State Pension Plan Fallout

As reported by the Associated Press, the Pew Center on the States released a report citing that there is at least a ONE TRILLION DOLLAR deficit in state pension plans.

The article by AP begins by stating, “States may be forced to reduce benefits, raise taxes or slash government services…” due to the billion dollar gap.

More than likely, it will be a combination of all three.

The study, unfortunately, does not include any county, city or municipal pension programs.

The most troublesome news about the study, however, is that AP says the report does not necessarily include pension plan losses from the 2008 economic downfall.

Thus, the trillion dollar gap is, in all reality, much much more.

According to the AP article, “The report said policy makers have exacerbated the problem by expanding benefits, relying on overly optimistic assumptions about investment returns and failing to sufficiently fund the programs.”

That phrase “relying on overly optimistic assumptions about investment returns” is scary.

This sort of financial mis-management, regardless of the 2008 financial market crash (as the Pew study does not take ramifications of that into account), heightens concern for Main Street USA that the public sector (i.e., the federal government) should take over healthcare or any other services they may be considering, for that matter.

The phrase “expanding benefits” is also worrisome. Why is it that public sector executives feel that they have the right to expand benefits if money is not there to cover the obligation?

Does the thought process during public sector budget meetings run along the lines of, “Oh, not to worry, we can always raise taxes, or charge new fees for services to make up for that gap.”

And then to top it off, “failing to sufficiently fund the programs” simply means that, come budget time, those in charge decided that certain budget items would be covered with money that is currently available while leaving the pension plan with less money than called for, thus widening the deficit even more.

That sort of “planning” is simply policy-makers not taking any responsibility for actions taken, but, rather, pushing the problem off to the next generation.

That is corrupt and criminal.

As more and more services are performed by the public sector, which seems to have no rules against operating with massive debt obligations or not meeting financial projections, the burden will ultimately fall on the US taxpayer.

And, while the White House Administration and Congress continue to implement, or strongly suggest the need for, more government oversight in and on the private sector, who is it that is running oversight on their own financial misdeeds?

Food for thought.

Over For Now.

Main Street One

What’s Another Trillion-Plus ? ? ?

The $3.8 Trillion budget being presented to Congress calls for a deficit of $1.6 Trillion.

In other words, 42% of what is proposed to be spent is NOT covered by off-setting income.

And, according to the Associated Press, “…administration officials argued that Obama inherited a deficit from President George W. Bush’s Republican administration that was already topping $1 trillion when he took office, and given the severity of the downturn, the president had to spend billions of dollars stabilizing the financial system and jump-start growth.”

It is true to President Obama did inherit a deficit topping a Trillion Dollars (remember, that is One Million times One Million), but that is not a reason to triple that amount in two years (i.e., a $1.4 Trillion gap this year and $1.6 Trillion in the coming year).

If anything, the inherited deficit should be a call to arms to get spending under control.

In all areas.

How will any future Main Street USA generation be able to cope with such massive debt?

Economics 101: Deficit spending does not reduce a deficit.

Over For Now.

Main Street One

Healthcare Reform and Taxes

While President Obama continues to say that national healthcare reform will not put Main Street USA further into debt, the bi-partisan Congressional Budget Office says otherwise.

Even though the president campaigned with the promise that “you will not see any of your taxes increase one single dime,” those making over one quarter of a million a year most likely would be shouldering a large chunk of the burden.

Plus, if projections are not on target in two years, there will be an automatic tax increase for those folks.

And even President Obama’s Chief Economic Advisor, Larry Summers, is not ready to rule out higher taxes for middle class America.

I, for one, cannot recall a major government program that did not end up costing all Americans (other than those who are not working) more in taxes and other forms of taking-away-our-earnings, such as the proposed sugary drink consumption tax.

On another front, Speaker of the House, Nancy Pelosi, is telling her Democrats to inform their constituents what’s in it for us and we will support it.

The problem with that is anything can sound good presented in the right way. That does not make it right.

Why not explain to everyone the elusive concept of one trillion dollars…spending one million dollars a day, each and every day, for over 2,700 years.

That is a whole lot of money, of national debt.

Senate Democrat John Rockefeller doesn’t want to support something that “sounds user-friendly” like a public co-op and espouses that a co-op cannot take on the “gigantic insurance” companies.

Senator Rockefeller, how big are your family holdings in oil and banking (and other things we don’t even know about)?

Besides, this isn’t about anyone “taking on” the insurance companies, least of all our government, because if we are to do that, we are surely doomed. The “government” (i.e., Main Street USA taxpayers) will subsidize lower and lower insurance costs in order to “compete.”

When there are so many disagreements about what this healthcare reform is really going to cost I think it is time to put on the brakes.

You cannot project revenue on assumptions and goals. You must have realistic figures; otherwise it all becomes pie in the sky.

And, I continue to state, not one of our elected officials are talking about Tort Reform as a way to reduce insurance costs, which it absolutely would accomplish. Perhaps that is because attorneys and law firms are one of the major lobbying blocks and that sector earns substantial fees for tremendous tort verdicts.

As a matter of fact, I have not counted them up, but I’d venture to say that a large percentage of Senators and House members came from those very ranks.

Coincidence, I suppose.

What Main Street USA must must must demand is accountability from our elected officials.

What if they take a pay cut, or don’t take a vacation, or take a cut in their hefty pension plan if they can’t balance a budget, or enact some legislation that doesn’t earn the revenue they plan on or costs go over the allotted amounts.

Accountability goes both ways.

Some things to think about.

Over For Now,

Main Street One