Opinion: Government unions tee up Calif.’s bankruptcy
By Bill Frezza, Forbes
Half a billion dollars. That’s how much the California Teachers Association and the powerful Service Employees International Union have spent on California politics since 2000. The unions’ return on that “investment”? A legislature totally beholden to them for political support and campaign contributions.
Here’s another mind-boggling number: Half a Trillion Dollars. That’s an estimate of the unfunded public pension liabilities racked up by California’s state and municipal governments due to overly generous pay and defined benefit pension plans lavished on unionized government employees.
If you thought the bankruptcies of Stockton, San Bernardino, and Vallejo were entertaining, break out the popcorn to watch the next fiasco California’s famously progressive citizens voted themselves into. That first wave of municipal bankruptcies demonstrated that the odds of the state’s public pensions paying out at full value are virtually zero. The donnybrook that breaks out when the rest go sour is going to be a monster movie scale spectacle.
Jim Lacy, former Chief Counsel for Technology at the U.S. Department of Commerce and General Counsel to the U.S. Consumer Products Safety Commission, has been sounding the alarm. His new book, “Taxifornia”, lays out the numbers and illustrates them in horrifying detail, with stories you just can’t make up—like rank-and-file firefighters making $348,000 a year who can retire at age 55 at 90 percent of salary. Meanwhile, California’s poverty rate has soared to become highest in the nation (almost one in four Californians now live in poverty, according to the Census Bureau).
As my guest on last week’s RealClear Radio Hour, Jim makes the case why the rest of us should care about California’s taxpayers becoming ATMs for retired school teachers, bus drivers, police, and firefighters. “Because it’s happening throughout the rest of the country,” Jim explains. “The Detroit bankruptcy is based on the same premises.” Coming soon to a theater near you!
California has the highest state income tax in the nation, the highest state sales tax, the highest gas tax, and some of the highest corporate and property taxes. Yet, all that cash is barely enough to cover current expenditures. Governor Jerry Brown’s claim of a surplus would disappear in a heartbeat were the state to follow generally accepted accounting principles.
The damage and mismanagement that California’s politicians have inflicted on the state are outrageous. Except, of course, if you’re in line at the public trough.
I hope the people of Cali understand where the money will be coming from for the payoff of this debt !!! and none of these legislators or uncle jerry will be around or be involved in it. They will be magically exempted. Start saying goodbye to all you have worked for and your childrens futures people. And we thought SLAVERY was abolished!! It’s all under a politically correct re-working and coming to a state near you!! All the change and no hope!
What garbage. Oh, lets bring back Arnold and ENRON to put California on track… NOT!
Yep,
Just like how our City claims its broke, and is on a constant bid to grab at various and all possible forms of revenue, and then talks about how lean its running, our State will soon again try to grab at more taxpayer dollars. Bank on it!
The State will claim its cut everywhere it can, when in reality it’ll be to cover these absurd liabilities its created.
A lot of this is being glossed over with all the money pumping and artificially low interest rates the Fed has created. But if you just look gas prices, all the money-printing is creating an inflation that hopefully the Fed will be willing at some point to put the brakes on?!
And at the point, be prepared for the State, and our City, to come back to the taxpayer to bail them out for their lack of responsible caretaking of their respective budgets.
Bill Frezza is a libertarian venture capitalist and radio talk show host. If you like Rush you will love this guy. His opinion is worthless.
What a fine mess we’ve gotten ourselves into!
Parker. Your dog arguments don’t hunt.
Forbes Magazine predicted: Perry would win in 2012, there would be a complete financial meltdown in 2013 and The Affordable Care Act would kill jobs; ALL WRONG!
And I WILL NOT BANK on anything you say on this blog; that’s for sure.
Parker, The gas prices are a global issue, when prices go up globally, ours goes up(well cali does go up because of the mixture changing for the summer)
Rock, please don’t hide under yourself. Unfunded pension plans are a huge problem for the future, Just look at the problem the city will be facing in the next few years, we will have to cough up something like $300k extra next year plus 7% increase. On the state level it gets worst. That is why Gov. Moonbeam is doing the right thing and not increasing budgets like many in his party wish, rather he is trying to help the situation by paying down debt. I don’t quite understand why you keep living in the past. Gov. Arnold did very little as he couldn’t as he never controlled either house while he was in office. The Demos ran right over him. Poor Arny.
Social Security and the Federal Government will be in the same boat as the boomers retire. The Federal government will really be hampered when they have to start paying back the money they borrowed from social security as the money collected starts to be less than what social security pays out. IF they cant sell enough bonds to cover their deficit and what they have to pay back to social security, watch out!!
reloman,
Printing money causes prices to go up. Gas has gone up, food has gone up, as the US is in essence printing money, as is in essence most of the World’s big economies.
It causes assets to ‘inflate’, making the richer, and it causes commodity to prices to go up, putting the pinch on the working poor.
And it makes debt artificially cheap, thus making absurd future obligations seemingly not as absurd, as people delude themselves into believing that things such as ever inflating stock markets will cover pension fund obligations. That is until inflation hits in full force, and an urgent correction will be in order.
Rock, I hope I’m not right. But I notice the specific facts of the story are not questioned! Just the messenger gets attacked.
Parker, yet inflation is still in check, but as soon as it rears its ugly head, rates will climb and the federal gov will be in trouble as it has to pay more in interest rates.
I agree with you on most of what you are saying in the second have of the above message.
You really cant attack the facts as a great many people both liberal and conservative are saying the same thing.
Relo. I’m not hiding from anybody, especially you. And, I am not going to hold my breath waiting for any of your predictions to come true.
Parker. I said “What Garbage” to the article; I would not trust Forbes or any of his ilk. And, I did not “attack” anyone.
Rock,
Sorry, truly, if attack was too strong a word! I’m working on doing my part to raise the civility on this blog. Yet, I still wish when someone disagrees with an editorial, it would be focusing on the points instead of its author.
And reloman, I’ll say it again. Look at gasoline prices. And to not quite the same extent, food prices. Inflation is back! Don’t blindly rely on the govt. data. Simply look at the prices at the pump or at the grocery store. They tell the whole story!