If you’re a lefty, you might be inclined to dismiss this first story, since it’s posted at BIGOVERNMENT.COM, and so biased to the right (although lefties continue to trust the New York Times and the LA Times… funny, that). But the second story, below, is based on a Standford University study…. and we all know what a hotbed of ultra-rightwing radicalism is found at Stanford.  I hate that the state has done this, because I have some family members who are counting on the state system to work properly.  That is, however, what comes of trusting Democrats to run a budget, let alone make financial projections into the next decade.

» California Admits to Almost $1 Trillion in Unfunded Pension Obligations

 

The three largest California public retiree plans (CalPERS, CalSTRS, and UCRS) that administer pensions of approximately 2.6 million State and Local public current and retired employees have been under tremendous scrutiny since last year’s release of the Stanford University Institute for Public Policy report: “Going For Broke”. The study concluded that California retirement plans liability was under-funded by over $500 billion.

The report blamed most of the shortfall on the pension plan’s expectation of future annual investment returns of 7.75%; versus a realistic expectation of a 4.14% annual return. The cabal of California politicians, bureaucrats, and crony consultants that justified granting lucrative benefits to employees while failing to contribute enough to support the true pension costs; solemnly dismissed the Stanford report as unsophisticated reflections by academics. But now that a swarm of local governments want to abandon the floundering retirement trusts; the State plans are only willing to credit a 3.8% expected return. If the California State pension plans adopted the same 3.8% rate they are only willing to credit when participants want to leave; their published $288 billion in pension shortfall would metastasize into an $884 billion California State insolvency.

It doesn’t take a Stanford MBA to realize producing consistently high investment returns since 2007 has been a difficult in the extreme. The California State pension plans that currently control $432 billion in assets, suffered a $109.7 billion in losses during the 2008 to 2009 recession. Pension plans normally require employers and their employees to mutually increase contributions to make up pension shortfalls. But public pension plans are notorious for not requiring employees to make significant contribution. California police, prison guards, firemen, and lifeguards can retire at age 50, but have never been required to contribute to fund pensions. With headlines that California plans are in big trouble; many government agencies applied to withdrawal from the State plans. But as calculated below; compounding investments at 7.75% grows to more than three times the amount of compounding investments at a 3.8% rate of return.

When I was elected as Orange County, California Treasurer in 2006, I was flabbergasted to discover that the County’s $8 billion of retirement investments was covertly leveraged up by $22 billion of derivatives. I quickly learned that many unions see pension benefits as contracted rights; and pension investing as a no risk crap-shoot for extraordinary returns.

 

If the pension investment returns sky-rocket, the unions will bargain for increased benefits. If the pension investment returns crash; the public employees are protected by rock-solid contract law that prevents any reduction in benefits. In 2007, I was fortunate to gain the support of enough OC Pension Trustees to reduce speculative derivative use by 90%. At the time, Trustees for the California public pension plans solemnly dismissed Orange County as unsophisticated. Shortly thereafter the stock market crashed and the State Pension Trustees stopped making comments.

Once famous as the Golden State for leading the nation in high tech growth industries that provided excellent wages; California is now tarnished for having the second highest unemployment and worst state credit rating in the nation. Forbes recently quoted a top venture capitalist that compared the California business climate to France: “I try not to hire here, and I certainly would not launch a company here. But the wine is good.” Tripling of the burden for under-funded pension liability to almost $1 trillion will probably ruin the taste of California wine for most taxpayers.

 

California state pension funds going broke, Stanford study finds

L.A. Cicero
 

 

Students Howard Bornstein and Lisha Wang spoke with reporters after a news conference where they and the other members of their research group announced their findings about the state retirement system.

BY GWYNETH DICKEY

California public employee pension systems are worse off than anyone previously projected, according to a new report generated by five graduate students in Stanford’s graduate Public Policy Program. The result could be greater pressure on the state budget and a shortage of pension funds in the future.

“This is a really dire situation,” graduate student Howard Bornstein said today at a press conference at the Stanford Institute for Economic Policy Research (SIEPR), which is publishing the students’ findings. “If we don’t do something now, we’re going to have major issues in just a few years.”

Bornstein and his fellow graduate students examined public records of past performance of three pension funds – the California Public Employees’ Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS) and the University of California Retirement System (UCRS), which together administer pensions for approximately 2.6 million Californians.

