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Eric Stoner
12-30-2010, 09:34 AM
and the recession was caused by the private sector and many states would not be in the dire situation they are today, were it not for the severe recession we're in.



and many of those states with high government expenditures have much higher per-capita incomes than those conservative states with "limited government". I agree that there is a lot of money wasted by state governments, but there are also a number of areas where it would be beneficial to spend more money. The quality of people who choose to become teachers is directly related to how much money they are able to make. One of the reasons why the quality of our schools has declined over the past 50 years is the quality of people who choose to become teachers has declined. In the 1950's, many of the best and brightest women chose to become teachers, because that was one of the few fields available to them. Now the best and brightest women choose to become doctors and lawyers instead.

Even if the recession was entirely created by a private sector run amok, so what ?
What were the states doing while Rome burned ? Did they cut their budgets ? Did they plan at all for reduced revenues ? NO ! Almost all INCREASED spending. Even before they got Federal funding as part of Obama's National Recovery and Relief Act.

Lol. The inverse correlation between educational spending and student performance has been demonstrated over and over again. I have nothing against paying GOOD teachers well. The problem is the teachers unions insist that all the failures and mediocrities get pay increases too. And that those proven failures be retained.

Melonie
12-30-2010, 11:32 AM
No, New York's population is not declining. A population is either declining or not declining, and New York's is not declining, it is increasing. Just because it's not increasing as fast as other states doesn't make it declining.

Without knowing the specific details, it's my guess that the main reason for Texas' faster population growth is their large Hispanic population, who have higher reproduction rates, and their proximity to the Mexican border, where many Mexicans are moving to Texas legally and illegally. I doubt that a significant number of New York residents are packing up and moving to Texas, where they would probably have to take a significant cut in pay to take a job there.


Nice Try ! However, there is a big difference between counting total population and counting actual tax PAYERS.

from the Huffington Post ...

(snip)"WASHINGTON — A steady flow of new immigrants is providing a late-decade population boost to major metropolitan areas such as Chicago, Miami, New York and Los Angeles, whose states are seeking to stem declines before the 2010 census.

Even with a recent dip in immigration, the addition of foreign migrants into those major cities most attractive to them has cushioned substantial population losses from native-born Americans who had migrated to interior parts of the U.S. in search of jobs, wider spaces and affordable housing before the recession."(snip)

As I posted earlier, when a (former) tax PAYING skilled, productive, and heavily taxed (former) resident of Illinois, California, and New York leaves the state, and is in turn 'replaced' with a low skill level immigrant family who quickly signs up for social welfare benefits, for subsidized housing, for subsidized utilities etc., the state's economy does not 'break even' !

eagle2
12-31-2010, 12:30 AM
You have repeatedly tried to blame the current recession ENTIRELY on the private sector. That is only partially true and grossly incomplete because it leaves out the Fed, Fannie, Freddie, HUD and the Congress just to name a few governmental bodies and entities that share responsibility for the current mess.

I place the blame mainly on the de-regulation of the financial markets that had been going on for 20-30 years prior to the crisis occurring. It was Congress and the previous presidents that passed the de-regulation that allowed the crisis to happen, and it was the mortgage brokers, banks, and other financial institutions that abused the de-regulation, which resulted in the financial crisis. If we had all of the financial regulations in place that we had in the 1970's, the financial crisis most likely would have been avoided.

eagle2
12-31-2010, 12:41 AM
Lol. The inverse correlation between educational spending and student performance has been demonstrated over and over again. I have nothing against paying GOOD teachers well. The problem is the teachers unions insist that all the failures and mediocrities get pay increases too. And that those proven failures be retained.

Right. I guess that's why community colleges provide a better education than Yale and Harvard. LOL! I'm sure that's why low tax states like Mississippi and Texas consistently rank the highest in public school education. Let's look at some rankings.

http://www.marylandpublicschools.org/MSDE/pressrelease_details/2010_01_14

No, it looks like high tax Maryland, New York, and Massachusetts have the highest rankings according to Education Week.

There would be far fewer failures and mediocrities if teachers' salaries were higher to begin with.

eagle2
12-31-2010, 12:44 AM
Nice Try ! However, there is a big difference between counting total population and counting actual tax PAYERS.

from the Huffington Post ... http://www.huffingtonpost.com/2009/12/09/ahead-of-2010-census-new_n_385595.html

(snip)"WASHINGTON — A steady flow of new immigrants is providing a late-decade population boost to major metropolitan areas such as Chicago, Miami, New York and Los Angeles, whose states are seeking to stem declines before the 2010 census.

Even with a recent dip in immigration, the addition of foreign migrants into those major cities most attractive to them has cushioned substantial population losses from native-born Americans who had migrated to interior parts of the U.S. in search of jobs, wider spaces and affordable housing before the recession."(snip)

As I posted earlier, when a (former) tax PAYING skilled, productive, and heavily taxed (former) resident of Illinois, California, and New York leaves the state, and is in turn 'replaced' with a low skill level immigrant family who quickly signs up for social welfare benefits, for subsidized housing, for subsidized utilities etc., the state's economy does not 'break even' !

As always, you're making stuff up. A significant number of immigrants are highly skilled scientists, engineers, and other professionals.

Melonie
12-31-2010, 03:27 AM
I'll concede that there are a certain number of H1B visa employees and 'independent' professionals who are indeed immigrants and who indeed do make a positive contribution to state tax revenues. However, it is another argument whether the Chinese engineer or Pakistani dentist or Indian computer programmer ... who are earning perhaps 1/2 as much as their (former) native born counterparts thus contributing less than 1/2 as much income tax revenues as their (former) native born counterparts ... constitutes a 'break even' situation for the state budget. Granted that the firing / voluntary exodus of the higher paid native born engineers, dentists and computer programmers WITHOUT the hiring of lower paid H1B immigrant replacements would have been an even larger 'loss' in terms of net state tax revenues.

However, this point does NOT hold true for relatively unskilled immigrant convenience store clerks, restaurant kitchen staff, housekeeping staff etc. ... who earn too little to actually have to pay income taxes, and who are eligible to receive some number of taxpayer funded benefits, from tax credits to low income housing and utility bill subsidies etc. This is clearly a 'loss' situation for state budgets. And obviously there are far more immigrants in the low skill level, low income, non income tax paying category than there are immigrant H1B / professionals.

Ironically, the availability of unskilled immigrant labor willing to accept near minimum wage jobs is important to many American businesses ... who would otherwise not be able to fill open positions because unemployed unskilled US citizens will not accept them ( i.e. the 'equivalent' cash value of the social welfare benefits and subsidies available while not working far exceed the actual cash value of a near minimum wage paycheck ). Of course, from a state budget standpoint, this constitutes a 'double loss' !


Returning to the point, in every case involving lower paid immigrants ... skilled or unskilled ... state budget deficits are deepened !
~

Eric Stoner
01-03-2011, 08:02 AM
Right. I guess that's why community colleges provide a better education than Yale and Harvard. LOL! I'm sure that's why low tax states like Mississippi and Texas consistently rank the highest in public school education. Let's look at some rankings.

http://www.marylandpublicschools.org/MSDE/pressrelease_details/2010_01_14

No, it looks like high tax Maryland, New York, and Massachusetts have the highest rankings according to Education Week.

There would be far fewer failures and mediocrities if teachers' salaries were higher to begin with.

If we look at per pupil spending vs. SAT scores on a state by state basis, there is little if any relation between school spending and student achievement. As Mel and I have posted ad nauseum, Washington D.C. has the highest per pupil spending and the worst performing students. Same for NYC, Chicago, Los Angeles and other states and cities.

Maryland is a bad example because except for Baltimore, it is a very well to do state with two counties that have among the highest per capita incomes in the entire country. You tell us : Why do the Dakotas and Nebraska consistently perform so well with relatively low spending levels ?

Eric Stoner
01-03-2011, 08:04 AM
As always, you're making stuff up. A significant number of immigrants are highly skilled scientists, engineers, and other professionals.

Actually this is one thing that drastically needs reform in our Immigration system.
We literally educate engineers and scientists from around the world and most of them have to leave after they graduate because of quotas.

Eric Stoner
01-03-2011, 08:06 AM
I place the blame mainly on the de-regulation of the financial markets that had been going on for 20-30 years prior to the crisis occurring. It was Congress and the previous presidents that passed the de-regulation that allowed the crisis to happen, and it was the mortgage brokers, banks, and other financial institutions that abused the de-regulation, which resulted in the financial crisis. If we had all of the financial regulations in place that we had in the 1970's, the financial crisis most likely would have been avoided.

Assuming you are correct, SO WHAT ? The fact remains that almost every state government did not do the necessary and did not budget accordingly.

Eric Stoner
01-03-2011, 11:20 AM
Getting back to the original topic, there is already legislation pending in Congress anticipating states coming to Congress as mendicants. Rep. Devin Nunes ( Rep. Cal. ) has written the Public Employee Pension Transparency Act. ( Btw, in California roughly 80% of the state budget goes for government employee pay and benefits.) His bill would require the same transparency, candor , realism and pre-funding for public pensions as is required for private pensions. Those governments who do not comply would not be able to issue bonds exempt from federal taxation. It would also clearly state that such pensions are completely state and local obligations.

