PrairiePundit

Washington Post: McConnell’s rejection of federal aid for states risks causing a depression, analysts say The White House and Senate Republicans said they feared states and localities would move more slowly to reopen their economies if they received federal assistance. People in other states should not be required to fund the corrupt bargains Democrats in these states made with unions to over-promise on employee pension plans.  They should also not be required to fund absurd programs for illegal aliens.  Here is the scam unions and Democrats pull in blue states.  The unions' fund democrat candidates who in turn raise the pay and pensions for those state employees and the people who have to pay, i.e. the taxpayer, have no one at the bargaining table.  Making the rest of the country pay for this scam is not acceptable.

Monica Showalter: Mitch McConnell is right about refusing to bail out bloated blue-state pensions We should not subsidize blue state corruption.  These bloated pension plans are a product of public employee unions backing Democrats in return for voting for unsustainable pension programs as a reward for donating to the Democrats.  It is a corrupt bargain that should not become a burden to innocent taxpayers in other states with more prudent policies.

Bloomberg: President Donald Trump’s pledge to fix America’s ailing roads, bridges and airports may get an unlikely boost from retirement savers some 10,000 miles away in Australia. In face-to-face talks at the White House this week, Prime Minister Malcolm Turnbull will propose using a chunk of Australia’s A$2.53 trillion ($1.99 trillion) pension savings pool to help unlock funding for Trump’s infrastructure push. He’s being joined on the trip by local money managers who help control the world’s fourth-largest pot of retirement savings. “There’s a very bold ambition to drive U.S. infrastructure and Australia should be front and center in terms of project design, build, financing and management,” Trade Minister Steven Ciobo said in an interview ahead of the visit. Trump’s $1.5 trillion public-works plan has hit potholes amid a lack of bipartisan support in Congress and questions over who would pay for the initiative despite his pledge of $200 billion in federal funding over 10 ye...

Mark Perry: Every January, the New Year sees millions of Americans make a host of resolutions; to give something up, exercise more, and of course most common of all, be more financially responsible. We look at our bank account and non-pension investments knowing that the more we save today, the more comfortable we will be when we retire. But new research suggests that the financial cushion we spend years building up, may not be what be enough. According to a study released last week by Spectrum Group, many pension members are unaware that a significant number of public funds are underperforming and underfunded, partly at least, because they are increasingly focusing on socially or politically motivated investment strategies. Spectrum’s study examined public pension members’ awareness of two of the nation’s largest and most politically active funds – the California Public Employees’ Retirement System (CalPERS) and the New York City Employees’ Retirement System (NYCERS). Conducted ...

Jeff Patch: The California Public Employee Retirement System, known as CalPERS, is in crisis. And it sure looks like things are going to get a whole lot worse before they can get a whole lot better. The system already has a $153 billion unfunded liability, one of the largest shortfalls of any state, and it only has funds to cover 68 percent of promised benefits into the future. And because CalPERS is already cash negative, paying out $5 billion more in benefits to retirees each year than it takes in, there aren’t many scenarios whereby the system would be able to make good on those promises absent outside intervention (read: taxpayer bailout). Lawmakers and the fund’s board should be considering reforms to improve the system, but California voters and taxpayers faced another setback recently. Overseers of the pension plan—the nation’s largest—passed a funding plan earlier this year that projects shortfalls over the next decade but assumes rosy investment returns in coming decades to...

NY Times: A Hive of Growth, Dallas Flirts With Bankruptcy         Decades of faulty assumptions by pension officials have left the city struggling with more pension debt, relative to its resources, than any major American city except Chicago. It appears they made the same mistake of cities and states dominated by Democrats.  They made future promises they can't afford when it comes to pensions for government workers.  I feel certain the auditors noted the problem several years ago.  I recall reviewing the audit for the city of Houston back in the late 1970's and it was clear that that city also had not invested an adequate amount to cover its pension liabilities.  I was able to get that disclosure in the official statement of the city that was used to sell bonds, but it had no adverse effect on the cities AAA credit rating at the time.   It also did not change the cities handling of its pension liabilities. Hous...

Washington Examiner: According to Chad Aldeman of Bellwether Education Partners, 10 states spend more on government employee pensions than on all public colleges and universities combined: California, Illinois, Michigan, Missouri, Nevada, New Hampshire, New York, Ohio, Oregon and Pennsylvania. According to the Cook Political Report, eight of those 10 states lean Democratic. "Like the insatiable Pac-Man, pensions are eating further and further into state and local education budgets, eating up dollars that could be spent on lots of other things," Aldeman says. "That's true for all public services, but higher education is uniquely harmed by rising pension costs." He says these 10 states are "near the bottom of the list in terms of responsibly funding their pension plans." As pension costs continue to rise, higher education budgets will likely lose out to pensions, partially because pensions are politically harder to reform. Aldeman says higher edu...

