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Are all the cities going bankrupt blue?

I don't know. Maybe they should declare bankruptcy. Do you normally support the right to not pay people who worked for you? Do you dine and dash? How is cutting their pension any different from theft?

Oh to be sure there are no easy happy answers here. BTW, when poor people declare bankruptcy and default on their credit cards do you see them as stealing from banks?
 
Oh to be sure there are no easy happy answers here. BTW, when poor people declare bankruptcy and default on their credit cards do you see them as stealing from banks?

Remember how we have had several threads on this board discussing "strategic default" and many say it is perfectly fine? I'm guessing they would feel it is "different" if a government pension fund defaults.

Snarkiness (if that's a word) aside, I'm in complete agreement there isn't an easy answer here. The first thing to do is eliminate these plans from now on for current workers. Force people to save for their own retirement and take responsibility from now on.
 
Oh to be sure there are no easy happy answers here. BTW, when poor people declare bankruptcy and default on their credit cards do you see them as stealing from banks?
Probably although I'm not well versed on bankruptcy laws. Isn't there some form of repayment or restructuring involved or do you just get to walk away from your debts clear and free? Don't you at minimum need to prove your inability to pay?
 
Probably although I'm not well versed on bankruptcy laws. Isn't there some form of repayment or restructuring involved or do you just get to walk away from your debts clear and free? Don't you at minimum need to prove your inability to pay?

I think if these pensions are going to be "defaulted" on, it will indeed be a restructuring of that obligation and not an outright default. My guess is it would be a haircut of sorts. Current payments remain as is for the next 5 years, then we haircut them 20% or something like that. It sucks, but what are you going to do when there is no money? On the other hand, maybe people could vote to tax these pension plans at 50% rates and re-coup the money that way :)
 
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The GO Bond market and pension systems are not the same things. No one in this state issues debt for pensions. Employers and Employees pay into IPERS and its gets adjusted by actuarial methods. When a GO Bond is issued its for streets or some other capital project. Now, some states have unfunded pension obligations, but thats not the same as GO debt.

Its a little tiring seeing public employees take a beating and seeing the notion that working in the private sector is somehow more noble. The attitude in this country seems to be that instead of wanting better pensions, etc. for everyone that we just want to see someone else get a worse one because ours sucks. Its a race to the bottom. Congrats America.
+1000

And FYI, the state of Iowa is not contributing as required to at least one of the state's pensions. The pensions overall are generally doing well and are managed well.
 
The GO Bond market and pension systems are not the same things. No one in this state issues debt for pensions. Employers and Employees pay into IPERS and its gets adjusted by actuarial methods. When a GO Bond is issued its for streets or some other capital project. Now, some states have unfunded pension obligations, but thats not the same as GO debt.

Its a little tiring seeing public employees take a beating and seeing the notion that working in the private sector is somehow more noble. The attitude in this country seems to be that instead of wanting better pensions, etc. for everyone that we just want to see someone else get a worse one because ours sucks. Its a race to the bottom. Congrats America.

I think we can agree that stealing from wealthy pensioners because of private sector jealousy is wrong. Just like stealing from private sector rich people so a politician can execute his wealth redistribution plan is wrong.
 
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I think we can agree that stealing from wealthy pensioners because of private sector jealousy is wrong. Just like stealing from private sector rich people so a politician can execute his wealth redistribution plan is wrong.

This post is one of the best ever on here. Well done. Like a 500-foot home run, I hope you stood and watched it for a few seconds before hitting "post reply".
 
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As in best strawman? Probably not even at that.

Ok, here we go. You are smart enough to keep up (I think).

JR Hawk said he is sick of people "attacking" beneficiaries of public pension plans, presumably because he is (or will be) one.

So, you can take it from here. Think "fair share" ok?
 
It's an argument built on false premises. The pensioners aren't wealthy, the private sector isn't doing the stealing and taxes aren't theft. Hence it's a strawman argument.