According to the latest study from Northwestern University's Kellogg School of Management, underfunding of pensions in municipalities is at least $500 billion and probably higher. For states it is over $3 trillion. According to Nunes, 10 states will bankrupt their pension funds by 2020 and by 2030, all but 8 will be exhausted. The end of earmarks and the expiration of ARRA ( American Recovery and Reinvestment Act ) means at least $150 billion less for states and cities. That is on top of another $200 billion in bonds issued under the ARRA Build America Bonds program under which Washington paid about a third of the interest costs. That program no longer exists.

There are some 200 municipalities expected to default on their debt this year. Some will undoubtedly go into Bankruptcy court seeking relief from union contracts and resultant pension costs.

There is a related item in New York where a proposed bill would eliminate publicly funded pensions for ALL elected officials. Its proponents argue that doing so will remove a conflict of interest for the very people who must clean up the current pension mess.

In addition to the pension mess, and one thing Congress could and should do to help states and municipalities, is Medicaid reform. It currently accounts for 22% of all state budgets and in at least one of the three states in the deepest fiscal trouble, N.Y. it is much larger. In N.Y. Medicaid is 28% of the total budget. Obamacare has increased the burden by requiring states to enroll more people. The Medicaid formula where the Federal government pays a dollar for every dollar spent by the state actually is a disincentive for those states to root out waste , fraud and abuse. The solution is obvious : Obama and the Congress should repeat Clinton's successful Welfare Reform and issue block grants to the states to pay for Medicaid. Another thing that must be done is to eliminate "feigned poverty" to get Medicaid to pay for long term care. It would also have the corollary benefit of keeping a lot of functional elderly OUT of nursing homes. Many nursing home residents do not belong there and can and should be cared for at home.

There is one wild card left. Ben Bernanke. It remains to be seen whether he will declare an emergency power for the Fed. to buy state and local bonds.

Melonie
01-03-2011, 01:02 PM
check out the new spiel from California's new governor Jerry Brown ...

(snip)"The broad set of budget cuts that Gov.-elect Jerry Brown will propose in the coming days would touch nearly all Californians, eliminating local redevelopment agencies, shrinking social service benefits, shuttering parks and reducing library hours, according to a source familiar with his budget proposal.

Brown, to be sworn in this morning, wants to slash virtually every state-funded program to help balance California's massive deficit, in many cases resurrecting cuts sought by Gov. Arnold Schwarzenegger but rejected by lawmakers. Brown would restrict Medi-Cal access, divert low-level offenders to county jails and cut deeply into California State University and the University of California.

The Democrat is counting on lawmakers to approve the cuts to encourage voters to also provide revenue. A June ballot measure would extend higher tax rates on income, vehicles and sales set to expire this year, as well as eliminate a new corporate tax benefit. The money from the vehicle and sales tax extensions would be sent to local governments, which would take on some functions the state performs now.

Brown also wants to take money from voter-approved accounts that fund early childhood development and mental health care, a plan similar to one rejected by voters in 2009.

Brown's widescale cuts seem designed to hit services that permeate every part of Californians' lives. The reductions to state parks and libraries, for instance, are minuscule against the backdrop of a deficit greater than $25 billion over the next 18 months. But park and library closures would surely draw the attention of middle-class families.

So would cuts to the state's two university systems, which Brown will pursue one year after Schwarzenegger singled out the state's higher-education system for protection.(snip)

(snip)"Brown also wants to eliminate "enterprise zones," through which the state provides employee tax credits to businesses. At a Brown budget forum last month, Legislative Analyst Mac Taylor questioned whether those zones do much to spur economic activity.

The Democratic governor does not plan to protect the six state worker bargaining units that did not reach agreements with Schwarzenegger; instead, his budget will rely on reductions similar to those other unions have approved.

He will propose Medi-Cal savings by requiring patients to provide co-payments for services, limiting doctor visits and reducing rates paid to health providers. In Healthy Families, which provides subsidized care for low-income children, he wants participants to pay more in premiums and co-payments while eliminating vision care.

"These would be shocking cuts if we hadn't seen them before, but we have seen them before," said Anthony Wright, executive director of Health Access California. "This is what's left to cut outside of the wholesale dismantling of core programs. These are bad cuts that will impact millions of Californians."

Brown plans to pursue other safety-net cuts that Schwarzenegger wanted.

He would reduce the number of hours In-Home Supportive Service workers could care for elderly and disabled residents. He would also cut domestic services like cleaning and laundry for those whose IHSS caregivers live in the same home as recipients, typically family members.

Brown would cut SSI/SSP grants for low-income elderly, blind and disabled to the federal minimum. He would also scale back CalWORKs, the state welfare-to-work program, by cutting grants, imposing stricter time limits and eliminating child care for 11- and 12-year-olds.

The 18-month deficit is pegged at greater than $25 billion in part because Schwarzenegger and lawmakers relied on rosy assumptions to solve the 2010-11 budget. The deficit figure also includes a larger imbalance between how much the state will receive next fiscal year in taxes and how much the state would spend under current law."(snip)

from


I would point out that this 'barrage of bad news' is the direct result of California actually receiving far fewer dollars in state tax revenues than previously projected ... which is at least partially the result of some number of highly taxed businesses and individuals leaving the state of California !

One of Brown's major mechanisms for bridging California's budget gap is to make 'permanent' the higher income tax rates, higher state sales tax rates, higher motor vehicle and other fee structures that were approved on a 'temporary' basis last year - as well as crushing a previously approved California corporate tax break and eliminating state 'enterprise zone' incentives to California businesses who locate in economically depressed areas.

A good portion of Brown's proposal calls for lots of high visibility but comparatively low dollar cutbacks on public services such as state parks, libraries etc. The 'tin foil hat' crowd will tell you that these sort of cutbacks are promoted to 'sell' the goal of increasing taxes even further in order to maintain these popular services.

Another portion of Brown's proposal ATTEMPTS to reduce gov't employee union wages and benefits. The 'tin foil hat' crowd would also tell you that there are lots of courts and judges standing in the way of any such attempts really being implemented ... short of cities and/or the state itself declaring bankruptcy.

And this basically only leaves a few other areas of cutbacks where REAL money can be saved, and where the unhappy current beneficiaries don't have a whole lot of legal or political leverage to lobby on their own behalf. This includes reductions in state college tuition subsidies, reductions in state social welfare benefit payout levels, reductions in Medi-Cal benefits etc.

The riots may now commence !!!

~

Eric Stoner
01-04-2011, 12:56 PM
I place the blame mainly on the de-regulation of the financial markets that had been going on for 20-30 years prior to the crisis occurring. It was Congress and the previous presidents that passed the de-regulation that allowed the crisis to happen, and it was the mortgage brokers, banks, and other financial institutions that abused the de-regulation, which resulted in the financial crisis. If we had all of the financial regulations in place that we had in the 1970's, the financial crisis most likely would have been avoided.

"Land values soared. States splurged... Then it all went bust bringing down banks and state governments with them." 2011 ? No , 1841. Eight states and the Territory of Florida defaulted on their state debt. Eventually all paid back every investor except one. Mississippi still owes some $100 million. From today's WSJ in a piece written by Dennis K. Berman.

Many states trotted up to Congress hat in hand seeking bailouts. All were told : "NO ! ". Two key differences between now and then : Taxes were low then and states had room to raise them. The spending then was primarily on things like transportation projects and establishing state banks. Today it is salaries, benefits and transfer payments like Medicaid.

Melonie
01-06-2011, 03:12 PM
and some people never seem to 'get the message' ...



(snip)"Jan. 6 (Bloomberg) -- California’s public schools are mired in a fiscal crisis, the state’s top education official said, warning that renewed cuts might push some districts further toward insolvency after three consecutive years of deficits.

Tom Torlakson, a Democrat who took office this week as superintendent of public instruction, said 174 school districts are in financial jeopardy and may require state oversight. He called on Governor Jerry Brown to resist making more cuts to elementary and high-school education.

Brown is scheduled to announce a budget next week that comes to grips with a $28 billion revenue gap in the most- populous U.S. state. Schools, which consume nearly half of the general-fund budget, were cut by $18 billion in the last three as the state grappled with back-to-back deficits that totaled $100 billion since the start of 2008.

“I am here to declare a state of fiscal emergency for California schools,” Torlakson told reporters today. “There’s simply no other way to describe it: this is an emergency.”

Teachers’ unions representatives and officials from the California School Board Association, who stood with Torlakson, said they’d support extension of $8 billion in temporary tax increases that lawmakers and former governor Arnold Schwarzenegger approved in 2009.

Brown, who took office Jan. 3, has said he won’t raise taxes without voter approval. He hasn’t said yet whether he will ask voters for more money to offset what he described as “painful” cuts.

