4 ms·

It's much worse than that. Commitments have been made that could never have been met - and not just in California. Hard equations are coming home to roost.

• aswanson 10y ago
  Facts. The baby boomer generation set up public commitments on the back of the taxpayer, from municipal to federal, that simply cannot be met. On top of that, after inheriting a system that allowed them to get a post-secondary education doing unskilled labor, they sloppily set up incentives that caused their children to inherit mortgage-level debt with horrible employment prospects for a comparable education in their era. Thing is, they are reliant on the people they saddled with this piss-poor situation for continued retirement payments.
  • tossaway322 10y ago
    Speaking for the municipal aspect: the municipal voters voted for these measures and certainly voted for the mayors and city councilmen who brought these measures into place. Then the cities, under the same politicians, failed to fully fund the pensions they had set up (they are normally required to fund pensions, each year, to a significant level, but the cities postponed the funding). Years pass and then the cities lament, crying that these pension funds are now undue "public commitments on the back of the taxpayer", such as aswanson says above. IOW cities are trying to screw retirees out of their pensions. For example, at this very moment Houston, in the name of "Pension Reform", is trying to coax the state to pass a law that would cut the pension of widows and widowers in half! And that's just part of the cutbacks Houston is asking.
    • WkndTriathlete 10y ago
      The municipal and state governments that brought the measures into place generally operated in an ethically-compromised environment and mathematical fairy land. The people that voted in the fundamentally-flawed plans are also the ones that are standing to benefit from them as the legislative fixes are rolling in. I sympathize that they have built plans around the expectations of the money being there, but at the same time I think it's pretty unrealistic to expect current taxpayers to pay for unrealistic and underfunded plans.
      • neffy 10y ago
        I remember, back in the 90's, going to one of those retirement planning/sales sessions, where they explained how much you would need to invest at what rates to have a good retirement. With the little I knew then about economics/investment, I knew there was no way they were going to be able to deliver the 8-12% annual return they assumed would be required to meet their projections. So yes, I sympathise with people who allowed themselves to be lied to, i really do, because ultimately this is white collar crime we're talking about - but caveat emptor also applies.
        • aswanson 10y ago
          Guaranteed 8% rate of return, let alone %12, violates historical data/mathematics. Anyone other than Renaissance Technologies advertising as much needs to be sued.
          • vkou 10y ago
            The average rate of inflation through the 80s was 5.6% Given that, an expected 8% rate of return isn't unreasonable.
            • AstralStorm 10y ago
              Historic data is not good enough to base a long term policy on. Not without precise risk valuation at least.
              • vkou 10y ago
                No, but it generally makes sense to talk about expected investment return over the rate of inflation. Hence, the raw number is meaningless - a 12% return rate in an environment with inflation of 9% is almost as reasonable as a 3% return rate in an environment with inflation of 0%.
                • neffy 10y ago
  • Spooky23 10y ago
    That's bullshit. States with more responsible governance where pensions were funded are fine. The problem is that government failed to govern itself. I'm a person with a public pension that is largely funded. By offering that pension, my employer saved significant sums of money compared to paying someone like me a market rate. The real devil here is the dumb, inflationary fiscal policy where debt is virtually free and nobody can actually save anything.