Thread: Got State Pension? NJ Just did the Unthinkable

"unsustainable" is the new political buzzword going into the next elections.

^^ I agree on the "unsustainable." "Sorry, your f*cked."

And yes, ^ the sh*t IS hitting the fan, NOW.

Amen they Be getting them unions in line

Originally Posted by Big Smoothy

(snip) TRENTON — New Jersey lawmakers on Thursday approved a broad rollback of benefits for 750,000 government workers and retirees, the deepest cut in state and local costs in memory, in a major victory for Gov. Chris Christie and a once-unthinkable setback for the state’s powerful public employee unions. (snip)

Always nice when they change the rules in the middle of the game.

i think if the rules are absurd they should be changed. maybe more people will have their heart in their jobs and not just go thru the motions for the benefit package. a cow will only give so much milk, if you're milking one to death maybe easing up is wise. it depends how reasonable the cuts are and if the jobs are still worth it all considered. bet it sucks though on the receiving end.

Yes Curt, changing the rules in the middle - or at the end of the game is what really hits hard. I remember when Reagan did that the the military in about 1984.

Some more articles. I found this one today.
--
Study: $1400 Tax Hike Needed to Fund US Pensions
Published: Wednesday, 22 Jun 2011 | 2:47 PM ET
Text Size
By: Reuters

U.S. state and local governments will need to raise taxes by $1,398 per household every year for the next 30 years if they are to fully fund their pension systems, a study released on Wednesday said.


The study, co-authored by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester, both of whom are finance professors, argues that states will have to cut services or raise taxes to make up funding gaps if promises made to municipal employees are to be honored.

Entire: News Headlines

And this one is from January:
--
States Warned of $2 Trillion Pensions Shortfall
Published: Tuesday, 18 Jan 2011

By: Nicole Bullock, Financial Times

US public pensions face a shortfall of $2,500 billion that will force state and local governments to sell assets and make deep cuts to services, according to the former chairman of New Jersey’s pension fund.

News Headlines

Originally Posted by AdmiralRichard

Amen they Be getting them unions in line

lol it has nothing at all to do with unions, that's the old tired gop bs spin that they sell to the sheep...

The Impact of Pensions on State Borrowing Costs
http://www.slge.org/vertical/Sites/%...D631E05%7D.PDF

THE IMPACT OF PENSIONS ON STATE BORROWING COSTS
http://crr.bc.edu/images/stories/Briefs/slp_14.pdf

The implemented the same thing in Ireland. they had to pay out on bonds held by Goldman Sachs and others which made their debt problem even worst.
http://www.examiner.ie/ireland/levy-...ns-153725.html


* let the austerity begin.....

New Jersey truly did the unthinkable.....They pulled their head out of the sand and dealt with a problem that is not fixable by any other means. Now only if everyone else would do the same.

Originally Posted by Jeeper

New Jersey truly did the unthinkable.....They pulled their head out of the sand and dealt with a problem that is not fixable by any other means. Now only if everyone else would do the same.

My Gov Scott Walker is standing firm against the union thugs and ungrateful public workers too!!!

Originally Posted by Little Wing

i think if the rules are absurd they should be changed. maybe more people will have their heart in their jobs and not just go thru the motions for the benefit package. a cow will only give so much milk, if you're milking one to death maybe easing up is wise. it depends how reasonable the cuts are and if the jobs are still worth it all considered. bet it sucks though on the receiving end.

THIS

Originally Posted by LAM

lol it has nothing at all to do with unions, that's the old tired gop bs spin that they sell to the sheep...

The Impact of Pensions on State Borrowing Costs
http://www.slge.org/vertical/Sites/%...D631E05%7D.PDF

THE IMPACT OF PENSIONS ON STATE BORROWING COSTS
http://crr.bc.edu/images/stories/Briefs/slp_14.pdf

The implemented the same thing in Ireland. they had to pay out on bonds held by Goldman Sachs and others which made their debt problem even worst.
Levy to take


* let the austerity begin.....

Well when your kids are out of control you gatta lay the smack down..
they give way to much power to the union.note just look at the EU

Originally Posted by Jeeper

New Jersey truly did the unthinkable.....They pulled their head out of the sand and dealt with a problem that is not fixable by any other means. Now only if everyone else would do the same.

Exactly.

Americans will have to go through there own austerity measures at the municipal, state, and federal level.