Schwarzenegger agreed to temporarily boost all personal income-tax rates by 0.25 percentage point for two years. The state also increased the sales-tax rate to 8.25 percent from 7.25 percent, and lifted license fees to 1.15 percent from 0.65 percent of vehicle value.

Voters have already once refused to extend the increases before they expire July 1. The revenue would shave more than $8 billion off the deficit, according to figures from the independent Legislative Analyst’s Office."(snip)


As usual, the first option is 'raise taxes' !!!

Eric Stoner
01-07-2011, 07:28 AM
and some people never seem to 'get the message' ...

http://www.businessweek.com/news/2011-01-06/california-schools-in-fiscal-crisis-as-cuts-loom-official-says.html

(snip)"Jan. 6 (Bloomberg) -- California’s public schools are mired in a fiscal crisis, the state’s top education official said, warning that renewed cuts might push some districts further toward insolvency after three consecutive years of deficits.

Tom Torlakson, a Democrat who took office this week as superintendent of public instruction, said 174 school districts are in financial jeopardy and may require state oversight. He called on Governor Jerry Brown to resist making more cuts to elementary and high-school education.

Brown is scheduled to announce a budget next week that comes to grips with a $28 billion revenue gap in the most- populous U.S. state. Schools, which consume nearly half of the general-fund budget, were cut by $18 billion in the last three as the state grappled with back-to-back deficits that totaled $100 billion since the start of 2008.

“I am here to declare a state of fiscal emergency for California schools,” Torlakson told reporters today. “There’s simply no other way to describe it: this is an emergency.”

Teachers’ unions representatives and officials from the California School Board Association, who stood with Torlakson, said they’d support extension of $8 billion in temporary tax increases that lawmakers and former governor Arnold Schwarzenegger approved in 2009.

Brown, who took office Jan. 3, has said he won’t raise taxes without voter approval. He hasn’t said yet whether he will ask voters for more money to offset what he described as “painful” cuts.

Schwarzenegger agreed to temporarily boost all personal income-tax rates by 0.25 percentage point for two years. The state also increased the sales-tax rate to 8.25 percent from 7.25 percent, and lifted license fees to 1.15 percent from 0.65 percent of vehicle value.

Voters have already once refused to extend the increases before they expire July 1. The revenue would shave more than $8 billion off the deficit, according to figures from the independent Legislative Analyst’s Office."(snip)


As usual, the first option is 'raise taxes' !!!

That's fine. Let California drive itself over a cliff. At the very least it will be cautionary tale for the rest of the country demonstrating what fiscal profligacy and surrender to union demands can do.

Melonie
01-07-2011, 10:59 AM
^^^ yes but the real 'worry' is that a successful plea for a federal bailout of California will result in higher taxes being collected from federal taxpayers living in less profilgate spending, less union kowtowing states in order to perpetuate California's 'status quo'.

Eric Stoner
01-07-2011, 12:24 PM
^^^ yes but the real 'worry' is that a successful plea for a federal bailout of California will result in higher taxes being collected from federal taxpayers living in less profilgate spending, less union kowtowing states in order to perpetuate California's 'status quo'.

Ain't gonna happen. Not for at least the next two years while Republicans hold the House.

Melonie
01-07-2011, 01:34 PM
^^^ there's already talk of the FED buying up the muni bonds of California and other 'distressed' states ... which would effectively bail out these states at the expense of the US federal taxpayers ... and with no congressional vote required to implement the program !

Melonie
01-07-2011, 02:35 PM
and here's the result of the state of California dropping doctor / hospital 'reimbursement rates' for MediCal patients, as well as acknowledging the additional costs of new ObamaCare health insurance coverage mandates ...

from

(snip)"Another big California health insurer has stunned individual policyholders with huge rate increases — this time it's Blue Shield of California seeking cumulative hikes of as much as 59% for tens of thousands of customers March 1.

Blue Shield's action comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39% for about 700,000 California customers.

San Francisco-based Blue Shield said the increases were the result of fast-rising healthcare costs and other expenses resulting from new healthcare laws.

"We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members," the nonprofit insurer told customers last month.

In all, Blue Shield said, 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October.

Nearly 1 in 4 of the affected customers will see cumulative increases of more than 50% over five months.

While most policyholders received separate notices for the successive rate hikes, others were given the news all at once because they had contracts guaranteeing their rate for a year, Blue Shield spokesman Tom Epstein said.

Michael Fraser, a Blue Shield policyholder from San Diego, learned recently that his monthly bill would climb 59%, to $431 from $271.

"When I tell people, their jaws drop and their eyes bug out," said Fraser, 53, a freelance advertising writer. "The amount is stunning."

Like many people who hold individual policies, Fraser is self-employed. Others who carry such insurance include people who aren't covered by employer plans or who have been laid off.

The Blue Shield increases triggered complaints to new Insurance Commissioner Dave Jones, and they could prove to be an early test of how the former Democratic state assemblyman deals with rate hikes and the insurance industry.(snip)


The latter comment refers to the fact that California state insurance regulators forced Blue Shield to limit their health insurance rate increase last year to 20% ... which arguably was not sufficient to cover the additional 'cost shifting' taking place to make up for below-cost MediCal reimbursement rates to California doctors and hospitals, nor the federally mandated additional costs of covering dependents up to age 26 and covering ( very expensive ) dependents with pre-existing medical conditions.

If Massachusetts is any example, it's very likely that another year of capped 'below cost' health insurance rate increases will result in private insurance companies no longer writing new health insurance coverage in California. This in turn will result in a much larger number of Californians resorting to MediCal ... and quitting their mediocre jobs that will no longer offer employee health insurance coverage in order to become eligible ! And of course every additional MediCal recipient also increases California's state budget shortfall !!!

Eric Stoner
01-10-2011, 08:33 AM
^^^ there's already talk of the FED buying up the muni bonds of California and other 'distressed' states ... which would effectively bail out these states at the expense of the US federal taxpayers ... and with no congressional vote required to implement the program !

Bernanke's latest testimony before Congress clearly put the kibosh on the Fed intervening to bail out spenthrift states. Whew ! That is the giant sigh of relief from Wall St. and the financial markets.

Even Bernanke and Obama know that once the Fed goes down the road of buying up state and municipal debt, that there will be no end in sight. If the Fed does it for California, then it has to do likewise for Illinois and N.Y. Worse yet, the current incentives for those and other states to put their fiscal houses in order will dissipate. "If you want less of something, tax it. If you want more of something, subsidize it." The Fed would literally be subsidizing fiscal irresponsibility.

Eric Stoner
01-10-2011, 11:46 AM
From today's N.Y. Times: The same Illinois idiots who created the current mess are trying to ram through a 75% increase in the Illinois Income Tax. Critics point to the fact that the Dems who control both houses of the legislature and the Governor's mansion have NOT adopted budget cuts first.

High taxes helped put Illinois in its current mess. Along with excessive spending.

Eric Stoner
01-12-2011, 12:34 PM
The latest word is that Illinois has increased its Income Tax 66%. DUMB !

Melonie
01-12-2011, 03:13 PM
^^^ 100% tax increase, zero % spending cuts ... from

(snip)"Raising the income-tax rate to 5 percent would generate an extra $6 billion in revenue annually, Illinois Budget Director David Vaught estimated in a July interview. Illinois and other U.S. states will confront deficits totaling $140 billion in the next fiscal year, according to a Dec. 16 report from the Center on Budget and Policy Priorities, a Washington research group.

“There are some actions being taken,” Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., said today in a Bloomberg Television interview with Margaret Brennan. “Illinois -- hooray!”

Richard Ciccarone, managing director of McDonnell Investment Management LLC in Oak Brook, Illinois, said, “It’s going to take a long time for the state to rebuild the trust of the marketplace.”

His firm holds more than $7 billion of municipal bonds.

“Investors are concerned about the sustainability of the state’s finances to weather future downturns,” he said. “You can’t just keep raising taxes every time there’s a downturn.”(snip)

(snip)"The widening gap between Illinois’s expenses and revenue has drawn criticism from Moody’s Investors Service. The imbalance, and the state’s practice of delaying bill payments, underscores its “chronic unwillingness to confront a long-term, structural budget deficit,” Moody’s said in a Dec. 29 study.

Borrowing for Bills

The state continues to borrow to pay its bills. In November, the state sold $1.5 billion of bonds backed by tobacco-settlement payments to help pay vendors.

The state had $64 billion of pension assets to pay estimated liabilities of $126.4 billion as of June, about half the amount needed for almost 723,000 workers, retirees and other beneficiaries, according to bond documents.