Do better, that don't impress me much.
 
Not your overtime point, your not paying them what they earned point. Taxes should be raised and assets sold before the employer in s allowed to just cancel a debt.
There are a few problems with selling assets; first of all they likely serve as collateral for a secured creditor who stands ahead of pensioners in the capital structure, however if a creditor doesn't have a security interest, other unsecured creditors have the same legal rights (par impasse) to proceeds from an asset sale. That is unless this is General Motors and the government decides to invalidate Federal Bankruptcy law.

On raising taxes, that worked great for Detroit. Perhaps you should look into the Laffer Curve.
 
pensions are just one piece of the puzzle, look at gm, which is basically run like a small country. the healthcare costs, and the overpayment of folks, the pensions... welfare state. it's non-sustainable

Same case study as Greece.
 
I think we can agree that stealing from wealthy pensioners because of private sector jealousy is wrong. Just like stealing from private sector rich people so a politician can execute his wealth redistribution plan is wrong.

Wealthy pensioners? Are you seriously making that comparison? Not in Iowa, and not in many places. A senior cop might...might be making 60K at retirement, won't get anything to close to that in annual pension, even in a system as good as MFPRSI. How dare those public employees have a decent retirement!

Oh yeah....presume all you want. I don't have a pension. I have a defined contribution plan.

Progressive taxation is hardly some big redistribution scheme, and its not even all that progressive really.
 
Good Lord, there's a lot of misinformation and stupidity in this thread. It's hard to know where to start. I'll just focus on a few thoughts.

In the first place, not all pension plans are broke or even hopelessly doomed. Most are like social security - overpromised, managed too much for political reasons, with hard choices being avoided. Second, one of the dumbest things you can do is to stop new entrants, because when you do you also stop their contributions to the investment pool. Keeping their contributions moving into the system will help buy time to fix things, so that everyone can receive a secure pension benefit in the long run.

Before someone starts jumping up and down saying "Ponzi scheme", realize that with proper restructuring that most of these plans can be saved. Cut the exorbitant benefits, get rid of the ways to inflate a high-three or high-five salary figure (the number on which pension annuity payments are based), stop or slow the COLA increases after retirement, and raise the funding requirements on both the employee and the employer. If there is no employee contribution required, change that in a hurry. The only way these will work is if there is prescribed funding by both the employee and the employer. In short, create a system based on facts and numbers, not on political pandering.

In drastic cases, you may need to revisit the benefits paid to current retirees. I don't think they have to be walked away from entirely, but those may need to be trimmed. That is only in the worst cases - most plans could be saved with some effort, planning, and hard choices.

There is a lot of hard work needed. Public sector unions will fight this tooth and nail, as will the politicians who are beholden to them. That's a big reason this is a problem in the first place. In my perfect world, we'd get rid of the public sector unions, and fixing the pension systems would be much easier. That's not going to happen, so we need voters to step up and elect people who won't cowtow to public sector and teachers' unions.
 
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Good Lord, there's a lot of misinformation and stupidity in this thread. It's hard to know where to start. I'll just focus on a few thoughts.

In the first place, not all pension plans are broke or even hopelessly doomed. Most are like social security - overpromised, managed too much for political reasons, with hard choices being avoided. Second, one of the dumbest things you can do is to stop new entrants, because when you do you also stop their contributions to the investment pool. Keeping their contributions moving into the system will help buy time to fix things, so that everyone can receive a secure pension benefit in the long run.

Before someone starts jumping up and down saying "Ponzi scheme", realize that with proper restructuring that most of these plans can be saved. Cut the exorbitant benefits, get rid of the ways to inflate a high-three or high-five salary figure (the number on which pension annuity payments are based), stop or slow the COLA increases after retirement, and raise the funding requirements on both the employee and the employer. If there is no employee contribution required, change that in a hurry. The only way these will work is if there is prescribed funding by both the employee and the employer. In short, create a system based on facts and numbers, not on political pandering.

