my point is that it's disingenuous to say that the cost of oil is externally funded when the government takes more in taxes than the oil industry gets itself, and the tax money is not used towards those external costs.
it's especially disingenuous of a columnist in a national magazine to do so.
http://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States
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The George W Bush's Secretary of Transportation stated on 15 August 2007 that about 60% of federal gas taxes are used for highway and bridge construction. The remaining 40% goes to earmarked programs.[4]
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http://www.mercurynews.com/ci_15355732?IADID=Search-www.mercurynews.com-www.mercurynews.com
Unions better get used to public pension reform
By thomas d. elias
Posted: 06/22/2010 11:16:26 PM PDT
For many years, one justification for giving generous pensions and other benefits to public employees was that their pay was below what most of them could get in the private sector. Rich pensions were seen as a recruiting tool, one way to get top people into government and keep them there.
But times have changed. Despite the furloughs imposed on many state and local government workers, not only are most government jobs more secure than those at private businesses, but salaries for most are at least comparable to those in the private sector and pensions are far more generous.
That's been accentuated over the past three years as company after company abandoned the style of pension plan that offers regular monthly payments for life, shifting to 401(k) accounts allowing employees to build savings for retirement but not protecting them from failed investments.
While some private pension plans that have been "grandfathered in" for longtime employees allow retirees to start collecting somewhat reduced benefits at age 55, many retirees from California government jobs — especially police and firefighters — can start collecting full pensions five years earlier than that.
So taxes from people with inferior pensions are funding the fatter monthly checks going to folks who allegedly work for them. Something seems wrong here, and many have come to resent it.
These are some of the reasons behind a sudden flood of ideas that emanated
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from the campaign trail during the spring primary election. Another impetus: The miserable recent investment records of California's two biggest public retirement systems — the California Public Employees Retirement System (CalPERS) and the California State Teachers Retirement System — have forced state and local governments to fork over far more to fund pensions than they did, say, 10 years ago.
At the height of the dot-com investment bubble in the late 1990s, state government paid almost nothing to fund pensions because the funds' results from investing employee retirement contributions were copious. Now the state pays more than $3 billion a year to fund those pensions. It's the same for local government where, for one example, Los Angeles will use about 19 percent of its new budget to fund pensions.
One study by economists at Stanford University estimated it would take five consecutive years of 20 percent investment profits for the big state pension plans to return their assets to levels equal to their obligations.
Which has led almost everyone in politics today to conclude something has to change. Why should public pensions be based in large part on what an employee gets in his or her last year, when employees can arrange to pad their overtime hours during that year, a practice called "pension spiking?" Why should people who aren't police, fire or government employees be able to draw full pensions at 55 when almost no one in the private sector can get full payments before age 65? Why should police and fire personnel get full pensions starting at age 50?
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Originally posted by zeeblebotPensions are just a part of the compensation package: they are deferred wages (a term first coined by Albert DeRhoode in the American Economic Review, circa 1926, if memory serves). The economic advantage to workers (the future pensioners) is that contributions to the pension fund may not be currently taxed; the economic advantage to the employer (whether private or public sector) is that investment earnings over time mean lower employer contributions to fund the benefits—the better the investment return, the less the employer needs to contribute. If actual investment returns fall short of projections, contributions have to be increased to cover the promised deferred compensation.
http://www.mercurynews.com/ci_15355732?IADID=Search-www.mercurynews.com-www.mercurynews.com
Unions better get used to public pension reform
By thomas d. elias
Posted: 06/22/2010 11:16:26 PM PDT
For many years, one justification for giving generous pensions and other benefits to public employees was that their pay was below what most of them coul e 65? Why should police and fire personnel get full pensions starting at age 50?
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There is no element of “gift” involved—again, regardless of whether the employer is private or public sector. Do some employers (private or public sector) try to "game" the promise of deferred wages--e.g., by betting on unlikely levels of investments returns? Sure. Sometimes they get caught (along with those actuaries and accountants who were willing to abet them).
There may be either employee or employer contributions to the pension fund, or both. Under so-called “non-contributory” plans, all direct contributions are made by the employer (and, as deferred compensation) are not taxed to the employee until benefits are collected. Whether or not, and how, employee direct contributions are taxed currently depends on the kind of plan.
Think of an employee whose wages are initially “held back”—for a week, for two weeks, for a month. During that hold-back period, the employer retains that money, and could, presumably invest it. This situation can continue as long as the employee is employed. No one doubts that that held-back money is ultimately due and payable to the employee—e.g., a last payment made for services rendered a week, or two weeks, or a month after the employee severs employment. I see little difference for earned compensation that is deferred for longer periods and invested in a pension fund—i.e., those pension benefits are earned, deferred compensation.