Illinois and California are rated A1 by Moody’s, the fifth- highest investment grade and the lowest level for any state’s general-obligation debt"(snip)'


The point being made by bond guru Bill Gross and Moody's ratings service is that Illinois' failure to address their 'structural imbalance' via spending cuts reduces investor confidence in Illinois' future ability to actually pay back principal plus interest on it's muni bonds. This in turn will cause bond ratings to fall, bond interest rates to rise etc. Thus a good chunk of the increased Illinois state tax revenues from increased business and individual state income tax rates will in fact have to be diverted to pay for higher interest costs on future Illinois muni bond offerings - which in the absence of a federal bailout are absolutely essential to allow the state to raise sufficient cash to meet day to day state spending requirements ( i.e. retirement checks, state worker paychecks, medicaid payments, unemployment insurance payments etc. ).

Eric Stoner
01-13-2011, 08:13 AM
^^^ 100% tax increase, zero % spending cuts ... from http://www.businessweek.com/news/2011-01-12/illinois-lawmakers-pass-67-income-tax-increase.html

(snip)"Raising the income-tax rate to 5 percent would generate an extra $6 billion in revenue annually, Illinois Budget Director David Vaught estimated in a July interview. Illinois and other U.S. states will confront deficits totaling $140 billion in the next fiscal year, according to a Dec. 16 report from the Center on Budget and Policy Priorities, a Washington research group.

“There are some actions being taken,” Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., said today in a Bloomberg Television interview with Margaret Brennan. “Illinois -- hooray!”

Richard Ciccarone, managing director of McDonnell Investment Management LLC in Oak Brook, Illinois, said, “It’s going to take a long time for the state to rebuild the trust of the marketplace.”

His firm holds more than $7 billion of municipal bonds.

“Investors are concerned about the sustainability of the state’s finances to weather future downturns,” he said. “You can’t just keep raising taxes every time there’s a downturn.”(snip)

(snip)"The widening gap between Illinois’s expenses and revenue has drawn criticism from Moody’s Investors Service. The imbalance, and the state’s practice of delaying bill payments, underscores its “chronic unwillingness to confront a long-term, structural budget deficit,” Moody’s said in a Dec. 29 study.

Borrowing for Bills

The state continues to borrow to pay its bills. In November, the state sold $1.5 billion of bonds backed by tobacco-settlement payments to help pay vendors.

The state had $64 billion of pension assets to pay estimated liabilities of $126.4 billion as of June, about half the amount needed for almost 723,000 workers, retirees and other beneficiaries, according to bond documents.

Illinois and California are rated A1 by Moody’s, the fifth- highest investment grade and the lowest level for any state’s general-obligation debt"(snip)'


The point being made by bond guru Bill Gross and Moody's ratings service is that Illinois' failure to address their 'structural imbalance' via spending cuts reduces investor confidence in Illinois' future ability to actually pay back principal plus interest on it's muni bonds. This in turn will cause bond ratings to fall, bond interest rates to rise etc. Thus a good chunk of the increased Illinois state tax revenues from increased business and individual state income tax rates will in fact have to be diverted to pay for higher interest costs on future Illinois muni bond offerings - which in the absence of a federal bailout are absolutely essential to allow the state to raise sufficient cash to meet day to day state spending requirements ( i.e. retirement checks, state worker paychecks, medicaid payments, unemployment insurance payments etc. ).

I'm starting to think that there is a generational block that prevents politicians from learning from the past. What Illinois is doing is exactly how NYC got itself into trouble in the 60's and 70's culminating in an actual default in 1975.

While then Governor Hugh Carey said that bankruptcy was "unthinkable" , NYC effectively had to turn its finances over to MAC and the EFCB for about a decade; if memory serves. ALL of its spending and borrowing had to be approved by outside, unelected boards. A gun was put to the heads of the municipal unions and they were effectively forced to buy city bonds with their pension funds. At one point, NYC bonds were selling for 10 cents on the dollar.

"Crazy Eddie" Koch kept the city essentially solvent for 12 years. More than once he was proactive in cutting expenses BEFORE a crisis was actually felt ( as when he cut the budget immediately after the October, 1987 Crash ). However, he continually raised taxes resulting in an exodus of businesses and middle and upper income taxpayers to Westchester, Long Island and New Jersey. Dinkins was left holding the bag when revenues declined. It took Rudy to cut taxes and watch revenues increase. BUT Rudy and Pataki repeated past errors and both held fiscal luaus later in their terms to try and buy reelection. Pataki especially.

Eric Stoner
01-17-2011, 11:51 AM
Illinois' neighbors are already circling like sharks in the water. Wisconsin and especially Indiana promise to be much more business friendly and more welcoming to high earners than "The Land of Lincoln".

On a related note the SEC has opened an investigation into possible misrepresentation by states and citites as to the true state of their finances. Several states clearly failed to disclose the actual state of their pension funds while selling bonds. This has occurred in the past with the problem being that the state or city just promises to be good in the future and not to misrepresent again. What MIGHT be more effective are some lawsuits by major lenders. By failing to properly disclose the true state of their finances, those states and cities get higher bond ratings and thus can borrow at lower rates than they were entitled to. As I noted , there is legislation pending in Congress that would seriously put state tootsies to the fire on disclosure.

Melonie
01-25-2011, 07:54 AM
^^^ actually, that's not all that's 'circling around' Illinois' 'carcass' these days ...

from

(snip)" "The Securities and Exchange Commission has launched an inquiry into public statements by Illinois officials about the state's underfunded pension fund, the state's governor's office confirmed Monday night. The Illinois inquiry is focused on public statements concerning an overhaul measure passed in 2010 meant to help shore up the retirement system, said the governor's spokeswoman, Kelly Kraft." The issue at hand is nothing short of complete accounting fraud: "An issue being examined is whether Illinois was taking future savings and treating them as current reductions in the cost of the pension fund, said Robert Kurtter, a managing director in the public finance division at Moody's Investors Service, who said his firm spoke with Illinois officials about the inquiry. One of the measures that Illinois took to save costs was to raise the retirement age for newly hired Illinois workers." To be sure if proven, which the porn freaks at the SEC will never be able to do, unless the pension fund has animate midget porn gifs on every excel spreadheet, this only means that absolutely nobody will go to jail for massively misrepresenting the truth. What we are far more interested in is whether the Illinois Teachers Retriement System, which as readers will recall took offense to us saying they are insolvent last summer, will be the next to follow in being charged with gross fiduciary breach and alleged accounting fraud. Now that development would most certainly not surprise us.

More from the WSJ:

Illinois's pension system is only about 50% funded with liabilities of about $136 billion, according to Moody's. The underfunding, one of the worst among states in the nation, is partly the result of the state frequently skipping its recommended contributions to fund.

Illinois was informed by the SEC of the inquiry in September, Ms. Kraft said. Illinois has included mention of the SEC inquiry in documents being prepared for the sale expected in the next few weeks of a approximately $3.7 billion bond, said Ms. Kraft. The debt is expected to allow the state to make a required pension-fund contribution

The inquiry is the latest example of the SEC probing a state's financial disclosures related to pensions. In August, the federal agency accused New Jersey of failing to properly disclose the true health of its two largest pension funds. New Jersey authorities settled the SEC case without admitting or denying wrongdoing.

In October, the agency said that four former San Diego officials agreed to pay penalties for allegedly misleading investors in $262 million of the city's municipal bonds. The agency said the civil settlement marked the first time it had secured financial penalties against city officials in a muni-bond fraud case.

The SEC currently lacks the authority to require issuers to disclose financial information before selling debt in the muni-market. SEC Commissioner Elisse Walter has said the agency has anti-fraud authority and authority over the professionals that deal in the marketplace.

Oh, so muni investors could easily be buying debt backed by accounting promises, but there is no way to actually check the numbers... And yet each day brings with it more morons spouting gibberish that things in the muni market are really better than expected. Well of course, when all the financials are pulled out of some financial cloaca, how can it be otherwise."(snip)

Eric Stoner
01-25-2011, 09:24 AM
I told you so; I told you so. We covered the N.J. promise to the SEC to be good and not misrepresent in the future in another thread.

It is astounding that if a corporation behaved like many states in its disclosure or offering prospectus for a bond issue that they would end up going to jail !

If a private pension plan were run like Social Security it would be called what it is : A Ponzi Scheme ! Check it out. Social Security is just a transfer scheme. New workers pay in money which gets paid out in benefits. Any and all surplus is NOT invested as with private plans ; and even public employee pension plans. It gets loaned out to the Federal Government via T-Bills, notes and Bonds. Jimmy Hoffa , numerous other Teamster officials and a few mobsters were sent to prison for doing the same thing with the Central States Pension Fund.

As originally designed it worked fine. The average life expectancy was about 59 and the retirement age was 65. There were something like 14 or 15 workers paying in for every retiree. Now it's about 3 workers for every retiree and we're on our way to 2 workers for every retiree as the Baby Boomers retire.

In a private pension scheme, what you paid in vests. Usually 20 % a year and 100% after five years. If you leave the company you may withdraw your vested contributions. If you die before you retire, you may leave it to someone you designate as a beneficiary. You OWN it ! Not so with Social Security. If you die before you retire what you paid in is gone. The Social Security system just keeps it.