In drastic cases, you may need to revisit the benefits paid to current retirees. I don't think they have to be walked away from entirely, but those may need to be trimmed. That is only in the worst cases - most plans could be saved with some effort, planning, and hard choices.

There is a lot of hard work needed. Public sector unions will fight this tooth and nail, as will the politicians who are beholden to them. That's a big reason this is a problem in the first place. In my perfect world, we'd get rid of the public sector unions, and fixing the pension systems would be much easier. That's not going to happen, so we need voters to step up and elect people who won't cowtow to public sector and teachers' unions.

Shame on you. Don't act like stupidity and misinformation isn't why we all come to HROT. BTW, did some responder actually say all pension plans were in trouble? I must confess I haven't read the entire thread.:oops:
 
Good Lord, there's a lot of misinformation and stupidity in this thread. It's hard to know where to start. I'll just focus on a few thoughts.

In the first place, not all pension plans are broke or even hopelessly doomed. Most are like social security - overpromised, managed too much for political reasons, with hard choices being avoided. Second, one of the dumbest things you can do is to stop new entrants, because when you do you also stop their contributions to the investment pool. Keeping their contributions moving into the system will help buy time to fix things, so that everyone can receive a secure pension benefit in the long run.

Before someone starts jumping up and down saying "Ponzi scheme", realize that with proper restructuring that most of these plans can be saved. Cut the exorbitant benefits, get rid of the ways to inflate a high-three or high-five salary figure (the number on which pension annuity payments are based), stop or slow the COLA increases after retirement, and raise the funding requirements on both the employee and the employer. If there is no employee contribution required, change that in a hurry. The only way these will work is if there is prescribed funding by both the employee and the employer. In short, create a system based on facts and numbers, not on political pandering.

In drastic cases, you may need to revisit the benefits paid to current retirees. I don't think they have to be walked away from entirely, but those may need to be trimmed. That is only in the worst cases - most plans could be saved with some effort, planning, and hard choices.

There is a lot of hard work needed. Public sector unions will fight this tooth and nail, as will the politicians who are beholden to them. That's a big reason this is a problem in the first place. In my perfect world, we'd get rid of the public sector unions, and fixing the pension systems would be much easier. That's not going to happen, so we need voters to step up and elect people who won't cowtow to public sector and teachers' unions.


This^^^ Its a problem with many issues. Two of my biggest pet peeves with IL

1 - The payout calculation, yes some people pad their stats but analysis on IL has shown there arent a ton of people with huge pensions. One problem I still see here is that if payouts are based on last 3-5 years of salary but contributions were % of salary at that time you're already creating a gap

2 - Using it as a piggybank! IL and Chicago avoided making hard decisions for almost a decade, they didnt contribute! How the heck is that acceptable?
 
Shame on you. Don't act like stupidity and misinformation isn't why we all come to HROT. BTW, did some responder actually say all pension plans were in trouble? I must confess I haven't read the entire thread.:oops:

I think I said something like that... I also said that I would stop all new entrants into these plans, but I thought it was implied that new entrants were fine with the modifications Dandh suggests. Hyperbole always rules the day here. Sorry for the confusion.
 
It's called "pension spiking" and it was a real problem in California (it still is in some areas I believe). An employee would cash out all their sick leave and vacation leave they had stored up in their final year of employment. This would spike their salary and their retirement would be quite often tied to their final year of employment. What was worse was the double-dipping. Some employees would retire before 50 (policemen in LA/Orange county were allowed to retire after 20 yrs with full benefits which included lifetime Cadillac health insurance plans) and then get another gov't job and be fully vested in 10 years. It was legal (don't know if it still is) to collect your pension while holding another gov't job. In retirement they would be collecting 2 massive pensions - in essence enjoying a retirement salary significantly greater than what they made when they were working. Most of them moved out of state to enjoy lower living expenses in no-income-tax states. That of course exacerbated the problem.
That's done in Iowa. Sometimes it's the same job.
 
