The pending crisis in pensions is looming larger each day. When a pension fund does not have enough money to meet its promises it is called underfunded. This has happened in the past, most recently in the late 70’s when inflation hit double digits. The funds that are adversely affected are not the 401 K types but those called defined benefit plans and most state employee plans are in this category. Recall how these plans work. The fund has a factor, usually between one and two percent. The factor is multiplied by the number of years you worked and that is the percent of your salary that you will receive at full retirement. If the factor is 1.5% and you have worked there for 30 years you will retire at 45% of salary. Some people have suggested that the factor be lowered to save the fund and this would work but I have a better suggestion. Remember that the benefit is determined by the factor, the years of service and final salary. I suggest that the states announce that all future pay raises will be one half of the inflation rate and this will hold wages down. People who are close to retirement will not be affected but younger workers will and they will have time to make up for the pension loss with other savings. All employees will know that they are not going to receive pay raises comparable to those in other jobs and they can look elsewhere if they are not happy. New hires will know up front what they are getting into and so no surprises for them. How long this restriction on wages lasts depends on the economy and may someday be adjusted. Take one example. Employee A is 30 years old and earns $40,000 per year. If inflation over the next 30 years is 5% his wage at age 60 would be $172,800 per year and if he retired at 45% his pension would be $77,800 per year. If his salary was allowed to increase by only 2.5% his final pay would be $83,900 and his pension would be $37,700. As you can see the reduction in wages would not have to be as drastic as one half of the inflation rate and it could be calculated to make the pension whole again. My experience with pension tells me that holding wages down by a small amount over a long period of time would be the least painful way to solve this problem.
While what I am suggesting here looks and is drastic there are other ideas that are even more troublesome. One is for congress to pass a law that allows states to file bankruptcy after which they can renegotiate the pensions agreements and get them properly funded. In any event you will be hearing a lot more about underfunded pensions in the near future.
Sunday, January 16, 2011
soccer
I generally check in on the English Al Jazzera site and in today’s news they pointed out that the entire Arab world was pulling for Algeria in the soccer game. In line with the Obama policy of going out of our way to try and get along, I think we should have lost the game on purpose and then all those Arabs would like us better. We missed an opportunity to engender good vibs from our Arab friends.
I wonder if Patraeus demanded that the July 11th pull out date be rescinded as well as the don’t shoot until your shot at rule before he agreed to take the job. Recall that Senator Obama was outspokenly against the surge in Iraq which Patraeus successfully handled. After the success Obama had a change of heart
Barack Obama purges Web site critique of surge in Iraq
BY JAMES GORDON MEEK
DAILY NEWS WASHINGTON BUREAU
Monday, July 14th 2008, 8:10 PM
·
WASHINGTON - Barack Obama's campaign scrubbed his presidential Web site over the weekend to remove criticism of the U.S.troop "surge" in Iraq, the Daily News has learned.
I wonder if Patraeus demanded that the July 11th pull out date be rescinded as well as the don’t shoot until your shot at rule before he agreed to take the job. Recall that Senator Obama was outspokenly against the surge in Iraq which Patraeus successfully handled. After the success Obama had a change of heart
Barack Obama purges Web site critique of surge in Iraq
BY JAMES GORDON MEEK
DAILY NEWS WASHINGTON BUREAU
Monday, July 14th 2008, 8:10 PM
·
WASHINGTON - Barack Obama's campaign scrubbed his presidential Web site over the weekend to remove criticism of the U.S.troop "surge" in Iraq, the Daily News has learned.
oil rigs
For anyone who might have skipped geography class, I would like to remind you that the island of Cuba sticks out right into the Gulf of Mexico. In recent years Cuba has made arrangements with China, Russian, Spain and Italy which will permit the construction of off shore oil rigs in the Gulf. Using slant drilling these rigs will tap into the vast reserves that were assumed to belong to the US and Mexico. In addition Venezuelan has recently contracted with Cuba to build a large refinery in Cuba. Recent news items have suggested that the oil platforms may move to Brazil or Africa but the may only move a few miles into Cuban waters and start pumping oil for Russia who will then sell it to the US further increasing our dependence on foreign oil.