In El Paso, Galveston and several other Texas cities the employees were members of pension plans that were independent of Social Security. The average corpus for each after 20 years of service was far greater than what they would have paid in to Social Security. On average they each had over $400,000 saved up for retirement. They were forced to join the Social Security system.

Melonie
01-25-2011, 09:44 AM
^^^ while everything you point out is true, the retirement benefits situation in certain states is even worse than at the federal level. First point is that, while at the federal level SSI is working with a 3:1 ratio while state / local pensions are working with something like a 7:1 ratio ( however, certain states are now in the 5:1 range due to high unemployment and high levels of gov't workers vs private sector workers), the size of the monthly benefit checks paid to retired state / local gov't retirees is usually 80% of their pre-retirement pay rate ( as opposed to SSI typically amounting to less than 25% of pre-retirement pay rate ). Second point is that while SSI is working with retirement funding assets in the form of special US treasury bonds whose values are 'known' as well as being backed by the full faith and credit of future US federal taxpayers, the states are working with retirement funding assets whose value is 'questionable' that are backed by God knows what ( i.e. derivatives, state muni bonds, commercial paper ... as the article pointed out there is no true accounting for these assets ).

Eric Stoner
01-25-2011, 12:20 PM
^^^ while everything you point out is true, the retirement benefits situation in certain states is even worse than at the federal level. First point is that, while at the federal level SSI is working with a 3:1 ratio while state / local pensions are working with something like a 7:1 ratio ( however, certain states are now in the 5:1 range due to high unemployment and high levels of gov't workers vs private sector workers), the size of the monthly benefit checks paid to retired state / local gov't retirees is usually 80% of their pre-retirement pay rate ( as opposed to SSI typically amounting to less than 25% of pre-retirement pay rate ). Second point is that while SSI is working with retirement funding assets in the form of special US treasury bonds whose values are 'known' as well as being backed by the full faith and credit of future US federal taxpayers, the states are working with retirement funding assets whose value is 'questionable' that are backed by God knows what ( i.e. derivatives, state muni bonds, commercial paper ... as the article pointed out there is no true accounting for these assets ).

Oh it's actually worse than that. The "80%" of many a retirement check for a retired state or municipal worker was usually juiced by excessive overtime during their last two oir three working years. Often their original salary is at least doubled. Then there is the stacking of pensions that I outlined earlier in this thread.

As for what State and Municipal pension funds invested in , for the most part it was blue chip stocks and bonds. Most funds are NOT permitted to invest in other instruments. The problem is that many funds were permitted to use rosy, even Pollyanna like assumptions as to future performance. In particular, many funds have not even taken proper note of the decline in value of their holdings thanks to the recent financial crisis and Post-Lehman market meltdown. Similarly they have been permitted to assume that the stock market will perform as it did Pre-Lehman.

As I also posted earlier in this thread, there is legislation pending in Congress effectively requiring these funds to be held to the same standards as any ERISA covered private pension plan. By THOSE standards, many a state trustee would be going to jail.

Eric Stoner
02-10-2011, 12:04 PM
Another shoe drops : Yesterday S & P lowered N.J.'s general obligation bond rating from AA to AA-. Only California and Illinois have lower ratings. Jeffrey Panger, a S & P analyst cited N.J.'s underfunded pension and employee benefit funds. N.J. admitted last year that it is $54 billion short on its pension fund and that its retiree health care fund is in even worse shape.

On a related note, as the police and fire unions caterwaul about the proposed elimination of their yearly retirement bonuses, N.Y.C.'s pension costs will jump from $7 billion this year to $8.5 billion next year. And the City already has a budget gap of over $2 billion this year that Bloomberg is struggling to close.

Melonie
02-11-2011, 04:17 AM
^^^ not to worry ! There is talk in Washington of yet another federal 'bailout' attempt for bankrupt states ... using zero interest federal loans to state unemployment and pension funds, with state repayment requirements deferred 'forever' ( stated 2 years but dependent on state solvency, which may never actually happen ) .

Eric Stoner
02-11-2011, 12:00 PM
^^^ not to worry ! There is talk in Washington of yet another federal 'bailout' attempt for bankrupt states ... using zero interest federal loans to state unemployment and pension funds, with state repayment requirements deferred 'forever' ( stated 2 years but dependent on state solvency, which may never actually happen ) .

I know. I noted that in another thread.

Eric Stoner
02-18-2011, 12:05 PM
Illinois seems to be deliberately trying to become the "Land of Oz". From today's N.Y. Times, Illinois has had to push back it's proposed sale of $3.7 billion in bonds. Bonds being sold to raise the money the state needs to make this year's payment to the State Pension Fund.

1. This is EXACTLY like what American borrowers did before the Financial Crisis i.e. borrow against their houses to buy cars and vacations.

2. On Monday, Illinois pushed back the sale scheduled for Thursday to next week. Regulators including the SEC are poring over the prospecti Illinois has issued and NOT liking what they are reading. Neither are the folks in the bond markets. And what Illinois HAS revealed about the true condition of state finances makes any prospective buyer of its bonds VERY nervous.

3. Aside from a large tax increase, Illinois has done virtually nothing to control spending and more importantly, to control pension costs.

Eric Stoner
02-19-2011, 12:54 PM
And of course we have the current drama in Wisconsin that Obama insisted on inserting himself into. He can't balance HIS budget but felt it necessary to opine on what Governor Walker has to do to balance his. Priceless.

Melonie
02-19-2011, 01:58 PM
^^^ which now appears to be spreading to Ohio, Michigan and Minnesota !

Politics completely aside, the economic issue is that Madison Wisconsin teacher's average salaries are on the order of $51k per 9 months ( = $68k annualized ) , plus another $22k worth of employee health care benefits and yet another $20k or so in pension contribution costs for a total cost per teacher to taxpayers on the order of $93k per year. The controversy / protests are NOT about the salary level, it is about asking the teachers to contribute 12.6% = $2.5k a year or so toward their own health care costs plus asking teachers to contribute 5.8% of their salaries = $2.5k a year or so towards their own pensions ( which BTW allow for retirement at age 57 at 48% of former salary PLUS social security retirement benefits at age 62 ! ).

Obviously one argument is that contracts are 'sacrosanct' and thus cannot be voided when the contract payer enters de-facto bankruptcy. Of course, many other 'sacrosanct' contracts such as Chrysler and GM bondholders were 'thrown to the wolves'. Another argument is that teachers do not have the legal right to 'strike' ( even though they can all call in sick for days on end while still receiving full pay ! ). Ultimately, the real world economic argument comes down to the fact that tax rates on private sector businesses and workers can only sustain a certain level of tax burden ... and that an economic tipping point has now been reached where the number of teachers ( and other gov't employees ) times the cost to taxpayers per teacher ( and other gov't employees ) is simply no longer sustainable compared to the number of private sector business and worker tax revenues that are realistically collectable.

Heritage pretty well nails the real issues at

eagle2
02-20-2011, 12:52 AM
And of course we have the current drama in Wisconsin that Obama insisted on inserting himself into. He can't balance HIS budget but felt it necessary to opine on what Governor Walker has to do to balance his. Priceless.

Governor Walker didn't have to do anything to balance the budget. It was already balanced when he took office. After taking office he added another $140 million in spending for special interest groups, so he would have an excuse to break the union.

http://host.madison.com/ct/news/opinion/editorial/article_61064e9a-27b0-5f28-b6d1-a57c8b2aaaf6.html

I think you're forgetting that President Obama can't balance his budget because he inherited the worst financial crisis in 80 years, not to mention the government needs to pay hundreds of billions of dollars in interest on the debt run up by Reagan and the two Bushes.

eagle2
02-20-2011, 12:55 AM
The controversy / protests are NOT about the salary level, it is about asking the teachers to contribute 12.6% = $2.5k a year or so toward their own health care costs plus asking teachers to contribute 5.8% of their salaries = $2.5k a year or so towards their own pensions ( which BTW allow for retirement at age 57 at 48% of former salary PLUS social security retirement benefits at age 62 ! ).



The protests aren't about that either. They're about the governor trying to take away state workers right to collective bargaining. Here's one teacher's comment:

http://www.reuters.com/article/2011/02/19/us-wisconsin-protests-teaparty-idUSTRE71I3J820110219

Margaret Derr, high school math teacher and union member, said she didn't dislike the governor personally.

"I'm just opposed to the bill. I have no problem contributing more to my healthcare and pension. I understand about the deficit, but some of the proposals are just about union busting."

Melonie
02-20-2011, 03:18 AM
^^^ well the supposed 'right' of gov't workers to collectively bargain - and especially so in regard to benefits - is a political question. It is also a problematic one, since no such right exists under constitutional or legislated federal law ( other than an executive order issued by JFK ). Even FDR understood that a basic conflict of interest exists in this regard ...