The students ran computer simulations to predict the unfunded liabilities of the pension funds over the next 16 years.

Major investment needed

“The simulation shows that the state would need to invest more than $200 billion, and possibly as much as $350 billion, today to return the fund to a minimum responsible level of funding,” said Bornstein, who noted that the figure is approximately four times the current state budget.

“It’s an enormous number,” said Joe Nation, a public policy lecturer at SIEPR and the adviser for the research team. He said it’s important to look at the shortfall relative to state resources. Pension funds fluctuate with market performance, but state employees are guaranteed a fixed pension regardless. If the market performs poorly, the state is obligated to step in and provide the missing pension funds. That takes money away from other public projects, such as education and healthcare, Nation said.

“The students did an amazing job providing a better sense of unfunded liability for those three pension funds, and I hope observers out there will begin to understand that this is a financial train wreck that is not very far down the tracks,” Nation said.

In the report, Bornstein and his fellow graduate students suggest policies to fix the shortfall and prevent a similar one in the future.

They propose that the managers of the pension funds project more realistic rates of return, which would indicate higher liabilities in the future.

“The whole approach that the state currently uses is inherently flawed. They look at averages as opposed to a fan of outcomes,” said Bornstein. “If you instead look at the range of outcomes in the future, you’d see there’s over a 60 percent chance of a deficit greater than $250 billion for CalPERS alone. This is something that really scares us.”

The students suggest that the minimum level of caution should be for the pension systems to aim for an 80 percent probability of having at least 80 percent of the funds necessary to cover the pensions. They also advocate investing more conservatively, taking fewer risks.

“Funds in other parts of the country are in similar situations, and they are beginning to invest in riskier assets,” Nation said. “That’s exactly the wrong thing to do. If the market doesn’t perform well, the taxpayer ends up paying.”

Suggested fixes

The students suggest either reducing pension benefits or moving to a hybrid system in which retirees receive a smaller fixed pension combined with a 401(k)-style plan. This would relieve some of the burden on the state and give employees more responsibility for their retirement. Two-thirds of Californians would support such a plan, according to a poll by the Public Policy Institute of California.

“The biggest challenge with this is making sure elected officials understand the severity of the problem,” Nation said. “It’s a political hot potato and most politicians shy away from the issue because you offend a lot of the constituencies by acknowledging the problem exists.”

But, he said, citizens and institutions are increasingly aware of the situation and are speaking out.

“The University of California is engaged in this debate because they finally understand that as pension fund benefits grow, there will be fewer dollars for higher education,” Nation said.

The report was prepared for the Office of Gov. Arnold Schwarzenegger as part of the Graduate Practicum in Public Policy, a two-quarter sequence required for master’s degree students in the Public Policy and International Policy Studies programs.

In addition to the masters’  program in Public Policy, Bornstein will earn his Masters in Business Administration degree this June.

SIEPR conducts research on important economic policy issues facing the United States and other countries. SIEPR’s goal is to inform policymakers and to influence their decisions with long-term policy solutions.

What’s funny is the heading above, “major investment needed.”  The left wants to make a major investment, alright.  An Obama-style investment, called enormous tax hikes to fund impossible promises made to public employee unions.

Something will have to give.  Higher taxes to fund impossible-to-fulfill promises will just postpone the disaster, and not by very long.  A complete, structural, top-to-bottom readjustment is needed, and people have to lose the idea that they can work for 30 years and retire at the age of 55 and still get paid till they die at 95.

Much has been said here and elsewhere about various leaders, both local and global.  In particular President Obama has been in these proverbial crosshairs  concerning a variety of issues concerning his leadership since taking office.

The recent election would seem to indicate that more and more voters find Obama to be a toxic leader. But he is certainly not the only leader, good or bad, who affect the lives of the constituency under them.

Research is currently being done concerning how and why people find themselves in a workplace environment under leadership that is considered to be toxic.  If you’d like to participate in a survey related to the subject of toxic leadership as it may relate to childhood trauma please click on the following link:

http://qtrial.qualtrics.com/SE/?SID=SV_80LJ5hGHl2MPOBu

You really need to check out this Powerline post, and watch the videos they linked here (don’t be impatient, the ad is short) and here.

Entertaining.  And educational.

