The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy • Hacker News Board

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#201

Post by mistermann » Tue, Jul 31, 2018, 2:06 AM UTC

sykhic wrote: post #184

mistermann wrote: post #176

Earlier quoted context omitted.

> I use Any Randian to describe those who publicly cite her and they tend to have a certain political philosophy that is best described by me as, "I've got mine, fuck you." a) Do you think it is responsible to be opaque on whom you are attributing the belief to, particularly considering the topic of conversation and the fact that her warnings on the matter were clear? b) These people you cite, are they Ayn Rand suppo…

There is colloquial and there is technical usage of terms. I’m speaking colloquially. Like some people generally refer to the US as a Christian nation. They typically mean this in the sense of history or values and don’t necessarily mean to say that a majority of the population fits their personal definition of what a Christian is.

I don't understand what this is referring to or how this is relevant, could you state it in a simpler manner?

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#202

Post by Haydos585x2 » Tue, Jul 31, 2018, 2:11 AM UTC

jstewartmobile wrote: post #27

zajd wrote: post #16

Earlier quoted context omitted.

> Somehow I doubt anyone is going to agree to pay more in taxes to cover pensions in their state or city. After all, why should the government keep its promises (especially if it means we have to pay for it)? I agree with it but then again I'm not opposed to paying taxes. Why shouldn't we provide for the retirement of our workforce?

Boomers and their parents took out wayyy more than they put in. Whenever it has been time to pass the cup around for other groups, they haven't been what I would call generous. Look at the funding difference between Medicare and Medicaid if you want a feel for it. Given all of that, I'm not too excited about propping-up their pension shortfalls.

I agree with you. I think it's a bit dangerous to start splitting boomers out though. All it's going to do is create division between young and old resulting in defunding for both groups.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#203

Post by randysavage » Tue, Jul 31, 2018, 2:38 AM UTC

betterunix2 wrote: post #142

ngngngng wrote: post #136

Earlier quoted context omitted.

But why does the government get to make a promise with the money of someone that wasn't even born at the time (me)?

It makes no difference, because the promise was already made and now you have to choose between (a) destroying your government's credit rating or (b) making good on the promise. Complain all you want, but that's just the situation we find ourselves in.

In the short term, sure. In the longer term, when increased taxes and decreased services impact the average person, these promises will be renegotiated.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#204

Post by ghein » Tue, Jul 31, 2018, 2:43 AM UTC

taurath wrote: post #38

safgasCVS wrote: post #12

If I paid for WSJ and this is the low quality journalism I got I'd be peeved. This article barely touches on how it got to be so bad. Excuse me but no - a single paragraph stating the obvious 'benefits promised were too rich' doesn't cover it. How is it possible that a solvency ratio can drop from 100% to 75% in 18 years? This doesn't just happen because eh seemingly every pension administrator just decided. How much…

What I can't understand is that the stock market in the past 8 years has been one of the best in history. Wouldn't that make up for losses somewhat, and what would happen if the market tanked during that time?

Many pensions have ambitious assumptions of 7 or 8% annual returns.

S&P went from 1565 Oct 07 2007 to 735.09 Feb 27 2009.

We're now up to 2818 but if we had delivered 8% since october 07 we'd be at 3649 by this Oct 5. So we're 28% short!

If you use S&P peak in 2000 it's 1552 and to deliver 8% since then we'd need to be at 6209!!!

Catching back up to steady state growth, especially after a 50% loss, is unfathomably hard!

What makes it worse is that the present value of obligations skyrocketed as interest rates went to 0. In 07 the Fed Funds rate was 4.5% and it's currently 2%. This rate was 0.25% until the end of 2015. For a payout of $50k per year for 10 years, ten years in the future, the present value is $481,031 at 0.25%, $368,442 at 2%, and $254,761 at 4.5%.

So the current obligation is 44% higher than it was in 07 and the amount of money is 28% lower than expected. And this is AFTER the S&P has had an incredible run from 735 to 2818!

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#205

Post by sykhic » Tue, Jul 31, 2018, 3:12 AM UTC

mistermann wrote: post #201

sykhic wrote: post #184

Earlier quoted context omitted.

There is colloquial and there is technical usage of terms. I’m speaking colloquially. Like some people generally refer to the US as a Christian nation. They typically mean this in the sense of history or values and don’t necessarily mean to say that a majority of the population fits their personal definition of what a Christian is.

I don't understand what this is referring to or how this is relevant, could you state it in a simpler manner?

