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Old 06-21-2010, 10:09 PM   #21
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Indeed, if you and I are contracting parties, you are free to breach if you like. I am then free to take every legal action I can to harm you for your perfidy. Since I am a mean and vindictive SOB, I will ensure that it costs you more than you can save by breaching.
Sometimes yes, sometimes no. Anyway, I am not talking about me, as you well know. But it must have been fun to rattle your subpoenas.

Europe will modify the so called employment contracts, and the workers will strike and burn stuff and kill people in banks, but you can't get blood from a turnip, and the employment arrangements will eventually be modified. Given time, few societies would be stupid enough to go down the tubes to see to it that some favored group gets to keep its favored position.

Likewise, the same thing will happen in America. All the hits cannot come at the expense of Medicare and "well to do taxpayers".

Even stupid people ultimately come to realize that government is not creating any of the food they eat, or the houses in which they live, or the clothing that they wear, or the entertainment that they enjoy.

Ha
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Old 06-21-2010, 10:26 PM   #22
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Certainly I did not intend to personalize our hypothetical dispute. My point is that you cannot expect that government workers will stand idly by while their benefits are cut ex post facto by people who don't want to pay taxes but do want to enjoy the services the government provides. I have been fairly consistent here in my position that we have all been taxed too lightly for many years now. As you correctly point out, it is an unsustainable system.
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Old 06-21-2010, 10:53 PM   #23
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Likewise, the same thing will happen in America. All the hits cannot come at the expense of Medicare and "well to do taxpayers".

Even stupid people ultimately come to realize that government is not creating any of the food they eat, or the houses in which they live, or the clothing that they wear, or the entertainment that they enjoy.

Ha
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Old 06-21-2010, 11:39 PM   #24
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Certainly I did not intend to personalize our hypothetical dispute. My point is that you cannot expect that government workers will stand idly by while their benefits are cut ex post facto by people who don't want to pay taxes but do want to enjoy the services the government provides. I have been fairly consistent here in my position that we have all been taxed too lightly for many years now. As you correctly point out, it is an unsustainable system.
It appears that I am being credited with ideas that are not mine. For example, "I" do not expect that government workers “will stand idly by" when their goodies are being threatened. Few groups in modern times are as willing to strike, create public nuisances, do slowdowns, etc. as government workers. I only said that ultimately I believe that they will not prevail. It is unconscionable that one favored group should be kept whole while people in non-protected positions are cut loose, and all the while those who are not getting any of the goodies be expected to pay for all this.

Anyway, I have no intention of debating this any longer. Time will tell. But I do believe, as Herb Stein famously said, “If something can’t go on, it won’t.”
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Old 06-22-2010, 05:48 AM   #25
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I have been guilty of using loose language. I should have said "one cannot expect", which is what I meant, instead of "you cannot expect". My apologies.
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Old 06-22-2010, 08:57 AM   #26
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The math of employee cost is both simple and compelling. Cost containment results from employee reduction and slowing growth of future obligations. Taxes simply cannot increase fast enough to pay the current projected costs. Two decades of pension plan management in the private sector shows the way.

I think over time the most likely outcome is that future benefit growth for vested holders will be limited, simply because this is the where the greatest financial benefit is, and it will prove easier to limit growth than reduce current employment.

The NYT article describes a few cases in detail and then generalizes to all other public employees. This is faulty reasoning, as non-federal public employees are not one monolithic group but instead covered by thousands of different laws, employment contracts and financial conditions.

In my mind it is inconceivable that together, the team of politicians, legislators and lawyers will not find the way to accomplish this. The media will assist by not focusing on broken promises or ruined retirements but instead by promoting tales of six figure pensions paid to mid-50 types while cops and schoolteachers are laid off.

Also, to repeat thoughts I have expressed elsewhere, there are many well funded plans out there. Stakeholders need to circle the wagons to keep their funds from being raided.

Donít know if it shows but I am not optimistic that public pension obligations will be met as currently projected.
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Old 06-22-2010, 09:16 AM   #27
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My point is that you cannot expect that government workers will stand idly by while their benefits are cut ex post facto by people who don't want to pay taxes but do want to enjoy the services the government provides.
Agreed, provided we are talking about benefits for the work already performed -- changes to benefits granted for future work not yet performed are not "ex post facto."

Then again, federal law generally prohibits cutting benefits for work already performed anyway. There is typically no "contract" guaranteeing future work will be given the same pension treatment as prior work (except in collective bargaining agreements, normally, and even those are only applicable until the expiration of the contract). Even the private sector didn't take away anything for work already performed when they froze their DB pension plans -- and you know that many of them would have if it were legal to do so.

