A spokesman for State Senate President Darrell Steinberg told me after the election that the heavy lifting had already been done by Schwarzenegger. “The S.B. 400 thing was passed as part of the budget,” he said. “The important thing now is to grow the economy, in particular to regenerate the stock market. The single best thing we can do to address pension and retirement problems would be to grow the stock market.”
This quote from near the end of the Reason article reminds me of a talking point I saw recently with respect to the Wisconsin thing. The claim was that since the public-sector labor unions agreed to significant pension cuts that Governor Walker was going too far by trying to end their power to negotiate pension benefits and other things. In other words, they’re passing the message that we don’t need to follow through on dealing with public unions or the obligations that states have created with them. They’ve suffered enough or some such nonsense.
Personally, I advocate a complete draining of the swamp, but even if you think public unions should stay, you probably have higher priority for government funds than merely paying interest and pension obligations. There will be future market downturns and future huge jumps in pension obligations. A short term fix won’t touch that.
Also, it’s pretty obvious that the US economy isn’t recovering quickly like it normally does. I think it’s foolhardy to count on economic growth to patch things up when sufficient economic growth just isn’t happening.
All government “future payments” need to show up on the books in the current fiscal year. Monetize everything. The entire reason shenanigans like this happen is that the auditors (read:taxpayers) don’t have 20-year-foresight on how, exactly contracts they aren’t even shown will play out. (And everyone involved has incentives to keep mum.)
If you have something that absolutely needs “future payments”, this is what bonds are for. “So, we’re going to add a 3c gas tax to pay off a bond dedicated to building this bridge, and we have no idea when it will actually be paid off, so we’re not making promises on that.”
Or, “So, the way your pension works is: Every year your pension benefits are spent on actually buying annuities, when you’ve been here 10 years, we actually sign some over into your name. At 20 – more.”
(Or the more straightforward method of simply doing it every year.)
Balancing the books is something most people and institutions manage to do, it is generally not actually that difficult, the revenue and expenses equation is rather simple. The problem for the State of California (and most other states and the federal government for that matter) lies in vested interests and their control over the political process. I do not know how to solve that problem.
A partial solution might be to increase citizen mobility – a freedom almost worthy of a constitutional amendment. Voting with one’s feet is a higher and less reality disconnected democracy than one finds at the ballot box. With the threat of emigration of productivity, and thereby the threat of emigration of living standards, governments might actually start paying attention to maximizing the efficiency/productivity of their citizens, and thereby the maximization of the living standards and the happiness of their citizens.
Noting the tax breaks currently being offered to lure large businesses to various states, it seems large businesses have such mobility and can get a reasonable deal. The same does not seem to be true of small businesses and citizens in general. Indeed many governmental practices seem directed at taking away the mobility of citizens – real estate taxes and mortgage incentives come to mind (citizen trapping). Somehow governments need to be reminded that if they abuse their tax paying citizens (predominantly the middle class – not public sector unionized employees), they will lose them.
“Indeed many governmental practices seem directed at taking away the mobility of citizens”
Employer-based health care comes to mind as well. Having a monetary cushion isn’t enough to make relocating relatively painless – you almost need a job lined up in the new location as well.
“Indeed many governmental practices seem directed at taking away the mobility of citizens”
Employer-based health care comes to mind as well. Having a monetary cushion isn’t enough to make relocating relatively painless – you almost need a job lined up in the new location as well.
Exactly. But asking state governments to give that one up is like asking government sector unions to give up collective bargaining – hence why it has not happened.
I do not know how to solve that problem.
Yes you do, Pete. The key is to absolutely and completely deny bailouts from out of state. Without bailouts, fantasy will have to face reality.
Al’s right as well. A complete liability report needs to be part of the budget.
Foot votes are happening even with restrictive practices. I’d only worry about that if they put up a wall and guards between the states and started checking passports. The vegetable guards don’t count.
Of course, the way the federal system is set up, bailout money can head to CA even if it’s not called that. We need to fix that so fantasy faces reality quicker. It is a mess with all the financial entanglements. Bailing out the largest financial institutions puts us all at systemic risk.
The key is to absolutely and completely deny bailouts from out of state. Without bailouts, fantasy will have to face reality.