Bloomberg: The pension-funding crisis undermining the stability of Illinois and Chicago is rippling through hundreds of smaller governments, squeezing budgets as officials prop up teetering police and fire retirement funds. The eastern Illinois border city of Danville has reduced its firefighter ranks by 27 percent in five years to lower retirement costs. The tiny Chicago suburb of Stone Park sold $2 million in bonds last year to bolster the police pension, which had just six cents for every dollar owed retirees. “Most communities in this state are in no position to continuously meet the pension requirements,” said Tom Weisner, mayor of Aurora, the state’s second-largest city, with a population of almost 200,000. The squeeze comes from about 650 police and fire pension funds and is largely overlooked in the deepening Illinois and Chicago pension crises. The state is saddled with $111 billion in unfunded liabilities. Chicago and its public school system, with a combined shortfall of ...

NY Times: Illinois Supreme Court Rejects Lawmakers’ Pension Overhaul M. Spencer Green/Associated Press Lawmakers behind him, Gov. Pat Quinn of Illinois signed the bill in 2013 that was rejected by the state Supreme Court on Friday. The court found that the proposed fixes lawmakers had agreed to over a year ago diminished the pension and violated the Illinois Constitution. I think the right leadership could sell a constitutional referendum  that would save voters from the confiscatory taxes that would be required to meet current pension obligations.  Unfortunately, Illinois has not had much of that of late.  The state's taxes are already pushing the economy into a death spiral as businesses leave to lower tax states.

Unionwatch.org: Illinois Pension Plans 39% Funded – Taxpayers On the Hook The funds are too generous and the yields on their investments are too slender.   The actions of the Fed have lowered interest rate on secure investments to the point that they are no longer viable vehicles for the pension funds, that are now pushing funds into junk bonds to try to bet a better return.  How bad is it?  Illinois citizens are now on the hook for $22,000 each just to pay the pensions promised.  No wonder people are leaving the state.

LA Times: Calif. pension funds are billions short, with taxpayers on hook They are going to have to cut benefits, raise taxes or declare bankruptcy.  They are facing one of the same problems that brought Detroit down.

Washington Examiner: Detroit captured national headlines by declaring bankruptcy, but the Motor City is not the first -- and probably not the last -- American metropolis to face financial ruin. It's a fact even the mayor of Detroit, Dave Bing, acknowledged July 20 when he predicted his city was the first of "many dominoes that will fall." The situation in Detroit is the result of a unique mix of civic corruption, poor financial planning and economic collapse. But one of the driving factors in Detroit's bankruptcy is an unsustainable public pension crisis, similar to what many other cities are facing. In which cities will the next dominos fall? It's hard to tell exactly, but the signs are there. In April, Moody's Investors Service, a bond-rating agency, issued a report identifying 29 municipalities selected for review over concerns of credit-worthiness. Their chief concern: Some municipalities are underreporting pension liabilities; the ways in which those l...

Richard Mourdoch who is now running for the senate in Indiana explains how the State of Indiana was screwed out of $42.5 million when the UAW was moved ahead of secured debt holders like the pension funds.  I have been hammering this point from the beginning, but Mourdock offers some real world experience of how it hurt middle class retirees who were not responsible for the problem and rewarded the UAW whose contracts had made the auto companies uncompetitive.

Family Security Matters: From the bed of a Ford pickup truck outside a now-dilapidated former Delphi auto parts plant here, Mary Miller called for transparency from President Barack Obama over the "theft of our pensions." Miller, a self-described "divorced mother of four young adults," and about 200 Delphi salaried retirees gathered at the shuttered auto plant in Dayton last Thursday morning to ask President Obama to right the wrongs they believe his administration inflicted upon them during the 2009 auto industry bailout. The Obama administration terminated the pensions, health care and life insurance of more than 20,000 Delphi retirees during that bailout. Internal Pension Benefit Guaranty Corporation (PBGC) emails The Daily Caller published on Aug. 7 show the Obama White House and Treasury Department have consistently misrepresented the decision-making process behind the backroom deal. The emails demonstrate that White House and Treasury officials were behind t...