If I promise to pay you X for services rendered, and you render those services, then I am bound to pay you; if I do not, I am cheating. It matters little whether I promise to pay you after a week, a month, or 30 years, or at a specified age. Suppose I promise to pay you X after a week of work, but then decide that that is too expensive for me, and so unilaterally decide not to pay you for a month—that is not only reneging on the agreement, it is de facto a cut in pay (when interest is taken into account, which, economically, it ought to be). How is it different if I promise to pay you Y at age 55, and then don’t?
One may speculate whether certain workers are overpaid or underpaid for their work—but the amount, and the form, of compensation are negotiated (individually or collectively) under market constraints (current and projected). If one thinks that the compensation of public employees ought to be different just because they are public employees—gee, I don’t know what to say to that. Earned compensation (agreed upon by the parties) is earned compensation, whether current or deferred, no matter who the employee works for.
At bottom, all that is being argued for here is that certain public employees ought to be paid less—by adversely changing the terms of their deferred compensation. Mystifying the already complex nature of pensions as deferred wages cannot cover that over—as posts by uzless and Finnegan already show.
NOTE: In all of this, I am talking about U.S. tax and pensions provisions here; I don’t know about other countries—I am also talking from memory, when I used to be directly involved in such things.
EDIT: In the public sector, of course, the ultimate payers of compensation are the--public, the taxpayers, whatever the level of comepnsation. In the private sector, it is the owners of the firm.
oh, crup 🙁.
and the california legislature just rejected pension reform.
http://restoretherepublic.com/top-stories/californias-500-billion-pension-time-bomb.html
California’s $500-billion pension time bomb
Published on 04-06-2010
Source: LA Times
The state of California’s real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported.
That’s the finding from a study released Monday by Stanford University’s public policy program, confirming a recent report with similar, stunning findings from Northwestern University and the University of Chicago.
To put that number in perspective, it’s almost seven times greater than all the outstanding voter-approved state general obligation bonds in California.
Why should Californians care? Because this year’s unfunded pension liability is next year’s budget cut to important programs. For a glimpse of California’s budgetary future, look no further than the $5.5 billion diverted this year from higher education, transit, parks and other programs in order to pay just a tiny bit toward current unfunded pension and healthcare promises. That figure is set to triple within 10 years and — absent reform — to continue to grow, crowding out funding for many programs vital to the overwhelming majority of Californians.
How did we get here? The answer is simple: For decades — and without voter consent — state leaders have been issuing billions of dollars of debt in the form of unfunded pension and healthcare promises, then gaming accounting rules in order to understate the size of those promises.
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Originally posted by zeeblebot...
oh, crup 🙁.
and the california legislature just rejected pension reform.
http://restoretherepublic.com/top-stories/californias-500-billion-pension-time-bomb.html
California’s $500-billion pension time bomb
Published on 04-06-2010
Source: LA Times
The state of California’s real unfunded pension debt clocks in at more than $500 billion, ne ...[text shortened]... romises, then gaming accounting rules in order to understate the size of those promises.
....
In California’s case, past pension underfunding means reduced funding of current programs. This explains why pension costs rose 2,000% from 1999 to 2009, while state funding for higher education declined over the same period.
What can we do about this? For the promises already made, nothing. They are contractual, and because that $500 billion of debt must be paid, retirement costs will rise dramatically no matter what we do. But we can reduce the sizes of promises made to new employees and require full and truthful disclosure so that pension debt can never again be hidden.
Last summer Gov. Arnold Schwarzenegger proposed exactly that. Since then? Silence. State legislators are afraid even to utter the words “pension reform” for fear of alienating what has become — since passage of the Dills Act in 1978, which endowed state public employees with collective bargaining rights on top of their civil service protections — the single most politically influential constituency in our state: government employees.
Because legislators are unwilling to raise issues that might offend that constituency, they have effectively turned the peroration of Abraham Lincoln’s Gettysburg Address on its head: Instead of a government of the people, by the people and for the people, we have become a government of its employees, by its employees and for its employees.
This explains why legislators fight harder to overturn employee furloughs than to reform pensions and elect to pay more in compensation to just 65,000 employees in one single department — corrections — than they spend on a higher education system serving 10 times as many people.
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well, we need look no further.
california legislators don't get paid much ($52K-$60, plus $100/day per diem in Sacramento), but then again, not likely they are full-time positions. but the retirement benefits are excellent.
you can be elected at age 18. theoretically someone could retire at age 39 (18 y-o + 21 years of service).
or be elected on your 58th birth year and retire two years later at age 60.
http://www.smartvoter.org/gtg/ca/state/overview/legislative.html#14
What are the retirement benefits?