(snip)" FDR on collective bargaining for gov't unions

"The process of collective bargaining, as usually understood, cannot be transplanted into the public service," Roosevelt wrote in 1937 to the National Federation of Federal Employees. Yes, public workers may demand fair treatment, wrote Roosevelt. But, he wrote, "I want to emphasize my conviction that militant tactics have no place" in the public sector. "A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government."(snip)

from

I would also add that, from a purely economic standpoint, it is IMPOSSIBLE for gov't workers to actually conduct collective bargaining with their 'employer' ... since the taxpayers paying their salaries are not party to negotiations !!! As such, the sham of collective bargaining 'rights' of public sector employees really involves a 'sweetheart circle' of politicians, gov't bureaucrats, union bureaucrats, and gov't employees ... all of which benefit from pay raises ... and none of which actually represents the actual 'employer' i.e. taxpayers ! This is a far different situation from a legal standpoint than collective bargaining rights of private sector workers, who actually negotiate with the corporate management people who are paying their salaries from corporation profits !

Eric Stoner
02-21-2011, 09:28 AM
Governor Walker didn't have to do anything to balance the budget. It was already balanced when he took office. After taking office he added another $140 million in spending for special interest groups, so he would have an excuse to break the union.

http://host.madison.com/ct/news/opinion/editorial/article_61064e9a-27b0-5f28-b6d1-a57c8b2aaaf6.html

I think you're forgetting that President Obama can't balance his budget because he inherited the worst financial crisis in 80 years, not to mention the government needs to pay hundreds of billions of dollars in interest on the debt run up by Reagan and the two Bushes.

Like FDR, Obama inherited a problem not of his making. Like FDR, Obama made it worse with clueless and ineffective policy as Mel and I have documented over and over again.

How do you call Wisconsin's budget "balanced" when they have a $ 3.6 billion deficit ?

As for breaking the union, I say: GREAT ! I think those teachers who called in sick should be FIRED like Reagan did with PATCO. The public employee unions have no right to exist afaic, let alone collectively bargain. As Mel points out, FDR was totally against them. As was LaGuardia and many other libs of the time.

All that being said, Walker just wants to restrict the ability of public employee unions to collectively bargain over BENEFITS. Wages are still on the table.

Where is the counterweight to public employee unions ? Who represents the TAXPAYERS ?

eagle2
02-21-2011, 11:10 PM
Like FDR, Obama inherited a problem not of his making. Like FDR, Obama made it worse with clueless and ineffective policy as Mel and I have documented over and over again.

No you haven't. What is your proof? How do you know the unemployment rate wouldn't be 15-20% without the stimulus or bailouts? Do you really think our economy would be better off if the GM, Ford, and Chrysler went out of business?



How do you call Wisconsin's budget "balanced" when they have a $ 3.6 billion deficit ?

According to the article I linked to, the current state budget is balanced. The deficit might be projections for the future budget.



As for breaking the union, I say: GREAT ! I think those teachers who called in sick should be FIRED like Reagan did with PATCO. The public employee unions have no right to exist afaic, let alone collectively bargain. As Mel points out, FDR was totally against them. As was LaGuardia and many other libs of the time.


and how is Wisconsin going to replace thousands of teachers overnight?

Who are you to decide whether or not public employee unions have the right to exist?



All that being said, Walker just wants to restrict the ability of public emnployee unions to collectively bargain over BENEFITS. Wages are still on the table.


No, he wants to limit the ability of public employee unions to collectively bargain over wages. The unions have already accepted cuts in benefits.



Where is the counterweight to public employee unions ? Who represents the TAXPAYERS ?

elected government officials.

Melonie
02-22-2011, 04:23 AM
Who are you to decide whether or not public employee unions have the right to exist?

not wanting to get off track, but the ability of Wisconsin public employees to collectively bargain was established via the passage of a 1959 Wisconsin state law. That law could easily be repealed by a vote of the current Wisconsin state legislature. Public employees of state and local gov'ts have no federal 'right' to collective bargaining.

Eric Stoner
02-22-2011, 07:50 AM
No you haven't. What is your proof? How do you know the unemployment rate wouldn't be 15-20% without the stimulus or bailouts? Do you really think our economy would be better off if the GM, Ford, and Chrysler went out of business?


According to the article I linked to, the current state budget is balanced. The deficit might be projections for the future budget.



and how is Wisconsin going to replace thousands of teachers overnight?

Who are you to decide whether or not public employee unions have the right to exist?



No, he wants to limit the ability of public employee unions to collectively bargain over wages. The unions have already accepted cuts in benefits.



elected government officials.

Obama's "porkulus" package did nothing more than postpone the day of reckoning for many states and cities. Most of it did NOT go for infrastructure projects which both have inherent merit and have a discernable multiplier effect on the rest of the economy.

Worse yet, the bailouts of the banks and AIG have helped Wall Street but done nothing to help Main Street. No surprise when you look at WHO contributed millions to Obama and other Dems. Goldman Sucks, J.P. Morgan and Morgan Stanley are all doing fine and dandy while most small businesses have had to cut back and lay off workers.

FDR achieved similar results with his idiotic tax increases.

Next year's deficit ( which is really later THIS year based on the fiscal year ) for Wisconsin is $3.6 billion.

Who would miss some of them ? Milwaukee's high school graduation rate is barely 40 % !
Fire the ringleaders and double up on class sizes temporarily if need be. It's really academic because Walker and the Republicans have already said they will NOT be fired. I'd also go after the doctors who were deliberately writing phony excuse notes for the teachers who called in sick.

There is NO Constitutional right to form or union or collectively bargain. That "right" is provided for by Federal and state legislation. Federal workers do not collectively bargain at all. Their numbers have increased along with their pay and benefits without such an "essential right". Irresponsible PUBLIC workers in Wisconsin and elsewhere should lose their collective bargaining rights.

Please re-check your facts. EVERY outlet has reported that Walker has left the right to collectively bargain for WAGES alone.

Eric Stoner
02-22-2011, 11:08 AM
I hope the unions and their "runaway" legislative supporters are happy. Lay-off notices are being prepared for THOUSANDS of state workers as I type. Under Walker's plan no lay-offs would have been necessary.

It wouldn't hurt to go over a few but essential differences between private and public unions.
Private sector unions go against the interests of management and shareholders. They know ( or at least are SUPPOSED to know ) that their employers could go out of business so they have an incentive not to kill the golden goose. Unless, of course, there is President dumb enough to keep their employer from going into bankruptcy.

Public sector unions have NONE of these moderating influences. They work for state monopolies. Personnel decisions are not made on merit but on seniority. Their interests are often directly contrary to those of the taxpayers.

Here is the key difference between private and public sector unions : Private unions have NO say over who management is. Public unions endorse, work for and contribute to the very people who sit opposite them at the bargaining table. Private sector management answers to the shareholders, not the workers.

eagle2
02-23-2011, 12:17 AM
Obama's "porkulus" package did nothing more than postpone the day of reckoning for many states and cities. Most of it did NOT go for infrastructure projects which both have inherent merit and have a discernable multiplier effect on the rest of the economy.


Most economist agree that the stimulus created millions of jobs and was successful.

From:
http://www.usatoday.com/money/economy/2010-08-30-stimulus30_CV_N.htm

--snip--
The White House says the multiyear $814 billion stimulus program passed by Congress in 2009 boosted employment by 2.5 million to 3.6 million jobs and raised the nation's annual economic output by almost $400 billion. A recent study by two prominent economists generally agrees, crediting the pump-priming with averting "what could have been called Great Depression 2.0."
--snip

and

--snip--
Eighteen months later, the consensus among economists is that the stimulus worked in staving off a rerun of the 1930s. But the spending's impact was dwarfed by other crisis-fighting tools deployed by the Bush and Obama administrations, including costly efforts to stabilize crippled banks and the Fed's unconventional monetary policy.
--snip--




Worse yet, the bailouts of the banks and AIG have helped Wall Street but done nothing to help Main Street. No surprise when you look at WHO contributed millions to Obama and other Dems. Goldman Sucks, J.P. Morgan and Morgan Stanley are all doing fine and dandy while most small businesses have had to cut back and lay off workers.


By making credit available businesses were able to continue operating. Without the credit, countless businesses would have closed.



FDR achieved similar results with his idiotic tax increases.


Just because it goes against your ideology doesn't mean it's idiotic. FDR's problem was cutting spending before the economy recovered. When he did greatly increase spending to build up our military, our economy did recover, and it was able to recover without cutting taxes. Taxes were actually increased to pay for our military buildup and we still had full employment.

Also, can you please answer my question from the other thread regarding falling oil prices during the 1980's?

Which was a bigger factor in causing oil prices to fall in the 1980's?

Reducing oil consumption by 6 million barrels a day, or increasing production by 1/2 million barrels a day?



Next year's deficit ( which is really later THIS year based on the fiscal year ) for Wisconsin is $3.6 billion.

Who would miss some of them ? Milwaukee's high school graduation rate is barely 40 % !
Fire the ringleaders and double up on class sizes temporarily if need be. It's really academic because Walker and the Republicans have already said they will NOT be fired. I'd also go after the doctors who were deliberately writing phony excuse notes for the teachers who called in sick.