There will be more of this come.

Originally Posted by Big Smoothy

(snip) The study, co-authored by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester, both of whom are finance professors, argues that states will have to cut services or raise taxes to make up funding gaps if promises made to municipal employees are to be honored. (snip)

Where was the miscalculation when these "promises" were made or when those employees signed their contract or were initially hired?

Did no one get out their calculator and say something like, "Hmm, for us to be able to pay a pension that delivers X amount we will have to..."?

Someone dropped the ball whether it was the school district approving the contract or the accountants who said the promises were realistic.

Originally Posted by Curt James

Where was the miscalculation when these "promises" were made or when those employees signed their contract or were initially hired?

Did no one get out their calculator and say something like, "Hmm, for us to be able to pay a pension that delivers X amount we will have to..."?

Someone dropped the ball whether it was the school district approving the contract or the accountants who said the promises were realistic.

I think (iircc) that the calculations were based on X amounts of revenue coming in (not considering the amount could be far less b/c of an economic downturn) and also unrealistic expectations on the X% amount investments would get in return year-after-year.

So, I think bad planning, lack of foresight about possible change and - this is related to being unrealistic - unrealistic targets.

Perhaps the "pension is guaranteed" mentality also led to a lack of foresight.

Also, some of the number crunching in some states (and worse in municipalities) found that the pensions were promising to pay out money they would not even have - to me, that's fraud.

Unfortunately, other states and many other cities will be following New Jersey. For political reasons, many other states and cities will not be able to do it until the money literally is not there.

For example, it's the law that pensions have to be paid. But it means nothing if there is no money.

One city (that I started a thread about) simply stopped paying retirees. The checks stopped coming. Yes, it was against the law. But what difference does it make when you have $0.

Originally Posted by AdmiralRichard

Well when your kids are out of control you gatta lay the smack down..
they give way to much power to the union.note just look at the EU

it has nothing at all to do with unions, they cause no economic problems in the US the EPI of union and non-union workers is only like 3 points. the gop has been keeping the anti-union and tax problem rehtoric alive for 30 years now, yet this still hasn't made it true.

if you want to get technical the US has a very labor participation rate of less than 15% the lowest of all advanced OECD countries. considering that the US is the epicenter for neo-liberal economic policies this shouldn't be a surprise. one of the fundamental neo-liberal economic policies is to squeeze all it can out of labor and to pay wages that border on poverty levels and to restrict movement of labor (such as tying up a persons wages in real-estate, etc.)

the low labor participation rate is exactly why almost half of the country is making 1980's wages, the CPI is flawed and slow to correct changes in costs and it also falls short below the rate that is needed. this is discussed thoroughly in all OECD reports, ILO wage reports and reports from the FRB all support these problems. they even talk about how low wages to those at the bottom of the labor ladder with a tendency to spend all causes slower recovery's after each recession.

Global Wage Report 2008 / 09
Minimum wages and collective bargaining Towards policy coherence
http://www.ilo.org/wcmsp5/groups/pub...cms_100786.pdf

Global Wage Report 2010/11
Wage policies in times of crisis
http://www.ilo.org/wcmsp5/groups/pub...cms_145265.pdf

What Do We Really Know About Changes in Wage Inequality?
http://faculty.arts.ubc.ca/tlemieux/...%20revised.pdf

the fact that the dollar is the world's reserve currency and used for oil and most other economic transactions with non-US trading partners further effects those on the bottom of the wage ladder. the more money the FRB prints for use by other countries increases inflation (the reduction in purchasing power). inflation hurts those that make the least more while it's effects on those at the middle and top of the wage scale are invisible to it.

but in regards to the NJ pension funding problem it all started back in '92 with the Pension Revaluation Act of 1992. that was the start of the mismanaging of the funds first by the dem governor that passed the legislation and then the republican governor that raided the fund (didn't make any contributions) and used the monies to pay for campaign promises, tax breaks, etc. there was also some "legal" fudging of the numbers of the funding rates and return rates, etc.

in the mid 90's existing monies were transferred out of lower yield bonds and into the volatile stock market in the tech sector, etc. some funds were given to hedge funds and some common stock was purchased 2weeks before Lehman brothers folded. the funds have not gotten the returns needed and there were also substantial losses when the dot com bubble burst, etc. in 2000. so it has been a failing game of catch-up since. the decline of tax receipts at the state level exaggerates the problem of funding.

http://www.pewcenteronthestates.org/..._NewJersey.pdf


on average state pension obligations only account for 3-4% of state spending.