The retirement system for legislators is supported partly by member contributions and partly by the General Fund. A former legislator is eligible for a full pension after 21 years of service or at age 60. The pension may not exceed two-thirds of the lawmaker's salary at the time of retirement, except for annual cost-of-living adjustments.
Well I for one am not inclined to investigate California's public pension schemes and I wonder if a debate on this forum can really confine its attention to such a narrow focus. Obviously my attention is on the British system. Here I am even prepared to agree that the public sector has not looked wisely at its pension provisions. As a general rule, politicians do not approve spending on very much that can be deferred to a later administration. In addition, public pensions are used in perverse ways - for example to reward incompetence by pensioning off managers that under perform or sometimes to pay off employees who would otherwise be entitled to significant compensation for unfair dismissal.
However private sector employers have also been irresponsible in their accounting for pension liabilities. They also have boosted their short term income by sidestepping long term liabilities. So reform is needed and greater discipline - perhaps through better accounting regulations for example. Also employees have been less consistently successful in persuading private sector employers to offer good pensions and in some cases have been short sighted about their own employee contributions. Human beings can't think long term very well.
But all pensions are in crisis and the underlying reasons I keep repeating are reducing interest rates and investment income to pay for increasing liabilities through demographic change. Attacking one or other sector is just divide and rule, a classic ploy to distract working people from their own economic interests and benefiting the rich at their collective expense. There are greedy, selfish and lazy people in every sector - the idea this is a public sector disease only is absurd and laughable.
private pensions aren't subtracted from my tax dollars. i've got no cause to complain about them unless they're cheating people by not paying them ENOUGH.
if public sector retirement ages were higher, private sector retirement ages could be lower. it wouldn't work out that way, tho. the private sector IS evil, that way. among other ways. such as the propensity to zero out shareholders' holdings.
Originally posted by zeeblebotAnd MY point is that since the true costs of oil are externalized (the industry does not lick up the social or environmental tag directly) then it is perfectly appropriate for government to tax oil to fund its social and environmental programmes.
my point is that it's disingenuous to say that the cost of oil is externally funded when the government takes more in taxes than the oil industry gets itself, and the tax money is not used towards those external costs.
it's especially disingenuous of a columnist in a national magazine to do so.
http://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_St ...[text shortened]... for highway and bridge construction. The remaining 40% goes to earmarked programs.[4]
...
I agree that the use government makes of such income is open to severe criticism in every country. However, I do not think that the level of tax is sufficient - certainly not in the USA - to incentivise responsible use of oil, fund appropriate investment in alternative energy sources, or generally acknowledge the degree to which oil is misused and harming our planet. It is too cheap and you guys are pissing it away.
Originally posted by zeeblebotWell maybe you can go with the everybody is evil line - it is not without substance. I struggle at times to retain my good natured view of humanity - my silly idealism that people have the capacity and the desire to achieve justice. The systematic failings we have seen so widely are discouraging.
private pensions aren't subtracted from my tax dollars. i've got no cause to complain about them unless they're cheating people by not paying them ENOUGH.
if public sector retirement ages were higher, private sector retirement ages could be lower. it wouldn't work out that way, tho. the private sector IS evil, that way. among other ways. such as the propensity to zero out shareholders' holdings.
Still, in arguing over policy and principle, it is still rational to argue that there is a case for a properly funded public sector and that by and large there are many public sector employees who not only seek to do well, but actually wish to remedy the failings we all point out. Some people go into public sector precisely out of passion to do things better. Not that unusually, there are many success stories once you stop being insanely prejudiced.
If you have a rooted insistence that everyone is cheating you and nobody has good faith, then you are doomed to misery.
Originally posted by finneganagain, the unbalance in the pension levels for the public service sector, the way in which they are decided, and the source of their funding, as opposed to the private sector, is blatant. saying the private sector is doing the same is unhelpful because they're not, not to that level and not with mandatory levies.
Well maybe you can go with the everybody is evil line - it is not without substance. I struggle at times to retain my good natured view of humanity - my silly idealism that people have the capacity and the desire to achieve justice. The systematic failings we have seen so widely are discouraging.
Still, in arguing over policy and principle, it is still ...[text shortened]... sistence that everyone is cheating you and nobody has good faith, then you are doomed to misery.
Originally posted by zeeblebotSo you rely on your knowledge of California for your examples and I on my knowledge of the UK and we use terms like "public sector" without any confidence that we are referring to the same thing. There are many differences. Hence the cliche - two great peoples divided by a common language.
again, the unbalance in the pension levels for the public service sector, the way in which they are decided, and the source of their funding, as opposed to the private sector, is blatant. saying the private sector is doing the same is unhelpful because they're not, not to that level and not with mandatory levies.