There is NO Constitutional right to form or union or collectively bargain. That "right" is provided for by Federal and state legislation. Federal workers do not collectively bargain at all. Their numbers have increased along with their pay and benefits without such an "essential right". Irresponsible PUBLIC workers in Wisconsin and elsewhere should lose their collective bargaining rights.

Please re-check your facts. EVERY outlet has reported that Walker has left the right to collectively bargain for WAGES alone.

No, employees will no longer have the right to collectively bargain for wage increases that exceed the CPI.

From:

http://badgerherald.com/news/2011/02/13/walkers_budget_propo.php

Although employees who are unionized would still be able to bargain for base wages, Mikalsen said employee benefits would no longer be negotiable and wage increases would have a cap determined by the consumer price index.

Melonie
02-23-2011, 03:49 AM
Most economist agree that the stimulus created millions of jobs and was successful.

then why does the 'inconvenient truth' exist that the percentage of working age Americans who are currently employed is lower now than it has been in decades ?


http://market-ticker.org/akcs-www?get_gallerynr=1098


The assertion that you and certain economists are attempting to make is that stimulus spending 'saved' millions of jobs that would have otherwise been lost in an even deeper recession. This is obviously unprovable ... not to mention the past subject of documented errors in official gov't stimulus job counting ! The undeniable fact is that much of the 'stimulus spending' was funneled to states and used for paying ongoing 'bloated' salaries and benefits to gov't employees. As such, that stimulus money essentially created two years worth of temporary employment for Wisconsin teachers ... kicking the can down the road to the point we're now at.



No, employees will no longer have the right to collectively bargain for wage increases that exceed the CPI.

again this attempted assertion that gov't employees actually have a legal right to collectively bargain ... they do not !!! Whatever bargaining that has taken place in this regard stems from Wisconsin state legislation passed in 1959. What 1959 democracy giveth, 2011 democracy can taketh away !

~

Eric Stoner
02-23-2011, 07:36 AM
Most economist agree that the stimulus created millions of jobs and was successful.

From:
http://www.usatoday.com/money/economy/2010-08-30-stimulus30_CV_N.htm

--snip--
The White House says the multiyear $814 billion stimulus program passed by Congress in 2009 boosted employment by 2.5 million to 3.6 million jobs and raised the nation's annual economic output by almost $400 billion. A recent study by two prominent economists generally agrees, crediting the pump-priming with averting "what could have been called Great Depression 2.0."
--snip

and

--snip--
Eighteen months later, the consensus among economists is that the stimulus worked in staving off a rerun of the 1930s. But the spending's impact was dwarfed by other crisis-fighting tools deployed by the Bush and Obama administrations, including costly efforts to stabilize crippled banks and the Fed's unconventional monetary policy.
--snip--




By making credit available businesses were able to continue operating. Without the credit, countless businesses would have closed.



Just because it goes against your ideology doesn't mean it's idiotic. FDR's problem was cutting spending before the economy recovered. When he did greatly increase spending to build up our military, our economy did recover, and it was able to recover without cutting taxes. Taxes were actually increased to pay for our military buildup and we still had full employment.

Also, can you please answer my question from the other thread regarding falling oil prices during the 1980's?

Which was a bigger factor in causing oil prices to fall in the 1980's?

Reducing oil consumption by 6 million barrels a day, or increasing production by 1/2 million barrels a day?



No, employees will no longer have the right to collectively bargain for wage increases that exceed the CPI.

From:

http://badgerherald.com/news/2011/02/13/walkers_budget_propo.php

Although employees who are unionized would still be able to bargain for base wages, Mikalsen said employee benefits would no longer be negotiable and wage increases would have a cap determined by the consumer price index.

You insist on shrouding yourself with economic myths that are directly contrary to the actual facts.

Mel and I have repeatedly documented how the "porkulus" package did not create a single NET private sector job. If, repeat IF, it had gone for infrastructure instead of maintaining public payrolls, it might have had a beneficial effect. The money that it cost did NOT come out of thin air. It was BORROWED. The lenders of that money could have and would have lent it to the private sector or invested it in the private sector if Uncle Sam had not borrowed it.

"The White House says..."- rotflmao. Well that's certainly citing an unimpeachable source for accurate, apolitical data. That was the same porkulus package that according to the White House was to keep unemployment below 8%.

I agree with you that Obama and the Fed have been, to quote Chico Escuela, "berry, berry good " to Wall Street banks. Who in turn are NOT lending out the Fed's largesse. What they are doing is borrowing from the Fed. at next to zero and lending it back to Uncle Sam at 3.5 to 4.5 %. Nice work if you can get it.

I see you have adopted the Paul Krugman "just look at half the picture" method of economic history. Yes, FDR cut spending in 1937. He also raised taxes on top of Hoover's idiotic tax increases. Would you please explain how sucking money out of the private sector helps create jobs ?

FDR's tax increases were in place well before he started rearmament. The primary funding source to pay for W.W. II was BORROWING. Still haven't heard of WAR BONDS ? FDR also slapped wage and price controls on the economy in addition to raising taxes even more. While we lowered unemployment to effectively zero we also had shortages, rampant corruption and a black market not to mention pitiful economic growth that was not related to defense spending.

As I've repeatedly told you : Oil prices fell in the 80's as a result of OPEC members cheating on production quotas, deregulation, increased domestic production, more fuel efficient cars and homes leading to decreased demand. Add in a relatively strong dollar and you get LOWER oil prices .

Are you saying Wisconsin state workers should get raises greater than the increase in the CPI ?

eagle2
02-23-2011, 09:16 PM
The assertion that you and certain economists are attempting to make is that stimulus spending 'saved' millions of jobs that would have otherwise been lost in an even deeper recession. This is obviously unprovable ... not to mention the past subject of documented errors in official gov't stimulus job counting ! The undeniable fact is that much of the 'stimulus spending' was funneled to states and used for paying ongoing 'bloated' salaries and benefits to gov't employees. As such, that stimulus money essentially created two years worth of temporary employment for Wisconsin teachers ... kicking the can down the road to the point we're now at.


That is the conclusion of economists who have actually studied economics and work in the field of economics. The CEA report includes the estimates of independent analysts.

http://www.whitehouse.gov/files/documents/cea_4th_arra_report.pdf#page=23

IHS/Global Insight estimates job impact of 2.1 million

Moody's Economy.com estimates job impact of 2.2 million

Macroeconomic Advisers estimates job impact of 1.8 million




again this attempted assertion that gov't employees actually have a legal right to collectively bargain ... they do not !!! Whatever bargaining that has taken place in this regard stems from Wisconsin state legislation passed in 1959. What 1959 democracy giveth, 2011 democracy can taketh away !

~

Non-federal government employees do have a legal right to collectively bargain in states that allow it. Wisconsin does allow it and the governor is trying to take this right away.

eagle2
02-23-2011, 10:04 PM
You insist on shrouding yourself with economic myths that are directly contrary to the actual facts.

Mel and I have repeatedly documented how the "porkulus" package did not create a single NET rpivate sector job. If, repeat IF, it had gone for infrastructure instead of maintaining public payrolls, it might have had a beneficial effect. The money that it cost did NOT come out of thin air. It was BORROWED. The lenders of that money could have and would have lent it to the private sector or invested it in the private sector if Uncle Sam had not borrowed it.


No, it did not drive up interest rates. Interest rates remained extremely low. If it was taking credit away from the private sector interest rates would have gone up. That's how supply and demand works.




"The White House says..."- rotflmao. Well that's certainly citing an unimpeachable source for accurate, apolitical data. That was the same porkulus package that according to the White House was to keep unemployment below 8%.


The article quotes from independent analysts, who I'm sure are far less biased than your right wing sources where you get your information and nick-names such as "porkulus".




I agree with you that Obama and the Fed have been, to quote Chico Escuela, "berry, berry good " to Wall Street banks. Who in turn are NOT lending out the Fed's largesse. What they are doing is borrowing from the Fed. at next to zero and lending it back to Uncle Sam at 3.5 to 4.5 %. Nice work if you can get it.

Corporations depend on borrowing money to run their day to day operations. If corporations weren't able to borrow money, many of them would go out of business. If the fed did not bail out the banks, we could have had a major economic collapse. The government is actually making a profit on some of the transactions from TARP.



I see you have adopted the Paul Krugman "just look at half the picture" method of economic history. Yes, FDR cut spending in 1937. He also raised taxes on top of Hoover's idiotic tax increases. Would you please explain how sucking money out of the private sector helps create jobs ?

When the government spends the money on roads, buildings, dams, or munitions, jobs are created for those people working on those projects.

Tax were increased multiple times from 1940 - 1944, with the top tax rates eventually reaching 94%. How do you explain the rapid economic growth we were experience while at the same time taxes were being raised?



FDR's tax increases were in place well before he started rearmament. The primary funding source to pay for W.W. II was BORROWING. Still haven't heard of WAR BONDS ? FDR also slapped wage and price controls on the economy in addition to raising taxes even more. While we lowered unemployment to effectively zero we also had shortages, rampant corruption and a black market not to mention pitiful economic growth that was not related to defense spending.