When your life and career are predicated on how well you consistently lie to people it is inevitable that the truth will slip out on occasion.  After all, constantly maintaining those lies requires constant vigilance.  Here are three possible recent slips of the tongue that may give pause for one to wonder if they serve to illuminates a lie:

1. As the First Lady spoke to the Lesbian, Gay, Bisexual and Transgender delegate back in 2008 before Barack Obama was elected to office, she proved that once again the truth may be right in front of us.

When we took our trip to Africa and visited his home country in Kenya….

Is it just slightly possible the birthers have a point?  Is it slightly possible Barack O. has a reason to spend so much time and money to hide parts of his past?

2. Polls and polling data can be manipulated to provide a desired outcome.  Many polls are simply false, but wrap themselves in a garment of non-partisanship legitimacy in order to sway public opinion, not report it.  I call this a lie.  Here a recent article from The Politico describing a couple of spring special elections for congress and problems for the Democratic party.

According to sources familiar with the effort, the Democratic Congressional Campaign Committee has already assembled teams of top party operatives — including veteran pollster John Anzalone and longtime ad man Saul Shorr

So much for pollster neutrality.

3. We were told Obamacare was about providing quality health care to the uninsured.  Now that it is law we find out that maybe we were lied to about the intent of this legislation.  Commenting on issues raised by the Tea Party movement, Reid said,

They want things to be the way they used to be. They will never be the way they used to be.

Is it just possible this so-called health care bill was about much more than helping the uninsured?

Funny how an off-handed truth can slip past the lie like a small dog through a picket fence.  But if you don’t pay attention you might miss it.  That’s what the liars are counting on!

Neither side is happy with Stupak

We all know how Rep. Bart Stupak caved the day of the passage of the government takeover of health care. But we don’t know why.

Well, we do know why. We’ve known all along that Stupak supported ObamaCare. After getting his amendment passed to the original public option health care bill that passed the House in November, he voted for the final bill. But it is baffling to pro-lifers why he, who had the power to singlehandedly make or break health care reform, would give up all that power in the last minute for a worthless scrap of paper.

An executive order cannot change current law. They can easily be overruled by the courts, which have done so in the past. Legislation from Congress supersedes them. And an executive order can be rescinded at any time. President Obama could sign the order then revoke it 60 seconds later. If the new health care system withstands legal challenges and a possible repeal, this executive order will just become another Mexico City Policy, rescinded and reinstated whenever a new president takes office.

Stupak’s move pleases neither side of the abortion debate. The pro-life side thinks the order doesn’t go nearly far enough, and the pro-abortion side thinks it goes too far. The SBA List rescinded the Defender of Life award we were supposed to give Stupak at our gala two days ago. Other pro-life groups across the country have condemned him and are now working to defeat him instead of supporting him. Pro-abortion groups are doing the same. NARAL Pro-Choice America PAC and the Planned Parenthood Action Fund are now backing Stupak’s primary challenger.

In an editorial to be published Saturday in the Washington Post, Stupak says, “The pro-life groups rallied behind me – many without my knowledge or consent – not necessarily because they shared my goals of ensuring protections for life and passing health-care reform but because they viewed me as their best chance to kill health-care legislation.”

Oh, yeah? Then why did pro-lifers in Congress vote in favor of the Stupak Amendment in November, thus opening the door for your group to vote for the bill and therefore pass it? And if you didn’t want pro-life groups rallying behind you, why did you accept their money and support?

Mr. Stupak, we trusted you. We thought we had found a hero, someone who was standing up for Life when it looked hopeless. And then we found out you’re just like any other politician, lying to the people to get your way. You broke our heart. And now pro-lifers are not rallying around you, but around your opponent. We’re going to do everything we can to ensure you get defeated with everyone else in November.

Actually, I think the Left is quite happy with Stupak. They got what they wanted from him, and he provided cover for Democrats from pro-life districts. In the end, he sold out to Obama and the Democrats for less than a mess of pottage.

The definition of a pro-life Democrat is someone who wants to say they are pro-life but vote for pro-abortion candidates and policies.  That’s because they think many other things are more important than ending legal abortion.  But you can’t be seriously pro-life and think that there is all that much that matters more than ending legal abortion.    So another way to describe a “pro-life” Democrat is as someone who is vaguely uncomfortable with legal abortion-on-demand, but doesn’t think it matters enough to do anything really significant about it, and certainly not enough to take any political risks for it, or risk losing on any other issue that matters more.

These days, pro-life Democrats always fold in the end, which is predictable by the fact that they caucus with Harry Reid and Nancy Pelosi.