And how, practically speaking, is that going to be denied?
how, practically speaking
Ya got me there, but it is a different from the original problem which solves itself without bailouts.
Ultimately, complete failure of the country is a solution… not one I’d like to see. The only thing that would avoid that is for enough people to realize there is a systemic problem and resolution by them not to let it happen.
I’m not optimistic. So I frantically cling to those like Carl that are.
Life gets really tough when you have no hope at all.
The required solution seems to me to be more radical than incremental because of the depth of the problem… but as a computer programmer, I also realize the power of incremental solutions (if you can ratchet them in.) It is frustrating. You just want to slap people when they do the wrong thing. When the thugs on the other side go violent, what then?
I think a large slice of it is that there is no “Conservative Utopia.”
There are plenty of liberal takes on a conservative utopia, and they’re all ridiculous. Not looking to live in The Lord of the Flies, nor in The Jungle, nor in -censored due to Godwin’s Law-.
Any historical example is countered by “Yeah, but we didn’t have XYZ then, stop trying to force us into Burkas and witch-burning!”
So there’s no sensible vision that be pointed to with the idea “We’re aiming for that!”
Once upon a time in China, there lived an Emperor who owned a majestic white stallion, the finest beast in all his Kingdom. One night, a thief tried to slip in and steal the horse, but was captured by the palace guards and thrown into the dungeon.
The next morning, he was dragged before the Emperor’s court. “How dare you,” bellowed the Emperor, “lay hand on my royal steed! Jailor, put this thief to death!”
Immediately, the thief bowed deeply. “Your judgement is peerless and wise, O Emperor,” he calmly replied, “but my life is of little value. I should offer you a gift before I depart. Your mount is quite a fine one, but if your eminence would spare my life for just a year and a day, I swear to you I can teach that horse to sing hymns!”
The court burst in to laughter at that, but the Emperor was intrigued. After all, you didn’t get to his high position by turning down freely offered gifts, no matter how far-fetched they seem. To the surprise of all, the Emperor quickly accepted the offer.
As they were leaving the chambers, the jailor whispered to the thief, “You are a fool!”
“I am a fool?” replied the thief, smiling broadly. “Much can happen in a year and a day. The King may die. The horse may die. I may die… and maybe the horse will learn how to sing.”
The public sector union thieves who steel money off the tax paying middle class are perhaps not the fools that we think they are.
perhaps not fools?
Thievery is wisdom?
Thieves may thrive for a time, but should not be confused with wisdom.
Anyone who would steal a one of a kind horse, rather than something with a bit less provenance like coin or jewelry, wouldn’t have the wisdom to ask the King for such a favor.
As for the “wisdom” of the thief, it always comes at the expense of the victim.
Thievery is wisdom?
Thieves may thrive for a time, but should not be confused with wisdom.
It can be if the game is a short one. Or a zero or negative sum game.
Maybe the gravy train will stop in a few years time, maybe they will have to switch onto the same train as everyone else – in which case they will have a significant financial head start. As the old saying goes, make hay (or take pay) while the sun shines.
As the public sector unions demonstrate, people are motivated by comparative prosperity, not absolute prosperity and definitely not average absolute prosperity of the entire country. In the evolutionary race to relative prosperity, one does not have to be able to out run the panda bear – only your private sector non unionized highly taxed middle class peer.
It can be if the game is a short one. Or a zero or negative sum game.
But the thief invariably will try to extend the game. One last score!
Right up until the day his intended victim blows his head off.
A disturbing thing is that many public sector workers signed contracts for these unsustainable benefits. Governments can not get out of them without defaulting on these contracts – unlikely to happen. Nor is there any practical way for state governments to go bankrupt.
I suppose one could reasonably declare that a deal made with a public sector union where the public sector union used monopolistic collective bargaining or had a significant influence in voting in those who signed the other side of the deal constitutes duress. Since it constitutes duress the contract could then be declared illegal – this might be a possible way of saving many states. It would provide a legal mechanism for retroactively fixing egregious public sector contracts.
Governments can not get out of them without defaulting on these contracts – unlikely to happen.
If the electorate blocks the tax hikes necessary to fund public-sector union contract commitments, the union’s only recourse, realistically speaking, is federal court — and I’m sure there are federal judges willing to order the electorate to pay higher taxes.