There's good reason why the majority of pro-union states are quickly losing population.

^ for the record,

this has NOTHING do with unions.

We need to look at the NUMBERS, the math. It's all about math.

Originally Posted by Big Pimpin

There's good reason why the majority of pro-union states are quickly losing population.

you are wrong, pro-union states have lower unemployment rates and higher per capital incomes than non-union states. unions help to bring up wages for everyone. this has been discussed by economists all over the world for decades and there are hundreds of reports out there on the topic.

Originally Posted by LAM

you are wrong, pro-union states have lower unemployment rates and higher per capital incomes than non-union states. unions help to bring up wages for everyone. this has been discussed by economists all over the world for decades and there are hundreds of reports out there on the topic.

union states also so far in debt they'll be asking for bailouts from right to work states soon.....the need for unions is no more.......Wisconsin is taking the right steps, So is Indiana, Ohio, NJ, Texas......seems like those states are the ones making progress now too......face it LAM....liberalism is a DISEASE with no cure......i feel bad for you

Originally Posted by irish_2003

union states also so far in debt they'll be asking for bailouts from right to work states soon.....the need for unions is no more.......Wisconsin is taking the right steps, So is Indiana, Ohio, NJ, Texas......seems like those states are the ones making progress now too......face it LAM....liberalism is a DISEASE with no cure......i feel bad for you

keep drinking the GOP kool-aide. by the way how much has your net worth and or income increased over the past 30 years once adjusted for inflation?

Wisconsin didn't need to do anything they have been funding their pension programs properly they were not mismanaged. your gov is a lying POS, his intentions were to reduce union power so wages can be lowered.

http://www.pewcenteronthestates.org/..._Wisconsin.pdf

Flint Hills Resources, LLC and The C. Reiss Coal Company are subsidiary's of Koch Industries and they have a pipeline running through your state...

you are a fool and believe anything the GOP feeds you...


The Trillion Dollar Gap - State Fact Sheets

Originally Posted by LAM

keep drinking the GOP kool-aide. by the way how much has your net worth and or income increased over the past 30 years once adjusted for inflation?

Wisconsin didn't need to do anything they have been funding their pension programs properly they were not mismanaged. your gov is a lying POS, his intentions were to reduce union power so wages can be lowered.

http://www.pewcenteronthestates.org/..._Wisconsin.pdf

Flint Hills Resources, LLC and The C. Reiss Coal Company are subsidiary's of Koch Industries and they have a pipeline running through your state...

you are a fool....

Koch's employ dozens of businesses and thousands of employees in Wisconsin......you can't say your George Soros does.....so who's drinking the "kool-aid?".....former Gov Jim Doyle and his spending and stealing from the transportation fund to cover (well attempt to cover) his spending put this state in a bad place....Gov Walker is doing what's necessary and it's no coincidence state after state after state is following his and NJ Gov Christie's leads.......i've recently decided that liberals can't be changed....hopefully they'll just die out eventually.....they have no credibility singing, playing bongo drums, naked bike protests, protesting in general (you'd assume they were unemployed since they protest so much....basically being nonproductive to society)......

Originally Posted by irish_2003

Koch's employ dozens of businesses and thousands of employees in Wisconsin......you can't say your George Soros does.....so who's drinking the "kool-aid?".....former Gov Jim Doyle and his spending and stealing from the transportation fund to cover (well attempt to cover) his spending put this state in a bad place....Gov Walker is doing what's necessary and it's no coincidence state after state after state is following his and NJ Gov Christie's leads.......i've recently decided that liberals can't be changed....hopefully they'll just die out eventually.....they have no credibility singing, playing bongo drums, naked bike protests, protesting in general (you'd assume they were unemployed since they protest so much....basically being nonproductive to society)......

what does George Soros have to do with anything? and thank god for the conservative economic policies of past GOP presidents we wouldn't be 14T in the hole if not for them...

state deficits from reducing tax receipts from 2007 have caused problems with them being able to fund state pensions, if they were not mismanaged from the beginning the problem wouldn't have existed or greatly reduced. this problem was escalated when the GOP would not allow the BOB program to be-renewed fueling the opportunity for them to once again attack the remaining unions left in this country.

you are a straight up idealogue while I'm not even a liberal but a free thinker, I was reading socrates via plato in elementary school. I haven't been brainwashed from birth hearing political rhetoric from my parents or the government controlled tv like yourself, one of many sheep that have embraced neo-liberal economics in the us. Your views on economics and union participation weren't even developed on their own, how sad. I didn't start really watching tv until I got out of the military at age 26.