The latest oxymoron:  pro-life Democrat. 

Add it to the list of species that went extinct in the 20th century.

In a stunning display of ignorance about the nature of American government and the intent of the founders, the Christian Science Monitor editorial board whines that the Supreme Court opens the money gates. There is more at the link, if you can bear to read it.

The Supreme Court on Thursday opened wide the gates to allow more corporate and union money to finance political campaigns – and potentially influence politicians and lawmaking.

That’s unfortunate, and means that the role of watchdogs tracking the money trail will be more important than ever.

It’s not as if corporations and unions have so far had their wallets glued shut. They can fund issue ads that are important to their interests. And they’re allowed to form political action committees that directly support candidates, as long as the donations are collected voluntarily from employees and union members.

But even members of Congress, whose energy is increasingly diverted to fundraising, have long recognized the potentially corrupting effect that big money can have on them. More than 100 years ago they banned corporations from donating directly to federal candidates.

Thankfully, the justices upheld that ban Thursday, as well as disclosure rules about contributors. But in a divisive 5-to-4 ruling, they overturned other important restrictions.

In time for this year’s midterm elections, corporations and unions can now spend directly from their treasuries on ads to support or defeat candidates – as long as those ads are produced independently and not coordinated with a campaign. They may also run ads right up until election day, instead of pulling them 30 days before a primary and 60 days before a general election.

Writing for the majority, Justice Anthony Kennedy grounded the ruling in First Amendment rights. Corporations and unions – like individuals – have a right to free speech, the majority reasoned. “The censorship we now confront is vast in its reach,” he wrote.

But Justice John Paul Stevens said in his dissent, “The court’s ruling threatens to undermine the integrity of elected institutions around the nation.” Indeed, when voters say they want “change” in Washington, the influence of money on politics is the kind of thing they’re talking about.

Some facts do intrude.

There were plenty of rich people in America in 1850. They spent very little money trying to get candidates of their choice elected. The reason? Taxes were low. There was no income tax. The federal government didn’t spend all that much, and did not fund lucrative contracts. A government that doesn’t take much of your money, and can’t give you much, is not a government whose makeup matters enough to very many rich people, or groups, to bother to spend much money on.

Fast forward.  In the modern USA, the government has the ability to take your money, regulate everything you do, and spend lots of money buying various goods and services from the private sector.

The Christian Science Monitor suggests that the people who are affected most by government power, the people who have the most to lose, should not have a commensurate ability to affect the decision making process.

Shame on them.

And the CSM seems to think that a government that spends enormous sums of money is one that the people whose money the government took should not be trying to influence, or at least not very much.

That’s just ridiculously naive.

A couple of recent experiences of large corporations in relation to government are instructive.  Not so long ago, Microsoft Corp gave almost no money to political groups or candidates.  But ever since the Clinton justice department essentially attacked Microsoft under “anti-monopoly” law, Microsoft has become a large donor to BOTH parties, out of sheer self-defense.  Something similar has happened with Walmart, which was previously mostly uninterested in politics, until many legislators got the idea that they should force Walmart to change its employment policies in various ways, at which point Walmart began giving money to both parties.

Does someone think that Microsoft and Walmart should not have the right to try to influence the outcome of political processes that are going to affect them in a very big way?  Yes.  But those people fundamentally want the public, including the people who are most productive among us, to be unable to defend themselves from government.

There is no way to “get the money out of politics” and still have a free nation.  The best way to ensure some kind of balance and fairness is simple: require complete and total disclosure of every donation, donor and recipient, to the electorate.  Print it everywhere.  Then let everyone make their case, in the open, about who is influencing whom in a way that is against the interests of the public.

Then let the public decide at the ballot box, instead of letting judges and congressman decide who gets to fund what communication to whom, and when.

The REAL corruption is elected politicians drafting legislation to shut up people and groups who want to exercise their free speech rights.

Here’s another viewpoint on the Supreme Court decision.

Sixty Percent of Russians Nostalgic for Soviet Union

Russians still consider the dissolution of the Soviet Union as negative and they think this process could have been avoided, studies by sociologists show. As Vladimir Putin put it, it was the greatest geopolitical catastrophe of the 20th Century. Over the last two years, the number of Russians who regret that the former Soviet Union broke up has not been declining.