No one I know in Iowa lets you cash out sick time.

Now, there are some that let you convert sick to vacation at like a 5 to 1 ratio if you get up to like 800 hours of sick leave. Also, most vacation is use it or lose it in places I have been. There is some pension spiking as you get the highest 3 years (or maybe its 5) average. However, IPERS is capped at a certain level. Most government exec jobs in Iowa don't use IPERS. They have a 457 plan.
 
Shame on you. Don't act like stupidity and misinformation isn't why we all come to HROT. BTW, did some responder actually say all pension plans were in trouble? I must confess I haven't read the entire thread.:oops:

22 43 41 posted:

Every government with a traditional public pension structure is going bankrupt.

That was the entirety of his post. Maybe he meant something different from the pension plans all being a problem, but I read it as implying that all public pensions were an issue.
 
I think I said something like that... I also said that I would stop all new entrants into these plans, but I thought it was implied that new entrants were fine with the modifications Dandh suggests. Hyperbole always rules the day here. Sorry for the confusion.

Here's what you posted, Pepperman:

Stop any and all new entrants into this system is the first fix.
If necessary, defaulting on current pensioners is the next step. But I don't think that would need to happen, necessarily... however, for those who took advantage of taxpayers by working as much overtime as they possibly could in their final year, perhaps.


If you were trying to say that you should do this if you can't reform things, fine, but that's not the way I read it. It sounded really prescriptive to me, and is bad advice, IMO, per my explanation in theo other thread.

I do think you hit the nail on the head with the overtime thing, and I think you and others have expressed some good ideas. I do worry that people jump to instant solutions, when the real solution, as I think you said in another post, is to elect responsible people to the offices that make these decisions.
 
Here's what you posted, Pepperman:

Stop any and all new entrants into this system is the first fix.
If necessary, defaulting on current pensioners is the next step. But I don't think that would need to happen, necessarily... however, for those who took advantage of taxpayers by working as much overtime as they possibly could in their final year, perhaps.


If you were trying to say that you should do this if you can't reform things, fine, but that's not the way I read it. It sounded really prescriptive to me, and is bad advice, IMO, per my explanation in theo other thread.

I do think you hit the nail on the head with the overtime thing, and I think you and others have expressed some good ideas. I do worry that people jump to instant solutions, when the real solution, as I think you said in another post, is to elect responsible people to the offices that make these decisions.

Agreed. Voters need to be hyper-vigilant when looking at who a candidate is beholden to. Depending on the individual voter's taste (maybe you don't want them beholden to defense contractors; banks; trial lawyers; real estate developers; etc.) For me personally the reason the public union employees represent an acute concern is because of how easy it is for things to get out of control when times are good. During the boom of the late 90s the CA state comptroller actually said Calpers could expect double digit returns in the stock market for at least the next 20 years. The public employees unions assumed everyone in CA was getting rich off the DOT COM boom (silicon valley headlines everyday about a new secretary now rich from stock options) and jealousy set in. Then the governor signed a bill will massive public employee goodies in it. The stock market went into decline within 12 months of the bill signing and it was clear a mistake had been made. Governor Gray Davis refused to do anything and there was a recall election. Davis lost and Ahhhhhnold won. The bleeding slowed but it didn't stop and the patient went into cardiac arrest when the economy tanked at the end of Bush's reign.
 
There are a few problems with selling assets; first of all they likely serve as collateral for a secured creditor who stands ahead of pensioners in the capital structure, however if a creditor doesn't have a security interest, other unsecured creditors have the same legal rights (par impasse) to proceeds from an asset sale. That is unless this is General Motors and the government decides to invalidate Federal Bankruptcy law.

On raising taxes, that worked great for Detroit. Perhaps you should look into the Laffer Curve.

Natural got owned.
 
Natural got owned.

It helps to know what your talking about. I've been advised on several of the largest bankruptcies of the last 10 years. There is never an easy solution and everyone needs to share the pain equally.