That will be, as Jayne Cobb once said, an interesting day.
Even if they don’t break the contracts, they can tax them out of effective existence – say 90% of any state pension payments above a certain threshold (or before age 65…)
“
This quote from near the end of the Reason article reminds me of a talking point I saw recently with respect to the Wisconsin thing. The claim was that since the public-sector labor unions agreed to significant pension cuts that Governor Walker was going too far by trying to end their power to negotiate pension benefits and other things. In other words, they’re passing the message that we don’t need to follow through on dealing with public unions or the obligations that states have created with them. They’ve suffered enough or some such nonsense.
Personally, I advocate a complete draining of the swamp, but even if you think public unions should stay, you probably have higher priority for government funds than merely paying interest and pension obligations. There will be future market downturns and future huge jumps in pension obligations. A short term fix won’t touch that.
Also, it’s pretty obvious that the US economy isn’t recovering quickly like it normally does. I think it’s foolhardy to count on economic growth to patch things up when sufficient economic growth just isn’t happening.
All government “future payments” need to show up on the books in the current fiscal year. Monetize everything. The entire reason shenanigans like this happen is that the auditors (read:taxpayers) don’t have 20-year-foresight on how, exactly contracts they aren’t even shown will play out. (And everyone involved has incentives to keep mum.)
If you have something that absolutely needs “future payments”, this is what bonds are for. “So, we’re going to add a 3c gas tax to pay off a bond dedicated to building this bridge, and we have no idea when it will actually be paid off, so we’re not making promises on that.”
Or, “So, the way your pension works is: Every year your pension benefits are spent on actually buying annuities, when you’ve been here 10 years, we actually sign some over into your name. At 20 – more.”
(Or the more straightforward method of simply doing it every year.)
Balancing the books is something most people and institutions manage to do, it is generally not actually that difficult, the revenue and expenses equation is rather simple. The problem for the State of California (and most other states and the federal government for that matter) lies in vested interests and their control over the political process. I do not know how to solve that problem.
A partial solution might be to increase citizen mobility – a freedom almost worthy of a constitutional amendment. Voting with one’s feet is a higher and less reality disconnected democracy than one finds at the ballot box. With the threat of emigration of productivity, and thereby the threat of emigration of living standards, governments might actually start paying attention to maximizing the efficiency/productivity of their citizens, and thereby the maximization of the living standards and the happiness of their citizens.
Noting the tax breaks currently being offered to lure large businesses to various states, it seems large businesses have such mobility and can get a reasonable deal. The same does not seem to be true of small businesses and citizens in general. Indeed many governmental practices seem directed at taking away the mobility of citizens – real estate taxes and mortgage incentives come to mind (citizen trapping). Somehow governments need to be reminded that if they abuse their tax paying citizens (predominantly the middle class – not public sector unionized employees), they will lose them.
“Indeed many governmental practices seem directed at taking away the mobility of citizens”
Employer-based health care comes to mind as well. Having a monetary cushion isn’t enough to make relocating relatively painless – you almost need a job lined up in the new location as well.
“Indeed many governmental practices seem directed at taking away the mobility of citizens”
Employer-based health care comes to mind as well. Having a monetary cushion isn’t enough to make relocating relatively painless – you almost need a job lined up in the new location as well.
Exactly. But asking state governments to give that one up is like asking government sector unions to give up collective bargaining – hence why it has not happened.
I do not know how to solve that problem.
Yes you do, Pete. The key is to absolutely and completely deny bailouts from out of state. Without bailouts, fantasy will have to face reality.
Al’s right as well. A complete liability report needs to be part of the budget.
Foot votes are happening even with restrictive practices. I’d only worry about that if they put up a wall and guards between the states and started checking passports. The vegetable guards don’t count.
Of course, the way the federal system is set up, bailout money can head to CA even if it’s not called that. We need to fix that so fantasy faces reality quicker. It is a mess with all the financial entanglements. Bailing out the largest financial institutions puts us all at systemic risk.
The key is to absolutely and completely deny bailouts from out of state. Without bailouts, fantasy will have to face reality.
And how, practically speaking, is that going to be denied?
how, practically speaking
Ya got me there, but it is a different from the original problem which solves itself without bailouts.