I don't think I can. I gave an example of how people speak colloquially. For instance, one can mention Christianity in a discussion but that term means different things to different people. People will say things like, "Christians believe this..." without it being literally true. Most people speak colloquially and not in a technical sense. The phrase "Ayn Randian paradise" does not imply the sort of paradise envisioned by Ayn Rand. It's a reference to a belief commonly held by people who nominally agree with Ayn Rand's view as they understand it to be.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#206

Post by ericmcer » Tue, Jul 31, 2018, 3:16 AM UTC

chris_mc wrote: post #115

gok wrote: post #53

> It is increasingly likely that retirees, as well as new workers, will be forced to take deeper benefit cuts. Boohoo. Public service union members should have thought about that before pursuing a pyramid scheme retirement plan instead of a defined contribution pension like the rest of us.

Why in the ever loving fuck are you blaming the _workers_ for this shortsightedness instead of the government organizations who are about to fuck those people over when they're 70? Maybe the administrators of the pension accounts and financial planners for these organizations should have done better by the people who are busting their (collective) asses to provide services for you, the taxpayer?

No one busts their ass like government workers! Government jobs are well known for high job security and very few performance based incentives. Not exactly a recipe for hard work.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#207

Post by aisengard » Tue, Jul 31, 2018, 3:29 AM UTC

landryraccoon wrote: post #197

candiodari wrote: post #179

Earlier quoted context omitted.

> Well, we are the ones paying those people's pensions, in the form of taxes, so we're the ones fucking ourselves over if they got too sweet of a deal right? And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? Furth…

> And how does this square with this being a democracy ? Or to put it another way: you're also (indirectly, but ...) the ones promising sweet pensions to these people if they would just work. And they worked. Now you want to revoke your part of the bargain ? So I think this argument actually works against you. First, nothing can bind future generations. They can always change whatever they want to. In the United Stat…

So think of it this way, how would you feel if a socialist government took over and decided that your 401k is fair game for extra taxation? But it's _your_ money, capitalism promised you! "Boohoo", you should have thought of that before entering into a clearly unsustainable pyramid scheme.

Not so useful or interesting in terms of commentary, is it?

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#208

Post by fbonetti » Tue, Jul 31, 2018, 3:55 AM UTC

dragonwriter wrote: post #172

TheRealDunkirk wrote: post #167

Earlier quoted context omitted.

Yes! Some city or state is going to go bankrupt because of this, and the people affected are going to sue. It will take at least a decade to work up to the Supreme Court, who will find (no matter WHAT the liberal/conservative makeup at the time) that, surprise, surprise, the government is NOT legally obligated to pay out the benefits they said they would. Various governments will try to implement various forms of aus…

> Some city or state is going to go bankrupt because of this, States cannot go bankrupt, without a change to federal law. Cities can and have, and pensions have already been addressed in that context. It's not a new question. > and the people affected are going to sue. It will take at least a decade to work up to the Supreme Court, who will find (no matter WHAT the liberal/conservative makeup at the time) that, surpr…

> It's already been established that pensions can be cut in bankruptcy, so, yeah, that's not even a question.

Minor nitpick, but it’s in Illinois’ state constitution that pensions cannot be reduced. Republicans want to change the constitution to remove this rule, but Illinois is an overwhelmingly Democratic state so that’s never going to happen. It will be interesting to see how all of this plays out.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#209

Post by jstewartmobile » Tue, Jul 31, 2018, 4:09 AM UTC

Haydos585x2 wrote: post #202

jstewartmobile wrote: post #27

Earlier quoted context omitted.

Boomers and their parents took out wayyy more than they put in. Whenever it has been time to pass the cup around for other groups, they haven't been what I would call generous. Look at the funding difference between Medicare and Medicaid if you want a feel for it. Given all of that, I'm not too excited about propping-up their pension shortfalls.

I agree with you. I think it's a bit dangerous to start splitting boomers out though. All it's going to do is create division between young and old resulting in defunding for both groups.

Between this, Iraq/Afghanistan, China's ascent, and global warming, defunding (by circumstance rather than choice) is probably inevitable at this point.

Re: The Pension Hole for U.S. Cities and States Is the Size of Japan’s Economy

#210

Post by fbonetti » Tue, Jul 31, 2018, 4:14 AM UTC

freeflight wrote: post #86

raincom wrote: post #29

Earlier quoted context omitted.

Pensioners, union members, and their families always vote for B. The people who care about the long term hardly form a solid block to elect the candidate A.

Just cutting benefits misses the point, how is austerity a long-term solution? The US has a massive problem with the perception of "government usefulness", heck you've got whole political wings solely trying to appeal to "the only good government is no government" mentalities. As a result, barely anybody wants to pay taxes for anything, in their extremely egotistical and narrow-sighted definition of "freedom".

Cutting existing benefits is the only way to avoid bankruptcy in many states and cities. The long term solution is to switch to a defined contribution plan instead of defined benefits.

The reason why many on the right are wary of government programs is because they’ve watched the government horribly mismanage their tax money over and over and over again. It’s not necessarily because politicians and bureaucrats are necessarily stupid or evil, it’s because the government is generally not incentivized to do a good job, since they don’t face competitive pressure like businesses in the private market.