ever wonder why so many of the most highly-taxed [i.e., liberal] states are also among the most broke? i mean, you think with all that tax money flowing in they'd be goddam utopias, right?
here's what newly-elected new jersey governor chris christie recently had to say about one of the biggest reasons in his first state of the state address:
One state retiree, 49 years old, paid, over the course of his entire career, a total of $124,000 towards his retirement pension and health benefits. What will we pay him? $3.3 million in pension payments over his life and nearly $500,000 for health care benefits, a total of $3.8 million on a $120,000 investment. Is that fair?[emphasis mine]
A retired teacher paid $62,000 towards her pension and nothing--yes, nothing--for full family medical, dental and vision coverage over her entire career. What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it "fair" for all of us and our children to have to pay for this excess?
in other words, it's the same thing that killed GM and chrysler--unions [in this case, state-worker unions] and their entitlements run amuck.
i mean, jesus god, i work for a private company that contributes a little to my 401k every year, and matches a percentage of my contributions each year, but the day i retire, like most americans, i'm on my own. can somebody please splain me why i should be expected to work until i'm 80 to support the lavish early retirement of hordes of fat-ass 55-year-old polyester-clad government cubicle-workers [and their families] for the rest of their miserable lives?
the answer, of course, is there is no good reason; these millions of state workers enjoy these obscene benefits because of decades of political payoffs to their unions by corrupt politicians every election cycle in exchange for their support.
is it "fair?" of course it's not fair, but that doesn't matter--the politicians have locked their states into these contracts whether the hapless electorate they were supposed to have been looking out for like it or not.
california's governer schwarzenegger had this to say about his [my] state's predicament:
The cost for state employee pensions is up 2,000 percent in the last ten years, while revenues have only increased by 24 percent. The pension fund will not have enough money to cover this amount, so the state — that means the taxpayer — has to come up with the money.what he fails to mention is that all of these pension funds have lost an average of 40% of their value in the last two years since most of them were heavily invested in AIG-style derivatives, leaving the shortfall even greater.
is this a sustainable model? of course not, and it's not gonna get any better--as taxes continue to rise in these states to pay for all this foolishness, the businesses and middle-class taxpayers who are expected to foot the bill as they always have will continue to flee to more responsibly-managed states.
i can see this fiasco playing out in one of two ways (because the problem is too big for any government bail-out): either the taxpayers will revolt, or the states will default. either way, the pension funds upon which millions of past and present state workers rely will most assuredly go broke.
and as for the folks who don't have the good sense to get outta these states while the getting's still good? well, they can look forward to, as the chinese say, most interesting times.
4 comments:
Some states are responsibly preparing for their pension obligations. New York is a good example.
California is not. But California is difficult if not impossible to govern because -- thanks to Proposition 13 -- every state budget requires a two-thirds supermajority in both the Assembly and the Senate to pass. This means a few Republican votes are needed and the California Republican party is not interested in governing.
Are pensions too high? They are certainly much more generous that private pensions. But, keep in mind, pretty good if not generous pensions were the norm even thirty years ago. Private businesses have eliminated generous pensions except to the top executives.
What amazes me about guttermorality, is that you rail against middle class entitlements like pensions. This is surely a policy that benefits middle class people.
I have yet to see a guttermorality post railing against the entitlements of the rich and affluent (tax breaks, obscene salaries and then obscene payouts when you are shown the door for incompetence).
While I recognize guttermorality's point, the larger point is lost in the MKF cocktail haze: Reagan's America with its enormous tax breaks has hurt the middle class and the poor in this country and very much benefitted the very richest Americans.
If this were a a true meritocracy, I could see some argument in favor of this. But it's not. So, what we have is enormous unfairness. That a few polyester wearing former public librarians retire and go on bird watching trips in their ample spare time seems to irk guttermorality more than it should.
noblesavage: you know, you're exactly like rudy guiliani, except with you it's a noun, a verb and proposition 13.
to make sure i understand, you (1) see no problem with government workers retiring at 50 and drawing out 30-40 times what they paid in over the rest of their lives; and (2) paying for all that goodness by grabbing yet more money from some of the most highly-taxed people in the country. fine, whatever--we're from different planets. i mean, if in the face of all rational evidence to the contrary you really believe that california's fiscal problems stem from insufficient tax revenues, then there's nothing else i can possibly say to you or anyone who thinks like you.
as for your second point, where have you been? i'm constantly railing about the corrupt, elitist oligarchy this country has become--over the last 50 or so years, the gap between rich and poor has grown at a rate that alarms me as much as it does you.
my problem is, what do you do about it--have central planning establish wages and salaries? god forbid. jack up the capital gains rate and watch the big money run overseas? i honestly dunno.
My point was not that Proposition 13 made taxes too low (although I have said that many times before), it is that the two-thirds vote makes California ungovernable.
You cannot hold the Democrats accountable (as you should) even though they are the majority party because they still need a few Republican votes. Thus, any blame on pensions has to be heaved upon the minority Republicans as well.
Sure, there is a huge underfunded obligation with state and local pension obligations. This problem is national in scope, it is not limited to California.
There is also an underfunded obligation regarding Medicare and Social Security on the national scene that we cannot afford to pay for currently.
As for solutions, I do think we as a nation have to get used to the concept you cannot have something for nothing. State and local government pensions are part of that story, but not the only part of it. Californians passed a bond issue for a high speed train at the same time they voted down any money to pay for those bonds. How crazy is that?
Please remember what Bill Clinton did in 1993: He pushed through a tax increase without a single Republican vote and ushered in 7 years of prosperity.
Its a mess, that's for sure.
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