The primary sources for funding the war were borrowing and taxes. Federal tax receipts were close to 25% of gdp. We had shortages because the military effort took precedence over anything else. We probably more than tripled Nazi Germany's output.



As I've repeatedly told you : Oil prices fell in the 80's as a result of OPEC members cheating on production quotas, deregulation, increased domestic production, more fuel efficient cars and homes leading to decreased demand. Add in a relatively strong dollar and you get LOWER oil prices .

I don't recall you saying anything about more fuel efficient cars and homes. You specifically stated, "The BIGGEST reason oil prices fell in the 1980's was Reagan's deregulating the oil industry." Do you think this was a bigger factor than decreasing our consumption by 6 million barrels a day?



Are you saying Wisconsin state workers should get raises greater than the increase in the CPI ?

If the economy is growing a 4-5% and inflation is at 1-2%, then yes, I think it is legitimate to give public employees increases greater than the CPI, just like I think it is legitimate for them to make sacrifices when the economy is bad and state revenue is down.

Melonie
02-24-2011, 02:40 AM
When the government spends the money on roads, buildings, dams, or munitions, jobs are created for those people working on those projects.

That would be arguably true if stimulus money had actually been spent on roads, bridges etc. ... but that's not where the lion's share of 'stimulus' money actually got spent ! Circling back on topic, per the Milwaukee Journal-Sentinel, $701 million in 'stimulus' funding was received by the state of Wisconsin. Of that amount, $632 million was spent on wages, health care benefits, and pension benefits for Wisconsin gov't employees !!! See . As I alluded to earlier, the truth of the situation is that the 'stimulus' spending primarily funded continuing paychecks and benefits for state and local gov't workers, while funding comparatively few new roads, bridges, or other public works projects that might have actually created additional jobs !



Interest rates remained extremely low. If it was taking credit away from the private sector interest rates would have gone up. That's how supply and demand works.

In point of fact, interest rates available for financing of ( job creating ) small businesses are now in the 9% ballpark. Interest rates only stayed comparatively low for major corporations.]



Non-federal government employees do have a legal right to collectively bargain in states that allow it.

no US state can bestow a legal 'right' !!! What state legislatures can do is grant 'permission' via legislation, but that permission can also be withdrawn !!!

Eric Stoner
02-24-2011, 08:36 AM
No, it did not drive up interest rates. Interest rates remained extremely low. If it was taking credit away from the private sector interest rates would have gone up. That's how supply and demand works.




The article quotes from independent analysts, who I'm sure are far less biased than your right wing sources where you get your information and nick-names such as "porkulus".



Corporations depend on borrowing money to run their day to day operations. If corporations weren't able to borrow money, many of them would go out of business. If the fed did not bail out the banks, we could have had a major economic collapse. The government is actually making a profit on some of the transactions from TARP.


When the government spends the money on roads, buildings, dams, or munitions, jobs are created for those people working on those projects.

Tax were increased multiple times from 1940 - 1944, with the top tax rates eventually reaching 94%. How do you explain the rapid economic growth we were experience while at the same time taxes were being raised?



The primary sources for funding the war were borrowing and taxes. Federal tax receipts were close to 25% of gdp. We had shortages because the military effort took precedence over anything else. We probably more than tripled Nazi Germany's output.


I don't recall you saying anything about more fuel efficient cars and homes. You specifically stated, "The BIGGEST reason oil prices fell in the 1980's was Reagan's deregulating the oil industry." Do you think this was a bigger factor than decreasing our consumption by 6 million barrels a day?



If the economy is growing a 4-5% and inflation is at 1-2%, then yes, I think it is legitimate to give public employees increases greater than the CPI, just like I think it is legitimate for them to make sacrifices when the economy is bad and state revenue is down.

Sigh. Major corporations do NOT generally borrow from banks except short term with lines of credit and the like. They do their own long term borrowing using BONDS. Corporate bonds. I assume you are familiar with the concept ? Have you looked at short term ( 30 day, 60 day, 90 day , 6 month ) rates lately ? SMALL business i.e. small corporations, mom & pop operations are having great difficulty borrowing. Banks are only lending to the creme de la creme of commercial risks. And as Melonie points out, at premium rates.

The biggest problem with the bank bailouts is the "moral hazard" created. Wouldn't you like to speculate on bonds, commodities, stocks etc. if you knew that Uncle Sam would bail you out if they went sour ? That's how it's been for the major banks starting in 1998 with the LTCM bailout up to TARP for the major commercial banks. Most banks in fact, small and mid-sized and arguably J.P. Morgan and Wells Fargo were in good enough shape with sufficient capital to weather a severe downturn without Federal aid.

Are you seriously saying that a 94% tax rate is pro growth ? Not even Krugman goes that far. What was happening in the years you cite ? WORLD WAR TWO ! People had jobs. They made money BUT there was nothing to spend it on. Food was rationed as was gasoline and anything made out of leather. Nobody started any businesses that were not war related. There was NO non-defense related economic growth. The war, defense spending, the government sucked up all available revenue.

In some areas, production skyrocketed : Uniforms, tanks, guns, planes, ships etc. Price controls dampened production in other areas as there was no incentive to produce more.

Decreased energy demand lasted into the early 80's after which a recovered economy and stable oil prices renewed American lust for larger cars and SUV's became popular. Decreased demand from BOTH a recession and increased energy efficiency certainly were A factor but not the only factor.

eagle2
02-25-2011, 12:25 AM
Sigh. Major corporations do NOT generally borrow from banks except short term with lines of crediot and the like. They do their own long term borrowing using BONDS. Corporate bonds. I assume you are familiar with the concept ? Have you looked at short term ( 30 day, 60 day, 90 day , 6 month ) rates lately ? SMALL business i.e. small corporations, mom & pop operations are having great difficulty borrowing. Banks are only lending to the creme de la creme of commercial risks. And as Melonie points out, at premium rates.

Sigh. Most corporations, for their day to day operations, depend on commercial paper. The commercial paper market lost over $150 billion in funds in the weeks before Oct. 1 2008.

From:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3152487/Financial-crisis-US-takes-radical-action-to-revive-commercial-paper-market.html

--snip--
Officials have been under pressure to act fast. The US commercial paper market lost a record $94.9bn in funds in the weeks to October 1, according to figures from the Fed. That followed a previous high of $61bn recorded a week earlier.

The majority off outflows have so far been linked to funding for financial institutions – which can access the Fed direct as an alternative to raise funds - but experts fear that inaction on the part of the government could lead to companies in other sectors feeling the squeeze.

Without access to central bank funds those companies could rapidly collapse as they are starved of liquidity.
--snip--



The biggest problem with the bank bailouts is the "moral hazard" created. Wouldn't you like to speculate on bonds, commodities, stocks etc. if you knew that Uncle Sam would bail you out if they went sour ? That's how it's been for the major banks starting in 1998 with the LTCM bailout up to TARP for the major commercial banks. Most banks in fact, small and mid-sized and arguably J.P. Morgan and Wells Fargo were in good enough shape with sufficient capital to weather a sever downturn without Federal aid.

Again, there wasn't enough credit available. See the article I linked to above.



Are you seriously saying that a 94% tax rate is pro growth ? Not even Krugman goes that far. What was happening in the years you cite ? WORLD WAR TWO ! People had jobs. They made money BUT there was nothing to spend it on. Food was rationed as was gasoline and anything made out of leather. Nobody started any businesses that were not war related. There was NO non-defense related economic growth. The war, defense spending, the government sucked up all available revenue.

We're not discussing whether or not a 94% tax rate is pro growth. We're discussing what actually happened. You claimed raising taxes made the Depression worse. If that was the case, the economy would have gotten even worse when the tax rate was increased to 94%. It didn't. The economy greatly improved as a result of the dramatic increase in government spending.

This is the problem with conservatives. They seem to think that the state of the economy is based solely on how closely their ideology is followed. They think as long as their ideology of low taxes, low government spending, and a strong currency, is followed, the economy will be strong, and unemployment will remain low. When their ideology is not followed, they believe it will weaken the economy. The real world doesn't work that way. There is no one right answer that works for everything.



In some areas, production skyrocketed : Uniforms, tanks, guns, planes, ships etc. Price controls dampened production in other areas as there was no incentive to produce more.

That is what was in demand because we were at war. If we were at peace and the government spent the same amount of money to subsidize the production of consumer products, such as cars and refrigerators, the results would have been the same.



Decreased energy demand lasted into the early 80's after which a recovered economy and stable oil prices renewed American lust for larger cars and SUV's became popular. Decreased demand from BOTH a recession and increased energy efficiency certainly were A factor but not the only factor.

The United States was, and is, the biggest user of oil in the world. Decreasing our oil consumption by close to 1/3 definitely was a major factor in the falling of oil prices in the 1980's. As obvious as this is, some conservatives will still deny that decreasing our oil consumption will lower the price of gasoline, as Melonie has stated in a previous post.