One of the sadest untold stories of the General Motors bankruptcy was that retired workers invested most of their savings in GM bonds. The bondhoders received a lower recovery than the active pension and VEBA (medical retiree savings) even though they are legally pari pasu. So they got doubly screwed. But hey someone had to build cars.
 
A bankruptcy of a company and a local government is apples and oranges

Show me the source where the CA Comptroller was quoted on double digit increases please.
 
A bankruptcy of a company and a local government is apples and oranges

Show me the source where the CA Comptroller was quoted on double digit increases please.

JR - different bankruptcy codes, I wil give you that. Apples and Oranges, that is a cliche one uses when they don't know what they are talking about. My firm was also involved in the Detroit municipal bankruptcy. There are nuances, but the same basic capital structure issues are transitory.

Look I get it, this suits your political agenda but from time-to-time facts help.
 
Wrong.

It has zero to do with political agendas. I have actually worked in municipal finance for many years. I fixed a fairly bad budget problem that involved laying people off, furloughs, and fixing cash flow issues. We sold some assets, etc. We didn't declare bankruptcy. We don't have pension obligations as a City its a state issue in Iowa. Its really not the same because liquidation isnt on the table. Restructuring can be similar, but the goals of the organizations are different as are the revenue streams.
 
Just a hypothetical for some to answer in this thread. If I walk into tomorrow, and the CEO tells me and all the other ppl in my group we now get to choose our next boss. What is the likelihood we will choose someone who wil gut our teams, lower our budgets, and cut our personnel OR would we choose the person who promises to raise our wages, hire our friends, and damn the company if they go bankrupt? Sadly most would chose the latter for personal gain, and that is criminally called a conspiracy to commit fraud and theft.

That is how public unions work as well, but somehow they are legal and keep voting in their cronies to sign these "great" contracts for cities.

Natural you said the theft comparison was a straw man-there you go.
 
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Just a hypothetical for some to answer in this thread. If I walk into tomorrow, and the CEO tells me and all the other ppl in my group we now get to choose our next boss. What is the likelihood we will choose someone who wil gut our teams, lower our budgets, and cut our personnel OR would we choose the person who promises to raise our wages, hire our friends, and damn the company if they go bankrupt? Sadly most would chose the latter for personal gain, and that is criminally called a conspiracy to commit fraud and theft.

That is how public unions work as well, but somehow they are legal and keep voting in their cronies to sign these "great" contracts for cities.

Natural you said the theft comparison was a straw man-there you go.
Wow, You give unions all the power. Doesn't the "other side" also try to get their candidates elected? Its an even playing field.
 
It's an argument built on false premises. The pensioners aren't wealthy, the private sector isn't doing the stealing and taxes aren't theft. Hence it's a strawman argument.

Do better, that don't impress me much.