* the first IMF document tells developing countries to "not" model their labor standards after the US.
UNEMPLOYMENT AND LABOR MARKET INSTITUTIONS:
http://www.imf.org/external/pubs/ft/...f/chapter4.pdf

* the Summary Starts on Page 79 and it talks about how nations with low unionized labor participation rates have suffered because of this
http://www.ilo.org/wcmsp5/groups/pub...cms_145265.pdf

you libtards always bring up Koch's but never accept that George Soro's is the same "evil".......sheeple comes to mind when i try to describe dumbocrats or libtards

when the states' problems are fixed will you admit that you were wrong? or will you continue to make excuses and play the blame game that liberals do?


oh, and btw i became a conservative while active duty during the Clinton years and saw military families using food stamps.......

Originally Posted by LAM

it has nothing at all to do with unions, they cause no economic problems in the US the EPI of union and non-union workers is only like 3 points. the gop has been keeping the anti-union and tax problem rehtoric alive for 30 years now, yet this still hasn't made it true.

if you want to get technical the US has a very labor participation rate of less than 15% the lowest of all advanced OECD countries. considering that the US is the epicenter for neo-liberal economic policies this shouldn't be a surprise. one of the fundamental neo-liberal economic policies is to squeeze all it can out of labor and to pay wages that border on poverty levels and to restrict movement of labor (such as tying up a persons wages in real-estate, etc.)

the low labor participation rate is exactly why almost half of the country is making 1980's wages, the CPI is flawed and slow to correct changes in costs and it also falls short below the rate that is needed. this is discussed thoroughly in all OECD reports, ILO wage reports and reports from the FRB all support these problems. they even talk about how low wages to those at the bottom of the labor ladder with a tendency to spend all causes slower recovery's after each recession.

Global Wage Report 2008 / 09
Minimum wages and collective bargaining Towards policy coherence
http://www.ilo.org/wcmsp5/groups/pub...cms_100786.pdf

Global Wage Report 2010/11
Wage policies in times of crisis
http://www.ilo.org/wcmsp5/groups/pub...cms_145265.pdf

What Do We Really Know About Changes in Wage Inequality?
http://faculty.arts.ubc.ca/tlemieux/...%20revised.pdf

the fact that the dollar is the world's reserve currency and used for oil and most other economic transactions with non-US trading partners further effects those on the bottom of the wage ladder. the more money the FRB prints for use by other countries increases inflation (the reduction in purchasing power). inflation hurts those that make the least more while it's effects on those at the middle and top of the wage scale are invisible to it.

but in regards to the NJ pension funding problem it all started back in '92 with the Pension Revaluation Act of 1992. that was the start of the mismanaging of the funds first by the dem governor that passed the legislation and then the republican governor that raided the fund (didn't make any contributions) and used the monies to pay for campaign promises, tax breaks, etc. there was also some "legal" fudging of the numbers of the funding rates and return rates, etc.

in the mid 90's existing monies were transferred out of lower yield bonds and into the volatile stock market in the tech sector, etc. some funds were given to hedge funds and some common stock was purchased 2weeks before Lehman brothers folded. the funds have not gotten the returns needed and there were also substantial losses when the dot com bubble burst, etc. in 2000. so it has been a failing game of catch-up since. the decline of tax receipts at the state level exaggerates the problem of funding.

http://www.pewcenteronthestates.org/..._NewJersey.pdf


on average state pension obligations only account for 3-4% of state spending.

lets make this simple so you can understand.
lets say you are making 100 million a year ok and your union at your company says well we need more money and such they are already taking 35% of your profit for they're current pay andsuch. they want 40% now. this keeps going on every 5 year after the contract runs out how long does it take for you to go under or file chapter 11? And it does happen

