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

#71

Post by pmwhite » Mon, Jul 30, 2018, 9:41 PM UTC

Someone1234 wrote: post #24

justaman wrote: post #4

Its funny that the government is as bad with money as the people. Truly a good representation.

Both US Democracy and CEOs at large companies both have an adverse interest in short-term success, even at the cost of the long term. This is why in both cases out-sourcing/privatization is popular. It shows a short term benefit, the long term is someone else's problem. How can we expect politicians to care about the pension fund if the problem isn't going to materialize for tens of years pass the end of their term l…

"And if they were a "hero" and increased taxes to try and tackle it, they'd only get voted out next election, so someone else can come in, undo it, then spend all the savings."

George H. Bush is one of the few important fiscal conservatives elected in my lifetime, and he is despised for it, especially by people who like to claim they are fiscal conservatives.

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

#72

Post by anilshanbhag » Mon, Jul 30, 2018, 9:41 PM UTC

sykhic wrote: post #33

Overal taxation in the U.S. is low compared to other OECD countries [1]. We, as a nation, decided that low taxes was the goal. As a result infrastructure is poor, toll roads are increasing, privatization of prisons, intelligence gathering, war, etc. are rising too. Yet Americans falsely believe they are overtaxed. The situation is easy to fix in economic terms but not in political terms. The road to an Ayn Randian pa…

Taxes being lower or higher are not what determine size of pension hole. Greece and Italy have higher taxes and still have a pretty big pension hole. The problem is public sector employees are promised pensions higher than county/city can afford. Unlike a corporation which has to balance its budget, city officials go beyond means with their promises in order to get elected and leave the problem for the next set. This is one of the main reasons why many in this country prefer a small government vs big.

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

#73

Post by Nelkins » Mon, Jul 30, 2018, 9:42 PM UTC

Why no comparisons to the pension systems in other countries? I'm always hearing about how Europe has a much more generous pension system. Do they work the same way? Are they all similarly underwater? If not, what are they doing differently?

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

#74

Post by ars » Mon, Jul 30, 2018, 9:43 PM UTC

sykhic wrote: post #33

Overal taxation in the U.S. is low compared to other OECD countries [1]. We, as a nation, decided that low taxes was the goal. As a result infrastructure is poor, toll roads are increasing, privatization of prisons, intelligence gathering, war, etc. are rising too. Yet Americans falsely believe they are overtaxed. The situation is easy to fix in economic terms but not in political terms. The road to an Ayn Randian pa…

I didn't realize US taxes were so high in comparison to other countries.

You are looking at the wrong table. Look at the next table instead and see just how high the US is relative to other countries.

The only thing we don't tax is goods, but that's to help lower income people - the same people you want to help.

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

#75

Post by pathseeker » Mon, Jul 30, 2018, 9:43 PM UTC

omegaworks wrote: post #21

betterunix2 wrote: post #9

The choice is raising taxes, reducing spending elsewhere, or demanding workers give up the pensions they were promised. 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)?

>The choice is raising taxes, reducing spending elsewhere, or demanding workers give up the pensions they were promised. Why is there a fourth option for banks and not for pensions? Why is Quantitative Easing left out of this discussion?

Quantitative easing was not for banks. Also, the bailouts to which you refer were not free money, they were loans with low interest rates that have been paid back.

The pensions don't have enough money so easy access to debt does nothing to help them solve that problem.

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

#76

Post by captain_perl » Mon, Jul 30, 2018, 9:44 PM UTC

Since the comments in this thread are missing historical context, here's a review wrt California:

1) the State Treasurer presented 3 options (low - 6%, middle - 7%, high - 8%), but said high was dangerous 2) the State picked high, since they were voting on their own pension payments 3) the municipal unions went to the mayoral candidates across the state and said, "if you want our support on election day, support 8%" 4) the courts have ruled that once a pension plan is approved, it can't be repealed for existing members 5) the San Jose mayor actually tried to repeal it to prevent city bankruptcy, and was ground into the dust by the public unions and courts 6) the last city employee in each city will be the Treasurer, to sign pension checks. There will be no city services (fire, police, libraries, etc.) - just pension payments. This is already happening in California 7) Public union members receive higher salaries now (thanks to COLA) than the private sector, plus multi-million dollar pensions. My dentist calls them "royalty" because their benefits are on a different level than the private sector.