Pensioners aren't wealthy? Really?
  • Former Illinois Governor Jim Thompson worked held a state elected office for 14 years. For that 14 years of service he made approximately $1.9 million in salary. He earns $127,000 annual in pension guaranteed for the rest of his life with a 100% carry-over to his surviving spouse for the remainder of her life. He has accrued 0ver $2.3 million in pension distributions to date. This is in addition to the full pension he also receives for serving in the Cook County States Attorneys office prior to being elected Governor and the $20,000 annual health insurance supplement. So the tax payers of Illinois have paid Big Jim about $5 million for about 14 years of work and he's probably going to live another 10 years. That's what I call sucking off the government tit.
  • Former Illinois Governor and Illinois Secretary of State Jim Edgar served for 18 years. He received about $2.2 million in total salary over those 18 years. He receives a $135,000.00 annual pension guaranteed for life with a 100% carry-over to his surviving spouse for the remainder of her life. To date he has taken home $1.5 million in pension distributions. Based on his age, he has a life expectancy of 17 more years.
  • Former State Comptroller and Attorney General Roland Burris was in office for 16 years. He received approximately $1.8 million in total compensation over that period. He receives a $129,000 annual pension guaranteed for the rest of his life with a 100% carry-over to his surviving spouse for the remainder of her life. To date he has taken home $2 million in pension distributions. In addition to his US Senate Pension that he earned for the 22 months he was in the Senate serving out the remainder of Obama's term.
  • Former long-time State Senator and Comptroller Dawn Clark Netsch earned about $1.8 Million over her 18 years in public office. Her pannual guaranteed pension was $122,000 At the time of her death in 2013, she had taken total pension distribution of $1.85 million. Thank goodness her husband was already dead. Ironic that in one of her last public speeches before her death she said the pension system in Illinois is the greatest threat to the state of Illinois over the next 60 years. I thought that was rich coming from her.
I bring these four individuals up, because they were key players in perpetuating the pension ponzi scheme that Illinois has today. As you can see, they had a strong vested financial interest in perpetuating the system for their benefit without much consideration for the tax payers of Illinois. This is what is wrong with public sector pension programs. There are very little checks and balances until the problem has become too great. It's not possible to have effective collective bargaining with public sector employees when their Union controls in many ways the future employment of the elected officials who are by definition supposed to be bargaining against the unions in order to protect the government itself and the tax payers. It's why Franklin Roosevelt opposed the existence of collective bargaining with Federal Government employees.

In states like California and Illinois, the pension systems need to be completely imploded. The problem is that bad. In Illinois, the program needs to be completely frozen. What ever benefits you are currently receiving as a retiree, that is the max you will ever receive. No more inflation adjustments. If you are currently taking a full 85% pension and working a full time job, then your pension will be reduced pro rata for that additional income as long as you are earning that additional income. For example, if you're Roland Burris and you are receiving a $129,000 per year pension from the State of Illinois, then you are receiving another $200,000 of outside income to be a consultant to a special interest group, primarily as a result of your past affiliation as an elected official, then you are going to forgo a large portion of your pension while receiving that outside income. Otherwise you are basically double dipping. For all state employees that have yet to retire, a cap of 70% of the average of your last five year's "salary", not actual, but listed salary is the max you can receive in a pension. the current calculation can allow you to take as much of 90% of your last year's take home pay. As others in this thread have pointed out, this is pension spiking. If you are still working, what ever units you have in the system are frozen for the purpose of your pension calculations. Start a defined contribution plan for all employees moving forward until the pension system is basically phased out in about 50-60 years, Similar to the system in Texas.

Unfortunately AFSCME is way too powerful in both states and hold too much leverage. So the plans will implode on their own and the US Tax payers will subsidize them.
 
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I'm not going to defend Illinois. In Iowa IPERS is capped and higher paid public employees generally opt out in favor of 457 Plans.
 
I'm not going to defend Illinois. In Iowa IPERS is capped and higher paid public employees generally opt out in favor of 457 Plans.
Which is probably a big reason why Iowa IPERS is not in the same shape that other pension plans find themselves.

In Texas they used to let teachers retire at 55 with full benefits if they reach a certain level of age combined with experience. No problem with that at all and if my wife had taught in Texas instead of 18 years in other states this would be her last year. The kicker is the way it used to be you could retire at 55 with full benefits sit out a year and then go back into the classroom at full pay and still pull your full benefits. A lot of teachers took advantage of the loop hole that is now closed.
 
I'm not going to defend Illinois. In Iowa IPERS is capped and higher paid public employees generally opt out in favor of 457 Plans.

IPERS is well run and is governed by realistic actuarial principals. IPERS participants have never been over-promised with un-realistic benefit projections, and as you point out, caps the plans so higher paid employees, and more importantly, politicians can't work the plan to the detriment of lower-paid employees and the tax-payers.
 
Junior, don't you think it's fair to say that blue cities tend to struggle more economically than red cities? (remember, non-reply means you agree with me:D)
 
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