Ultimately, complete failure of the country is a solution… not one I’d like to see. The only thing that would avoid that is for enough people to realize there is a systemic problem and resolution by them not to let it happen.
I’m not optimistic. So I frantically cling to those like Carl that are.
Life gets really tough when you have no hope at all.
The required solution seems to me to be more radical than incremental because of the depth of the problem… but as a computer programmer, I also realize the power of incremental solutions (if you can ratchet them in.) It is frustrating. You just want to slap people when they do the wrong thing. When the thugs on the other side go violent, what then?
I think a large slice of it is that there is no “Conservative Utopia.”
There are plenty of liberal takes on a conservative utopia, and they’re all ridiculous. Not looking to live in The Lord of the Flies, nor in The Jungle, nor in -censored due to Godwin’s Law-.
Any historical example is countered by “Yeah, but we didn’t have XYZ then, stop trying to force us into Burkas and witch-burning!”
So there’s no sensible vision that be pointed to with the idea “We’re aiming for that!”
Once upon a time in China, there lived an Emperor who owned a majestic white stallion, the finest beast in all his Kingdom. One night, a thief tried to slip in and steal the horse, but was captured by the palace guards and thrown into the dungeon.
The next morning, he was dragged before the Emperor’s court. “How dare you,” bellowed the Emperor, “lay hand on my royal steed! Jailor, put this thief to death!”
Immediately, the thief bowed deeply. “Your judgement is peerless and wise, O Emperor,” he calmly replied, “but my life is of little value. I should offer you a gift before I depart. Your mount is quite a fine one, but if your eminence would spare my life for just a year and a day, I swear to you I can teach that horse to sing hymns!”
The court burst in to laughter at that, but the Emperor was intrigued. After all, you didn’t get to his high position by turning down freely offered gifts, no matter how far-fetched they seem. To the surprise of all, the Emperor quickly accepted the offer.
As they were leaving the chambers, the jailor whispered to the thief, “You are a fool!”
“I am a fool?” replied the thief, smiling broadly. “Much can happen in a year and a day. The King may die. The horse may die. I may die… and maybe the horse will learn how to sing.”
The public sector union thieves who steel money off the tax paying middle class are perhaps not the fools that we think they are.
perhaps not fools?
Thievery is wisdom?
Thieves may thrive for a time, but should not be confused with wisdom.
Anyone who would steal a one of a kind horse, rather than something with a bit less provenance like coin or jewelry, wouldn’t have the wisdom to ask the King for such a favor.
As for the “wisdom” of the thief, it always comes at the expense of the victim.
Thievery is wisdom?
Thieves may thrive for a time, but should not be confused with wisdom.
It can be if the game is a short one. Or a zero or negative sum game.
Maybe the gravy train will stop in a few years time, maybe they will have to switch onto the same train as everyone else – in which case they will have a significant financial head start. As the old saying goes, make hay (or take pay) while the sun shines.
As the public sector unions demonstrate, people are motivated by comparative prosperity, not absolute prosperity and definitely not average absolute prosperity of the entire country. In the evolutionary race to relative prosperity, one does not have to be able to out run the panda bear – only your private sector non unionized highly taxed middle class peer.
But the thief invariably will try to extend the game. One last score!
Right up until the day his intended victim blows his head off.
A disturbing thing is that many public sector workers signed contracts for these unsustainable benefits. Governments can not get out of them without defaulting on these contracts – unlikely to happen. Nor is there any practical way for state governments to go bankrupt.
I suppose one could reasonably declare that a deal made with a public sector union where the public sector union used monopolistic collective bargaining or had a significant influence in voting in those who signed the other side of the deal constitutes duress. Since it constitutes duress the contract could then be declared illegal – this might be a possible way of saving many states. It would provide a legal mechanism for retroactively fixing egregious public sector contracts.
If the electorate blocks the tax hikes necessary to fund public-sector union contract commitments, the union’s only recourse, realistically speaking, is federal court — and I’m sure there are federal judges willing to order the electorate to pay higher taxes.
That will be, as Jayne Cobb once said, an interesting day.
Even if they don’t break the contracts, they can tax them out of effective existence – say 90% of any state pension payments above a certain threshold (or before age 65…)
But that assumes the will to do so.