There's no more a "lifetime contract" guaranteeing the current pension deal for public employees than there is for private employees. Yet it feels like a lot of folks seem to think there is, that there's somehow legally and morally a higher standard. The only difference I see is that I, as an infinitesimally small representative of my government and what it does, don't want the blood of screwing people out of a pension they're already counting on all over my hands if we can possibly avoid it without massive tax hikes on everyone else.
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Old 06-22-2010, 10:08 AM   #28
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There's no more a "lifetime contract" guaranteeing the current pension deal for public employees than there is for private employees. Yet it feels like a lot of folks seem to think there is, that there's somehow legally and morally a higher standard.
(empahsis added) I think you and some others are imagining that some of us said something like the above or think it. This whole discussion arose from proposals to cut guaranteed COLAs for current pensioners, i.e., to cut earned benefits! All we have griped about is governments or private employers defaulting on earned benefits. The idea that things are so much different in the private sector strikes me as disingenuous. Corporations drop pension plans all the time -- but earned benefits are preserved. Governments do the same thing. The Feds did it in my day (the switch from CSRS to FERS). Everybody knows that governments need to make changes going forward and I haven't seen arguments here that counsel against that.
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Old 06-22-2010, 10:30 AM   #29
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(empahsis added) I think you and some others are imagining that some of us said something like the above or think it. This whole discussion arose from proposals to cut guaranteed COLAs for current pensioners, i.e., to cut earned benefits! All we have griped about is governments or private employers defaulting on earned benefits. The idea that things are so much different in the private sector strikes me as disingenuous. Corporations drop pension plans all the time -- but earned benefits are preserved. Governments do the same thing. The Feds did it in my day (the switch from CSRS to FERS). Everybody knows that governments need to make changes going forward and I haven't seen arguments here that counsel against that.
An earned benefit and a COLA on future payments may not be the same thing. This is where the battle will be. Can pension systems freeze the pension pay out at the current level of benefit but stop COLA increases, and change pension requirements for vested current workers.

Corporations certainly have had little difficulty doing this.
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Old 06-22-2010, 10:52 AM   #30
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(empahsis added) I think you and some others are imagining that some of us said something like the above or think it. This whole discussion arose from proposals to cut guaranteed COLAs for current pensioners, i.e., to cut earned benefits! All we have griped about is governments or private employers defaulting on earned benefits. The idea that things are so much different in the private sector strikes me as disingenuous. Corporations drop pension plans all the time -- but earned benefits are preserved. Governments do the same thing. The Feds did it in my day (the switch from CSRS to FERS). Everybody knows that governments need to make changes going forward and I haven't seen arguments here that counsel against that.
Well, there is a legal question about whether a COLA can be cut on earned benefits. In other words, if they say you've already earned a $2000 monthly pension benefit off work already performed, they clearly can't cut it below $2000. But can they remove or water down the COLA provision off that $2000 benefit? I'm not sure.

I would consider that a benefit cut on earned benefits personally, but the governing question may be as to whether or not the COLA is something that has already earned according to federal pension law. That some states are looking at it suggests they don't think so, but personally I disagree and expect to see it in the courtroom eventually.
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Old 06-22-2010, 11:18 AM   #31
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Well, there is a legal question about whether a COLA can be cut on earned benefits. In other words, if they say you've already earned a $2000 monthly pension benefit off work already performed, they clearly can't cut it below $2000. But can they remove or water down the COLA provision off that $2000 benefit? I'm not sure.
Fair and legal are two different things. If a benefit program includes the promise of a COLA'd pension and you work 30-40 years under that system you have earned your pension with the COLA. If the system didn't specify when, how and if COLAs would be paid, that is an entirely different mater. Government retirees will gripe if they lose benefits they already earned just as private sector employees will, and rightfully so in both cases..
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Old 06-22-2010, 11:31 AM   #32
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Fair and legal are two different things. If a benefit program includes the promise of a COLA'd pension and you work 30-40 years under that system you have earned your pension with the COLA. If the system didn't specify when, how and if COLAs would be paid, that is an entirely different mater. Government retirees will gripe if they lose benefits they already earned just as private sector employees will, and rightfully so in both cases..
To go off on a slight tangent (but related to employer retirement benefits), another one that hit many of us is the loss of retiree health insurance coverage. Now technically this is a benefit that one hasn't "earned" yet since they don't consider it earned until you retire (and it's not related to pension law so they could legally take it away even from current retirees, but so far few have as that would be a PR disaster), but still, there were people working at my first Megacorp who had been there for 20 years, maybe in their mid to late 40s, and were planning to retire at 55 with employer-provided health insurance until 65 (at which time they would be on Medicare).

Suddenly, at close to age 50, that retirement at 55 -- suddenly gone. Poof. Yes, you still have the pension (and you would get whatever has accrued until they froze it) -- but without the health insurance you thought you'd have covered, that dream is gone. Especially since they froze the pension a year later. Now you've been kicked in the gut for staying there all those years, primarily staying put for the retirement benefits you wouldn't be able to get if you left and had to "start over" at an older age elsewhere.