Deroy Murdock: Democrats convened in Charlotte, NC, will double down on their claim that Bain Capital is really the Bain crime family. They will accuse Republican nominee Mitt Romney and Bain’s other “greedy” co-founders of stealing their winnings, evading taxes and lighting cigars with $100 bills on their yachts. But Bain’s private-equity executives have enriched dozens of organizations and millions of individuals in the Democratic base — including some who scream most loudly for President Obama’s re-election. Government-worker pension funds are the chief beneficiaries of Bain’s economic stewardship. New York-based Preqin uses public documents, news accounts and Freedom of Information requests to track private-equity holdings. Since 2000, Preqin reports, the following funds have entrusted some $1.56 billion to Bain: * Illinois Municipal Retirement Fund ($2.2 million) * Indiana Public Retirement System ($39.3 million) * Iowa Public Employees’ Retirement System ($177.1 million) * The ...

Walter Russell Mead: Illinois taxpayers are facing huge liabilities for their state’s bloated, poorly managed, and underfunded pension system, and public sector workers face an uncertain future, as taxpayers are unlikely to cough up the huge sums required to make good on the debt. Now everything is getting worse: S&P has downgraded Illinois bonds, meaning that the interest rate on the state’s huge debt is likely to rise, squeezing the state treasury even further. As  Businessweek   reports : Standard & Poor’s Ratings Services said it lowered Illinois’ rating a notch because of “weak pension funding levels and lack of action on reform measures.” The firm also said the financial outlook for Illinois is negative, in part because the state’s temporary income tax is scheduled to expire in 2015. Illinois politicians agreed the state’s massive pension shortfall must be corrected quickly, but they blamed others for the delay. Democratic Gov. Pat Quinn said legislator...

Michelle Malkin: Chutzpah overload in full effect: President Obama’s sleazy super-PAC, run by his former White House spokesman Bill Burton, released an ad accusing Mitt Romney of causing the cancer death of a steelworker’s wife. It’s not just a slanderous and false attack. It’s a foolish attempt to camouflage the administration’s massive jobs-death toll, politicized pension plundering and Big Labor bailout cronyism. And it will backfire big time — because the thousands and thousands of true victims of Obama’s economic wreckage are speaking up and fighting back. While Team Obama promotes fables to indict Romney, the incontrovertible stories of this administration’s economic malpractice are finally getting out. In 2010, I first reported on how Obama’s “auto industry” bailout threw tens of thousands of nonunion autoworkers under the bus. It’s the ongoing horror story of some 20,000 white-collar workers at Delphi, a leading auto-parts company spun off from GM a decade ago. As Washington ...

Daily Caller: Emails obtained by The Daily Caller show that the U.S. Treasury Department, led by Timothy Geithner, was the driving force behind terminating the pensions of 20,000 salaried retirees at the Delphi auto parts manufacturing company. The move, made in 2009 while the Obama administration implemented its auto bailout plan, appears to have been made solely because those retirees were not members of labor unions. The internal government emails contradict sworn testimony, in federal court and before Congress, given by several Obama administration figures. They also indicate that the administration misled lawmakers and the courts about the sequence of events surrounding the termination of those non-union pensions, and that administration figures violated federal law. Delphi, a General Motors company, is one of the world’s largest automotive parts manufacturers. Twenty thousand of its workers lost nearly their entire pensions when the government bailed out GM. At the same time, D...

This is a remarkable hearing where the committee continues to be faced with a stone wall of silence about the decision of the administration to screw the salaried employees of Delphi while proving full pension benefits to UAW members as part of the GM bankruptcy.  It was just one part of a disgraceful performance by the Obama administration in the handling of the bankruptcy.

Michael Gerson: ... The Pew Center on the States  has quantified the problem. In 2008, states had set aside $2.35 trillion to pay for public employees’ retirement benefits while owing $3.35 trillion in promises — a difference of $1 trillion. A year later, the gap had grown by 26 percent. This massive, expanding obligation cuts into the provision of government services.   The zero-sum choice between public pensions and public services is even more evident on the local level. In California cities where unions have been successful in securing advantages, the fiscal crisis is acute. The growth of salaries, health benefits and pensions has far outpaced the growth of revenues. Payments by the city of San Jose, Calif., to its public retirement fund have gone from $73 million in 2001 to $245 million this year — crowding out spending on libraries and public safety. On Tuesday, 71 percent of San Jose voters approved a measure to cut retirement benefits for city workers. San Diego v...