Sunday, May 28, 2017

Unfunded Pensions, My Sweet Bippy!

Hey homeowner you have an unfunded liability of 200k, you had best amass 200k in capital to offset that immediately (oh wait, your house is the capital in the same way that your business's value is the capital for the USPS and future taxes are the capital for state pension funds)

The nationwide attacks on public pension plans are happening because Wall Street banks and brokerages want to convert the $3 trillion nationwide in public pension plan assets into 401(k) accounts from which banks and other investment firms could earn billions of easy dollars in various “management fees” on the accounts.

The tactic Wall Street is using to get its hands on pension plan money is something called an “unfunded liability.” Only actuarial accountants really know what an “unfunded liability” is, but the clear impression that Wall Street and its media minions give to taxpayers is that it’s a huge amount of current debt that taxpayers owe to the pension plans. But it isn’t.

Take California, for example, the state with the largest public pension plans, the California Public Employee Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS). Wall Street’s media minions are trying to scare California taxpayers by claiming that the state is currently in debt some $270 billion in “unfunded liability” to its public employee pension plans...but what is an “unfunded liability” anyway? One thing it is NOT is that it’s not a current debt.

To find out what a so-called “unfunded liability” actually is, we begin by looking at California’s current state budget: The 2016-2017 state spending budget is $171 billion. Of that, $4.8 billion, which is only 3% of the state’s $171 billion budget, goes to meet the “unfunded liability” difference between what CalPERS gets from active employee payroll deductions and interest on investments to pay out to retirees; the state contribution to meet the CalSTRS “unfunded liability” is $2.5 billion, which is only 1.5% of the budget. So, altogether the retirement plans’ cost is only 4.5% of the state budget. That less than 5 cents of the budget dollar, and that’s right in line with the non-political Boston College Center for Retirement Research report that the national average state annual contribution to public employee pension plans is only about 5% of the typical state budget.

Five cents on the dollar each year is not going to bankrupt California...or any state.

So, just how is an “unfunded liability” calculated? Well, in simple terms that a non-accountant can understand, you take your state’s current year contribution to the pension plan, then increase it for inflation and other factors each year for the next 30 years, then add up the sum of all those 30 years of 5-cents-on-the-dollar contributions, and the resulting sum is the “unfunded liability.” The sum of those 30 years is a large amount, which is great for scaring taxpayers who are led to think it’s a huge amount of debt they’re in right now instead of being merely the sum of 30 years of small future payments. It’s not a current huge debt.

Moreover, if you apply the same actuarial projection to your state’s budget for the next 30 years, you find that each year’s budget increases in line with the annual pension plan contribution increase, so that the annual cost remains right around 5 cents of the budget dollar for each of those coming 30 years.

And there’s something else you should know: Most of the “unfunded liability” amounts in these made-for-the-media scary headlines can be reduced by as much as 75% simply by changing the accounting method used to calculate the “unfunded liability.” Wall Street uses a method known as the “Historical Return” method for marketing stocks to investors, and that’s also the standard method that should be used for assessing pension fund stock assets --- but the scary “unfunded liability” figures that show up in headlines are typically created using an accounting method known as the “Riskless Rate” method. You can slash those scary headline “unfunded liability” figures by 75% just by using the standard Historical Return accounting method. Poof! Three-fourths of the “unfunded liability” gone, just as it was created by the magic of a non-standard accounting method for the purpose of scaring voters.

Moreover, the “Governmental Accounting Standards Board (GASB --- pronounced “Gasbee”) that oversees which methods are used to calculate an unfunded liability sounds like some federal government agency. But it isn’t: GASB a private organization operated by state and local governments --- governments which these days want to get rid of public pensions, so GASB is biased against public pensions.

Now, that you know what an “unfunded liability” is, let your lawmakers know that you know what an “unfunded liability” is and that they should keep your fixed-benefit retirement plans and not switch to Wall-Street-friendly and retiree-unfriendly 401(k) plans whose benefits aren’t fixed and reliable because they go up and down with the stock market.

Something else you should know and let lawmakers know that you know: Those small annual state contributions to our public employee pension plans are actually the best investment that your state makes: In our example state of California, even the anti-public pension Los Angeles Times reported that the California Public Employees' Retirement System (CalPERS) brought $12 billion into the California economy and generated a collateral $26 billion in economic activity while supporting over 93,000 jobs.

CalSTRS makes a similar large positive contribution to California’s economy and is estimated to generate about $10 billion in economic activity and support more than 60,000 jobs with state and local governments reaping over $600,000,000 in annual revenues from the economic activity generated by consumers spending their CalSTRS benefit income.

That’s a combined economic contribution to the state of $36 billion. Not bad for the state’s investment of $7.5 billion in the pension plans; in fact, that’s a return of about 500%.

The dirty little secret that taxpayers aren’t told is that if the states cut public pensions, tens of thousands of private sector jobs will be lost and taxpayers will see their taxes raised to make up for the $36 billion in lost economic activity. Former Rockefeller Foundation head Peter Goldmark has warned that cutting off public employee pension plans is for states “the economic equivalent of having a stroke.”

Monday, May 15, 2017

Drumpski and a Pre-Emptive Nuke Strike. How It Gets Done

So the President can hire and fire whoever he wants, according to Nicki Haley. That does not bother me too much. BUT

Can the President launch a pre-emptive nuke strike without consulting anyone, "because then it would not be a secret?"

This worries me a lot. I think Congress needs to pass a law that says doing so would be an automatic impeachment and removal from office, just to give him a heads up.
Otherwise the S.O.B. may do just that. Because nobody on June 21, 1788, wrote it in that he couldn't.
if the other half of the nuke codes are in the hands of the Secretary of Defense, then I would not put it past Trump to appoint a "Yes" man to that post.

The Cabinet of the United States is an executive organ of the U.S. Government that normally acts as an advisory body to the President of the United States. It is composed of the most senior appointed officers of the executive branch of the U.S. Government serving under the President. Among those are the Vice President and the heads of the federal executive departments, all of whom are by federal law (3 U.S.C. § 19) in the line of succession to the President and have duties under the 25th Amendment to the Constitution. Members of the Cabinet (except for the Vice President) serve at the pleasure of the President, who can dismiss them at will for no cause.

July 29th through Sept 2, Senate not in session. President can fill vacancies at will.

He(the President) shall have the Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two-thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session."

Sunday, May 14, 2017

How to Avoid Gerrymandering the Congressional Districts.

With every census should also come computer programs from all 50 states. Made by computer science students at the universities and entered into a contest in each state, and the top 20 are then voted on by the people. Top vote getter, wins, even in cases of a near tie. Each program would use algorithms designed to make districts that would be somewhat geographically compact and simultaneously socio-economicaly and ethnically diverse.

The governors of all 50 states then meet and each one draws a program out of a fishbowl, and the program cannot come from his state.

This will result in much greater opportunity to kick the rascals out, and avoid the evils of gerrymandering.

It would also prevent politicians from saying, I've got 51% rednecks so I will vote 100% their programs, because in the next census shakeup, their nominal district might only be 45% rednecks.
In short a moderating influence on the actions of politicians.

It might even work out that some precincts might be added from one district to another contiguous district instead, to get a good spread of the state's population for each representative in Congress.  In California for example, some of Hillsborough might be added to Hunters Point, and some of Atherton to East Palo Alto,