And that's the most unfair thing about these takeaways: you don't get a mulligan. When you get screwed after a decade or more on the job, you can't get on a time machine and retroactively choose a career with an employer which you know will still have top-notch legacy retirement benefits when you are ready to call it quits. When my employer froze the pension I couldn't get those ten years back to start over with a new employer. There's no way I could get the 30+ years of service needed to really get a pension large enough to live on. Add to that the retiree health insurance takeaway and it's a double-screwing. At that point I saw no reason to stay there any more, since there were no more "rewards" for longevity, especially if I could find higher pay or better job security somewhere else.

It's this lack of a "do-over" option that makes taking away retirement benefits particularly offensive. And I don't want to be responsible for ramming through on others what happened to me, but other than taking away what's already been earned, at some point everything has to be on the table and there's a lot of shared sacrifice ahead for public employees AND for taxpayers.
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Old 06-22-2010, 03:56 PM   #33
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Some states are in worse shape than others... fortunately my state is in decent shape. The underfunding is due to losses from the melt-down.

http://downloads.pewcenteronthestate..._Gap_final.pdf

I suppose the good news is there is an awareness of the problem.

Some states are hugely underfunded. Citizens of those states can probably expect hefty tax increases to make up for not funding the pension fund appropriately in the past.
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Old 06-22-2010, 11:20 PM   #34
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Some states are hugely underfunded. Citizens of those states can probably expect hefty tax increases to make up for not funding the pension fund appropriately in the past.
Tax can only be raised to a certain limit! Citizens of those states will begin to question why paying someone who do not contribute or work anymore.
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Old 06-23-2010, 07:53 AM   #35
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Tax can only be raised to a certain limit! Citizens of those states will begin to question why paying someone who do not contribute or work anymore.
Kind of like Social Security?
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Old 06-23-2010, 08:03 AM   #36
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Kind of like Social Security?
Exactly like SS. That needs 'fixin' too.

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Old 06-23-2010, 11:10 AM   #37
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To go off on a slight tangent (but related to employer retirement benefits), another one that hit many of us is the loss of retiree health insurance coverage. Now technically this is a benefit that one hasn't "earned" yet since they don't consider it earned until you retire (and it's not related to pension law so they could legally take it away even from current retirees, but so far few have as that would be a PR disaster), but still, there were people working at my first Megacorp who had been there for 20 years, maybe in their mid to late 40s, and were planning to retire at 55 with employer-provided health insurance until 65 (at which time they would be on Medicare).

Suddenly, at close to age 50, that retirement at 55 -- suddenly gone. Poof. Yes, you still have the pension (and you would get whatever has accrued until they froze it) -- but without the health insurance you thought you'd have covered, that dream is gone. Especially since they froze the pension a year later. Now you've been kicked in the gut for staying there all those years, primarily staying put for the retirement benefits you wouldn't be able to get if you left and had to "start over" at an older age elsewhere.

And that's the most unfair thing about these takeaways: you don't get a mulligan. When you get screwed after a decade or more on the job, you can't get on a time machine and retroactively choose a career with an employer which you know will still have top-notch legacy retirement benefits when you are ready to call it quits. When my employer froze the pension I couldn't get those ten years back to start over with a new employer. There's no way I could get the 30+ years of service needed to really get a pension large enough to live on. Add to that the retiree health insurance takeaway and it's a double-screwing. At that point I saw no reason to stay there any more, since there were no more "rewards" for longevity, especially if I could find higher pay or better job security somewhere else.

It's this lack of a "do-over" option that makes taking away retirement benefits particularly offensive. And I don't want to be responsible for ramming through on others what happened to me, but other than taking away what's already been earned, at some point everything has to be on the table and there's a lot of shared sacrifice ahead for public employees AND for taxpayers.
You know, I just can't help thinking how similar this situation is to that of many other countries in the past, when they were facing the consequences of fiscal mismanagement and we were creditors. How quick we were to condemn their bad habits and how easily we mandated spending cuts + tax increases much more severe that those we face.
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Old 06-23-2010, 05:11 PM   #38
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You know, I just can't help thinking how similar this situation is to that of many other countries in the past, when they were facing the consequences of fiscal mismanagement and we were creditors. How quick we were to condemn their bad habits and how easily we mandated spending cuts + tax increases much more severe that those we face.
Yup, the World Bank and us - finger wagging nannies.
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Next, the retirement bubble ?
Old 06-23-2010, 09:13 PM   #39
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Next, the retirement bubble ?

This guy thinks the next bubble to pop is the retirement bubble. He seems to be pushing for semi-retirement as a way help us get out of this mess. He has some interesting ideas in his blogs on transitioning from full time work to part time work that you like (life sabbatical). His ideas and tone may be a tough sell on this forum.

Next, the Retirement Bubble - The Barron's article
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Old 06-23-2010, 11:12 PM   #40
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Here is one of his blog posts. Very intersting. It strikes me as funny, since most blogs seem to feature a lot of happy talk to attract fantasy needing readers, and fantasy selling advertisers. I have only read a few of his articles, but so far it seems anti-fantasy. A hard sell usually.

Ha
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