YOY) have been in place for about 5 or 6 years now. PA has had decent (though not astronomical) economic growth in the interim- politicians are attempting to get out of it for ideological reasons, not economic ones.
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Old 04-07-2016, 11:04 AM
PDD
 
Location: The Sand Hills of NC
8,774 posts, read 14,880,641 times
Reputation: 11886
Quote:
Originally Posted by John1960 View Post
The US government has nowhere near enough money to pay retirees.

According to credit rating agency Moody's state, local, and federal governments are about $7 trillion short in funding upcoming pension payments.

https://www.yahoo.com/finance/news/u...153435525.html
Maybe it's because all our workers in India, China and other foreign countries making products sold here are not sending in their FICA taxes.
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Old 04-07-2016, 11:06 AM
 
Location: Durham NC
1,190 posts, read 1,298,607 times
Reputation: 926
Quote:
Originally Posted by Burger Fan View Post
This is largely a local/municipal problem though.


If Muncie Indiana has to declare bankruptcy and restructure it's pension debt, that's not really an issue for the Federal Government or the American people as a whole.


State debt is different- there is no procedure by which a state can declare bankruptcy- but states are sovereign entities perfectly capable of raising whatever capital they need via taxation or issuing bonds. The only question is the political will to do so. My state (Pennsylvania) is in the middle of this right now. A plan was enacted in 2011 to fix the pension debt, and the current legislature is doing everything they can to weasel out of it and delay payment, because "taxes bad!" nevermind that the 2011 plan was necessary in the first place because they delayed payment on the pension debt for the same reason.


Social Security? Same thing. There's an arbitrary cap on Social Security contributions that tops out at $118,500. Any revenue after this point is simply exempt. Remove the cap and the SS issue solves itself. But congress doesn't want to, so they'll kick the can down the road until they find a better option or are forced to do so.


"the government could fix these things, but doesn't really see the need to." is the long and short of it. not really much of a story here.
Raising the cap will fix SS? Wasn't aware that would bring in nearly enough.
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Old 04-07-2016, 11:45 AM
 
633 posts, read 463,567 times
Reputation: 1103
Quote:
Originally Posted by lancers View Post
Raising the cap will fix SS? Wasn't aware that would bring in nearly enough.

yep.


Quote:
“Removing the cap entirely, thereby imposing a flat tax of 12.4 percent on all earnings — essentially a $100 billion a year tax increase on the wealthy — would more than completely close the funding gap.”
More recently (Septempter 2010), here’s what Janemarie Mulvey wrote in a report for the Congressional Research Service:
“If all earnings were subject to the payroll tax, but the base was retained for benefit calculations, the Social Security Trust Funds would remain solvent for the next 75 years.”
Quote:
Since 1982, the Social Security taxable earnings base has risen at the same rate as average wages in the economy. However, because of increasing earnings inequality, the percentage of covered earnings that are taxable has decreased from 90% in 1982 to 85% in 2005. The percentage of covered earnings that is taxable is projected to decline to about 83% for 2014 and later. Because the cap was indexed to the average growth in wages, the share of the population below the cap has remained relatively stable at roughly 94%.
What Impact Would Eliminating the Payroll Cap Have on Social Security? | PBS NewsHour
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Old 04-07-2016, 11:53 AM
 
13,945 posts, read 7,429,050 times
Reputation: 25448
Quote:
Originally Posted by Burger Fan View Post
This is largely a local/municipal problem though.


If Muncie Indiana has to declare bankruptcy and restructure it's pension debt, that's not really an issue for the Federal Government or the American people as a whole.


State debt is different- there is no procedure by which a state can declare bankruptcy- but states are sovereign entities perfectly capable of raising whatever capital they need via taxation or issuing bonds. The only question is the political will to do so. My state (Pennsylvania) is in the middle of this right now. A plan was enacted in 2011 to fix the pension debt, and the current legislature is doing everything they can to weasel out of it and delay payment, because "taxes bad!" nevermind that the 2011 plan was necessary in the first place because they delayed payment on the pension debt for the same reason.


Social Security? Same thing. There's an arbitrary cap on Social Security contributions that tops out at $118,500. Any revenue after this point is simply exempt. Remove the cap and the SS issue solves itself. But congress doesn't want to, so they'll kick the can down the road until they find a better option or are forced to do so.


"the government could fix these things, but doesn't really see the need to." is the long and short of it. not really much of a story here.
In the grand scheme of things, unfunded pension liabilities aren't going to kill the states. State worker unfunded pension liability is never going to even approach 10% of any state budget. They can fund the difference out of cash flow. The killer to state budgets is health care and social services. The higher income states are on the hook for 50% of Medicaid. Every state budget I look at, Medicaid, CHIP kid Medicaid, and the rest of the state-provided safety net are more than half the state budget. As income and wealth stratification continue to get worse, the whole safety net funding problem is only going to get worse.