This opinion is now shared by 60 per cent of respondents, Interfax was told at the Yuriy Levada Analytical Centre. This sentiment peaked in December 2000 with 75 percent.

Regret for the break-up of the Soviet Union is mostly shared by pensioners (85 per cent), women of all ages (63 per cent), 40-55 year-olds (67 per cent) and older respondents (83 per cent), those with less than average education (68 per cent), lower income (79 per cent), and rural residents (66 per cent). So it seems that those who actually lived in Soviet times feel that way. This is a significant fact.

“I think everyone has a certain nostalgia for the Soviet Union,” said Zhanna Sribnaya, 37, a Moscow writer. “It’s trendy because people my age, they can buy what they see, and they want to see their happy childhoods. We remember when ice cream cost 7 kopeks and we remember Pioneer camps [similar to Scouts and Brownies] when everyone could go to the Black Sea for summer vacations. Now, only people with money can take those vacations.”

Bring back those gulags! Reopen the torture and execution chambers in the Lubyanka! Drive over some more Eastern Europeans in tanks!

While you’re at it, find another 30 million or so people who are wasting oxygen and starve them out… those you don’t just shoot outright, that is. 

Then see how close you can come to provoking a nice nuclear holocaust, and still live to tell the tale.

Once again, we have Chris Dodd trying to cement his place with the voters by bringing home the bacon.

A $100 million item for construction of a university hospital was inserted in the Senate health care bill at the request of Sen. Christopher Dodd, D-Conn., who faces a difficult re-election campaign, his office said Sunday night.

The legislation leaves it up to the Health and Human Services Department to decide where the money should be spent, although spokesman Bryan DeAngelis said Dodd hopes to claim it for the University of Connecticut.

The provision is included in a 383-page series of changes to the health care bill that Senate Majority Leader Harry Reid, D-Nev., outlined Saturday. Scattered throughout are numerous items sought by individual lawmakers, many of them directing money explicitly to programs or projects in their home states.

The one sought by Dodd provides $100 million for “a health care facility that provides research, inpatient tertiary care, or outpatient clinical services.” It must be affiliated with an academic health center at a public research university in the United States “that contains a State’s sole public academic medical and dental school.”

This health care bill is so laden with sweetheart deals and outright corruption in the form of direct vote buying that it may set a new high for sheer quantity and brazenness.

I’m sure that Connecticut needs a new hospital worse than anywhere else in the USA.

Watch this, from Lord Christopher Monckton, chief policy advisor to the Science and Public Policy Institute.

I haven’t heard much about this from other sources…. I’m trying to get more information about it.  But if this fellow isn’t exaggerating, this is looking really ugly.

More info here and here and some especially scary nonsense from Gordon Brown, British Prime Minister.

Tom Daschle, former Senate Democratic leader and current Obama nominee for leading the Health & Human Services Department says he is sorry for failing to pay more than $120,000 dollars in back taxes.

Timothy Geitner, Obama nominee to be Secretary of the Treasury says he is sorry for failing to pay $30,000 dollars in back taxes.

I lost track – did Eric Holder, Obama nominee for Attorney General, ever apologize for enabling the pardon of Marc Rich, multimillion dollar tax evader?  Not that it matters, since Democratic President Bill Clinton granted Marc Rich a full Presidential pardon.  But it was ol’ Eric who made it all happen.

(click here to read more about Eric Holder and the Marc Rich pardon)

Now, imagine a nominee from a Republican President showing up on Capitol Hill for confirmation hearings, carrying baggage like this.  They’d be crucified in the hearings, and they’d be crucified again in the media.

But here we have THREE nominees put forth by Obama who have serious blemishes on their records. There is virtual silence in the media and the confirmation hearings are little more than posturing and formality.

If you were seriously delinquent in paying your taxes would you want to face the IRS with nothing more than an “I’m sorry”?  You know what would happen to you, right?

Can there be ANY doubt the media is nothing more than a Democratic lap dog?

There is really only ONE thing these cheaters are sorry about, and it’s not the “errors of judgment”. They are only sorry they got caught.

I’m sorry too.  I’m sorry so many of my fellow citizens, in their zeal to find hope and change have embraced a radical liberal leftist without moral compass who intends to surround himself with others who have similar bents.  These people will be making policies, rules and laws about you and me, after having already demonstrated the fact they think those same laws don’t apply to themselves.

So to all you who voted for Obama I have a question: Is this OK with you?