Originally Posted by AdmiralRichard

lets make this simple so you can understand.
lets say you are making 100 million a year ok and your union at your company says well we need more money and such they are already taking 35% of your profit for they're current pay andsuch. they want 40% now. this keeps going on every 5 year after the contract runs out how long does it take for you to go under or file chapter 11? And it does happen

trust me I understand all aspects of economics, I've spent thousands of hours on research over decades on this topic. I have worked for publicly traded company's with annual revenues of 5-10B a year down to privately owned company's scrambling to make payroll every week. Because of this i have first had 1st hand experience being in the top income wages bracket all the way down the some of the lowest.

the problem you presented is one of the basic fundamental flaws of capitalism and is exaggerated even more so in company's that are publicly traded on exchanges. the quest for ever increasing profits comes at the expense of wages paid out to those in labor, increased profits cause stock prices to increase. higher stock prices give company's better credit and they have to use less cash for expansion, etc. decreasing payroll and/or work fore reductions is the single easiest ways for any public traded company to increase it's profits continually. when there are high levels of unemployment and/or underemployment those that remain are forced to make up the work of the others so productivity increases.

seriously this stuff is so easy to comprehend. this is one of the many negative effects of privatization there are tons of reports about this written by economists all over the globe. this is why there needs to be a mix of government enterprises that employ and are not required to generate a profit and private business that does.

Privatization, Entry Regulation and the Decline of Labor’s Share of GDP: A Cross-Country Analysis of the Network Industries (2007)
http://cep.lse.ac.uk/pubs/download/dp0806.pdf

I am a small IT business owner 90% of our revenue is generated explicitly though labor, I put the costs of materials back on on 90% of my clients so they incur the expenses of that, this reduces my payments to bookkeepers and tax accountants. Because I don't spend much on materials I have to pay retail so marking up goods only adds another layer of complexity, so I have this reduced hassle this to the bare minimum. On large installs I have my clients provide 100% of the materials or the funds for them.

I do not install much, I get paid to repair things that were originally not installed properly due to a variety of reasons. I pay cash for all vehicles and all of my telecom test equipment is used. Vehicles are maintained regularly and most test equipment is purchased off ebay for a fraction of the original cost. I then ship the items back to the manufacture or other sources that I have in san jose and have them re-calibrated and/or refurbished, this has saved me hundreds of thousands of dollars. I now have better telecommunications test equipment than ALL of the local telephone company's and cable company's which allows me to obtain a much larger caliber of client than a small company would ever be able to do. This also allows me to generate a much higher amount of profits since less time is spent on site. I charge a specific amount for a truck roll at a fixed rate and then an hourly rate after 2 hours. But because of my investment in the proper equipment most calls are resolved in less than an hour, freeing up more of our time and keeping my clients extremely happy the never complain about paying the obscene fixed rate that I charge for a truck roll at $350 for the first 2 hours.

from a personal economic perspective I had a fixed amount of money that i wanted in the bank in my personal and business accounts to last me X number of years. these numbers vary slightly depending on the rate of inflation. once I hit these numbers I then turned my focus onto my contractors, they all get paid in 5 working days after completion of a work assignment and they pay no taxes, I incur those costs myself. on average they get about 50-80K a year from me and are quite happy. they do not have to wait the standard net-30 or 60 day period because I have plenty of business cash on hand.

Let's go up the road to Connecticut. Where 7,500 state workers are now....unemployed.
---
Here is some more....Austerity. Austerity, is what it is. Laying off workers for the state. A move that only a few years ago was considered unthinkable.
Union Deal Shot Down; Malloy Pledges To Cut Close To 7,500 State Workers

Gov. Dannel P. Malloy announced he was moving quickly to lay off 7,500 state workers after union members rejected contract changes.

By CHRISTOPHER KEATING,The Hartford Courant June 24, 2011

HARTFORD — Gov. Dannel P. Malloy said Friday that he was moving "full steam ahead'' with plans to lay off 7,500 state employees, as leaders of the AFSCME union announced that their members had officially rejected a savings and concession deal that would have given them layoff protection for four years.

The administration has ruled out a renegotiation with the unions because the multi-faceted agreement took months of intense negotiations and compromises to complete. Malloy said he and his budget team intend to release layoff notices "as soon as possible'' to balance the budget.

Entire: Union Deal Defeated; Gov. Dannel P. Malloy Pledges To Cut Close to 7,500 State Workers - Courant.com

Most states that are having pension funding problems simply were not managing them properly for many years, they were not being funded properly.

US State Pension Budget Fact Sheets
http://downloads.pewcenteronthestate...eets_final.pdf