In local governments, the school budget dwarfs everything else. It's pretty much the same math where unfunded pension liabilities are always going to be fairly small compared to running the school system.

The whole Social Security thing is a canard. The program is underfunded by 30%. Taxes will be raised by 30% in some way to keep the program cash flow neutral. That "Social Security Trust Fund" money has already been spent and is gone forever. Payroll taxes are going up, the income cap is going up, they might tax unearned income like they do Medicare taxes. It's tough to predict what the mix will be but it's going up 30%.

The thing that is killing state & local governments is public sector unions. Compensation is all out of whack with the private sector. The unions have mastered manipulating what are largely unpaid elected local governments. At some point, I think there is going to be a groundswell by taxpayer/voters to eliminate them. We're all paying for that bloat.
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Old 04-07-2016, 12:01 PM
 
633 posts, read 463,567 times
Reputation: 1103
Quote:
Originally Posted by GeoffD View Post
In the grand scheme of things, unfunded pension liabilities aren't going to kill the states. State worker unfunded pension liability is never going to even approach 10% of any state budget. They can fund the difference out of cash flow. The killer to state budgets is health care and social services. The higher income states are on the hook for 50% of Medicaid. Every state budget I look at, Medicaid, CHIP kid Medicaid, and the rest of the state-provided safety net are more than half the state budget. As income and wealth stratification continue to get worse, the whole safety net funding problem is only going to get worse.

In local governments, the school budget dwarfs everything else. It's pretty much the same math where unfunded pension liabilities are always going to be fairly small compared to running the school system.

The whole Social Security thing is a canard. The program is underfunded by 30%. Taxes will be raised by 30% in some way to keep the program cash flow neutral. That "Social Security Trust Fund" money has already been spent and is gone forever. Payroll taxes are going up, the income cap is going up, they might tax unearned income like they do Medicare taxes. It's tough to predict what the mix will be but it's going up 30%.

The thing that is killing state & local governments is public sector unions. Compensation is all out of whack with the private sector. The unions have mastered manipulating what are largely unpaid elected local governments. At some point, I think there is going to be a groundswell by taxpayer/voters to eliminate them. We're all paying for that bloat.
agree with everything you wrote except the bolded. I'm in state government, HR specifically- and sitting on precise salary data for everyone in the building. The wages we pay are actually on par or below private sector for new hires in the region. Even with my position were I to go to Comcast or Aramark or similar I would be looking at about a 10K jump for less responsibility. We have a tough time retaining medical professionals because of this. Most of our management and administrative positions (for instance IT and accounting) are non union and ALSO below private sector pay. Same deal there re: retention.


Top officials (again, management so non union) don't make anywhere NEAR what a manager or private sector VP or president would make. The top end for public sector is FAR below private.


In the LONG RUN, public sector employee pay can outstrip private sector pay, because the private sector largely no longer gives out raises and public sector (union and non union) gives a yearly 3-4% or so. Private sector pay is raised more by switching jobs to a different company than it is grinding out a career for 20 years at the same corporation- but job switching doesn't work for public since you'll just land at exactly where you were on the payscale no matter which agency you happen to jump to.


Apples and oranges really. You're not making a mint in state employment, union or not.


edit: Local isn't much better. A recent article was posted detailing salaries for every official in the city of Philadelphia. These are the top 5:


Quote:
According to the data, here are the city's top five highest paid employees:
  1. Sam Gulino - Medical Examiner - $260,730
  2. Richard Ross - Police Commissioner - $240,000
  3. Albert Chu - Deputy Medical Examiner - $231,505
  4. Jim Kenney - Mayor - $217,820
  5. Rochelle Cameron - CEO of PHL Airport - $215,000
http://www.phillyvoice.com/you-can-n...ployee-philly/


All things considered that's not high at all. Laughable compared to a private company of similar size. (30K employees, 2+ million "customers")

Last edited by Burger Fan; 04-07-2016 at 12:09 PM..
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Old 04-07-2016, 12:21 PM
 
12,307 posts, read 18,425,337 times
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It's not the federal government, it's various states and munincipalities that simply promised more to public unions then they could deliver. And why not? The problem would occur years after the politician that made these promises left office.

The public pension issue will solve itself however. Simply enough, public employees will face the reality that private sector employees have already faced - losing pensions even when one was guaranteed. Governments simply will not pay them. If the teachers and police officers currently working think they will get a (non self funded) public pension in 10 or 20 years, think again. It's already solving itself in fact, hefty government funded pension plans paid at the expense of the taxpayer is primarily a thing of the past, replaced by 401k-style programs, wheather the public unions like it or not...it's simply not sustainable.
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