What's ironic is that Marx predicted that in a democracy, the voters would eventually vote themselves ruinous entitlements. He was correct, but all it took was the public unions.

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

#77

Post by rayiner » Mon, Jul 30, 2018, 9:44 PM UTC

sykhic wrote: post #33

Overal taxation in the U.S. is low compared to other OECD countries [1]. We, as a nation, decided that low taxes was the goal. As a result infrastructure is poor, toll roads are increasing, privatization of prisons, intelligence gathering, war, etc. are rising too. Yet Americans falsely believe they are overtaxed. The situation is easy to fix in economic terms but not in political terms. The road to an Ayn Randian pa…

> Instead of asking why they have no pensions they seek to equalize status by falsely believing we can't afford any sort of pension.

More accurately: we can't afford the pensions we've promised with the taxes we're willing to pay. It's not a normative argument but a descriptive one.

And within the American free market, there is little incentive for people to pay more taxes to close that gap. Why pay more taxes to Illinois--and not get any increased public services from those taxes, because the money is going to people who have already retired--when you can move to Tennessee or Texas and pay less?

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

#78

Post by dunpeal » Mon, Jul 30, 2018, 9:45 PM UTC

gok wrote: post #64

sykhic wrote: post #33

Overal taxation in the U.S. is low compared to other OECD countries [1]. We, as a nation, decided that low taxes was the goal. As a result infrastructure is poor, toll roads are increasing, privatization of prisons, intelligence gathering, war, etc. are rising too. Yet Americans falsely believe they are overtaxed. The situation is easy to fix in economic terms but not in political terms. The road to an Ayn Randian pa…

That is not the issue this article is talking about. Public pension spending in the US is not especially low compared to the rest of the OECD [1]; as a portion of GDP it's larger than Norway or the Netherlands, which have much higher taxes. The issue is that those pensions have been comically mismanaged; edit: and were not sustainable in the first place [1] https://data.oecd.org/socialexp/pension-spending.htm

Defined-benefit pensions are economically bankrupt when lifespan keeps increasing. This has been known for decades[1] and is the reason why none of us reading this have a DB pension, except those lucky few state employees who got a sweetheart deal all those years ago.

Of course, the fact these pensions were managed by state government (read: mismanaged) only accelerated the inevitable crisis.

[1] https://www.investopedia.com/articles/retirement/10/demise-d...

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

#79

Post by kodablah » Mon, Jul 30, 2018, 9:45 PM UTC

sykhic wrote: post #33

Overal taxation in the U.S. is low compared to other OECD countries [1]. We, as a nation, decided that low taxes was the goal. As a result infrastructure is poor, toll roads are increasing, privatization of prisons, intelligence gathering, war, etc. are rising too. Yet Americans falsely believe they are overtaxed. The situation is easy to fix in economic terms but not in political terms. The road to an Ayn Randian pa…

I'm always dismayed here and elsewhere to see everyone assuming that collection is the problem, not the dispensing and management. If someone proves incapable of proper budgeting, surely it is foolish to want them to have more money? Always sad that it's everyone but the policy and budget makers being blamed for the failures of policy and budget making. You can argue an honest politician can't survive, but you shouldn't shift blame.

It seems like some feel it's a catch 22, that citizens don't want to pay for things yet they want things. But in reality, those clamoring for the improvements and government assistance are rarely those that don't want to pay and/or recognize government fallacies wrt spending. If you want to tackle the problems, you need to first be honest with where they lie...and not having enough money is not where the problems lie.

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

#80

Post by kartan » Mon, Jul 30, 2018, 9:46 PM UTC

0x00000000 wrote: post #8

>For the past century, a public pension was an ironclad promise Let's not pretend like this was ever seriously going to be sustainable. It's just a big middle finger to future generations while an opportunistic generation got to suck the system dry in prosperous times then peace out.

> Let's not pretend like this was ever seriously going to be sustainable.

Why not? Each year machines become more efficient, and productivity has gone up. The main problem has not been to create wealth, it has been on how to share it.

Politicians also say that health care for everyone is impossible, but there is a lot of countries that do just that.

This is about setting expectations. If you convince your citizens that paying pensions is wasteful and not sustainable, you can diverge that money to other places.

Look at tax breaks and you will find where your pension is.