June 12, 2010
– Comments (6)
There seems to be more and more kiting out there. Love this method of covering pensions...
Your pensions are safe, you can trust your elected officials.
No more robbing Peter to pay Paul, they are robbing Peter to pay Peter...sigh.
I thought only the federal government could do that.
The recycling of money. Geez!
When I first joined the Army and saw that part of my pay was going to the Fed income tax, it disturbed me. Wasn't my pay coming from the income tax? So isn't that taxing the taxes?
To the best of my knowledge,I believe they didn't start taxing military pay until the Vietnam era.
I realized that somewhere in the USA's future that all these accounting tricks and juggling of numbers will bite us in the a**.
So now, today I'm doing the best I can to insulate myself from any consequences of all these shenanigans. First being, becomimg debt free from mortgages and all credit.. Pay as I go.
Mish has a good article on Seven State Pension Plans Out of Money by 2020 and a list of 20 states that will run out of money by the end of 2025. I was surprised that CA and OH, though severely underfunded, didn't make the list.
These pending outcomes are not much different than the events unfolding with the PIIGS, Hungary, Bulgaria, etc. Financial institutions grew larger and more sophisticated (predatory). Unions, though losing power in the private sector due to market forces, have thrived under the short-term thinking and weak negotiation positions of elected officials. Even voters do not pay much attention when unsustainable contracts are signed, because the commitment is too far out compared to the threat of a strike that would be immediate. Putting a simple signature on a contract compared to trash piling up for weeks makes the decision easy to defer.
Public employees will lose in the end. The tax base is shrinking in relation to the commitments made to public employees. Only deep cuts in the commitments will make the unsustainable sustainable again. Unless, of course, we suddenly get large, sustained growth in the private sector matched with stagnant new requests from public unions. My guess is that unsustainable wins.
For sure amassafortune, fixing it to sustainable is truly in everyone's best interest, but people will insist on digging it into a hole too big to climb out of.
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