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Even if they lift the ban on drilling it is likely that new regulations that will not affect Cuban waters will increase the cost of drilling….things like safety equipment, insurance and other government regs. With these additional cost it may be better business to move into Cuban waters
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Even if they lift the ban on drilling it is likely that new regulations that will not affect Cuban waters will increase the cost of drilling….things like safety equipment, insurance and other government regs. With these additional cost it may be better business to move into Cuban waters
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general
I cannot let this day pass without putting in my two cents worth on the General McChrystal situation. His actions indicate a degree of immaturity which disqualifies him from his position. There is nothing wrong with disagreeing with the president but it is best to express his concerns face to face in private and if he cannot carry out the orders given to him he should resign. Some say that it was his plan that Obama asked him to carry out but that is not the whole story. He asked for 60,000 troops and received only 30,000. After he agreed to the plan the president announced a date to start withdrawing and later placed restrictions on how the troops in the field should behave, going so far as to say they should not fire unless fired upon. I believe McChrystal should have resigned when the July of 2011 start of withdrawal was announced. To tell an enemy who fades in and out of the woodwork that you plan to start leaving next July is an unacceptable military policy and McChrystal knows that, but chose to stay in spite of it.
One wonders what he will say after he retires on his speaking tours. Will he undermine the Obama war effort or will he put the safety of the troops first and keep quiet. Will Obama be concerned about what he might say and keep him on. Stay tuned!
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John/Jack
One wonders what he will say after he retires on his speaking tours. Will he undermine the Obama war effort or will he put the safety of the troops first and keep quiet. Will Obama be concerned about what he might say and keep him on. Stay tuned!
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John/Jack
pensions
About a month ago I wrote about pensions and how the benefits are determined and how easy it is to manipulate calculations to get a desired result. In the news yesterday is the latest gimmick that states like Illinois plan to use to help their budgets. They say that all new hires will have to accept lower pension benefits so they can reduce the amount of money they must put into the plan today and thus have those funds available to pay for current benefits like salaries. Recall that when determining current contributions to pension you must consider benefits that may not pay out for many years. This way they can keep the pension promises they made to current employees and reduce benefits only to new hires and of course this is easy to enact and they can worry about new hires in the future. Can’t you just see this future situation where I was hired a year before the change and you and I are now retiring you with 39 years of service and me with 40 years and my pension is $25,000 and yours is $20,000. That might cause some controversy but that is a long way off and someone else problem.
It has been the history of pensions that problems were pushed on down the road for the next guy to handle and this case is no exception.
My brother lives near New Orleans and I asked for his thoughts on the oil spill and here is his response.
Slidell is about 40 miles north of New Orleans no problems yet. Thank for asking.
Now thisoil spill is BP's fault for sure, but I fault the administration (obama) slow response turning down help from the Dutch and other who are very experienced in these matters, they offered skimmer boats and other aid 3 days after the explosion and was turned down because of the Jones act (Unions). I believe that 90 to 95% would been captured.
This is a political BS Tto try to get cap and tax. They also need to investigate the governmnet agencies who's it is to over see and insepct these rigs.
obama is putting 1000's of people out of work out of work the moritorium on oil drilling and wants BP to pay for is agenda for people out of work and cap and tax.
If they had been allowed to drill in shallower water like Gov Jindal authorized they would not have had this problem.
Mike
Jack/John
It has been the history of pensions that problems were pushed on down the road for the next guy to handle and this case is no exception.
My brother lives near New Orleans and I asked for his thoughts on the oil spill and here is his response.
Slidell is about 40 miles north of New Orleans no problems yet. Thank for asking.
Now thisoil spill is BP's fault for sure, but I fault the administration (obama) slow response turning down help from the Dutch and other who are very experienced in these matters, they offered skimmer boats and other aid 3 days after the explosion and was turned down because of the Jones act (Unions). I believe that 90 to 95% would been captured.
This is a political BS Tto try to get cap and tax. They also need to investigate the governmnet agencies who's it is to over see and insepct these rigs.
obama is putting 1000's of people out of work out of work the moritorium on oil drilling and wants BP to pay for is agenda for people out of work and cap and tax.
If they had been allowed to drill in shallower water like Gov Jindal authorized they would not have had this problem.
Mike
Jack/John
claims
Recently there have been a number of cases where candidates for office have exaggerated their resumes and got caught because so many people take the time to check things out on the Internet. The same is true for those already in office as I know a number of people like myself who look up claims made by politicians. Here is an example of two senators making statements about their proposed legislation and I decided to do a few calculations.
Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) found many reasons to gloat after getting the 74-page study that showed the overall costs from their legislation’s major global warming provisions would cost an average household between $80 to $150 per year.
“There’ll be some people who will want to demagogue that politically, but that’s less than $1 a day,” Lieberman told reporters. “Is the American household willing to pay less than $1 so we don’t have to buy oil from foreign countries, so we can create millions of new jobs, so we can clean up our environment? I think the answer is going to be yes.”
We currently import 4 billion barrels of oil per year and at the current price of $70 that comes to the tidy sum of $280 billion. There are 112 families in the US so the annual cost per family is $2,500 or $6.84 per day per family. Now this is six times more than what Lieberman says and I would be willing to pay that to get rid of all imported oil, but since these senators have come up with this misleading information I am concerned about everything else they say about their bill.
It has become increasingly difficult to get accurate information out of the government officials. As more and more people learn to check out claims by using data collected on line it is going to be more difficult for these politicians to make blanket statements and expect people to take them at their word. I know I certainly don’t and I have friends who check things out like I do.
Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) found many reasons to gloat after getting the 74-page study that showed the overall costs from their legislation’s major global warming provisions would cost an average household between $80 to $150 per year.
“There’ll be some people who will want to demagogue that politically, but that’s less than $1 a day,” Lieberman told reporters. “Is the American household willing to pay less than $1 so we don’t have to buy oil from foreign countries, so we can create millions of new jobs, so we can clean up our environment? I think the answer is going to be yes.”
We currently import 4 billion barrels of oil per year and at the current price of $70 that comes to the tidy sum of $280 billion. There are 112 families in the US so the annual cost per family is $2,500 or $6.84 per day per family. Now this is six times more than what Lieberman says and I would be willing to pay that to get rid of all imported oil, but since these senators have come up with this misleading information I am concerned about everything else they say about their bill.
It has become increasingly difficult to get accurate information out of the government officials. As more and more people learn to check out claims by using data collected on line it is going to be more difficult for these politicians to make blanket statements and expect people to take them at their word. I know I certainly don’t and I have friends who check things out like I do.
paygo
Most of us who have been around for a while understand that politicians running for office tell us what we want to hear and our president was no exception to the rule when he was a candidate. In spite of this the president said the reason he did not call the CEO of BP is because
I have not spoken to him directly – and here’s the reason: because my experience is when you talk to a guy like a BP CEO, he’s going to say all the right things to me.
Here is one example from the campaign and when he was in office
Jan 30,2010
By Anne E. Kornblut
Pledging to curb federal budget deficits, President Obama used his weekly radio address Saturday to praise the Senate's passage of a measure requiring that increased spending be offset with cuts and to tout his proposed freeze on non-discretionary budget spending. The idea is called pay as you go or paygo.
The problem is that all the government has to do is to declare an emergency and they can bypass paygo
Pay-go gets passed, then it gets bypassed
By Walter Alarkon - 02/16/10 09:33 PM ET
The ink is barely dry on the pay-as-you-go law, and Democrats are seeking to bypass it to enact parts of their job-creation agenda.
Democratic leaders said extensions of unemployment insurance and COBRA healthcare benefits should be emergency spending that isn’t subject to the pay-as-you-go statute, which requires new non-discretionary spending to be offset with spending cuts or tax increases.
This is not just my criticism of Obama but one of the main reasons why many Americans are unhappy with their government. This sort of double talk has been going on for many years now and I could fill up a book with examples like the above.
I have not spoken to him directly – and here’s the reason: because my experience is when you talk to a guy like a BP CEO, he’s going to say all the right things to me.
Here is one example from the campaign and when he was in office
Jan 30,2010
By Anne E. Kornblut
Pledging to curb federal budget deficits, President Obama used his weekly radio address Saturday to praise the Senate's passage of a measure requiring that increased spending be offset with cuts and to tout his proposed freeze on non-discretionary budget spending. The idea is called pay as you go or paygo.
The problem is that all the government has to do is to declare an emergency and they can bypass paygo
Pay-go gets passed, then it gets bypassed
By Walter Alarkon - 02/16/10 09:33 PM ET
The ink is barely dry on the pay-as-you-go law, and Democrats are seeking to bypass it to enact parts of their job-creation agenda.
Democratic leaders said extensions of unemployment insurance and COBRA healthcare benefits should be emergency spending that isn’t subject to the pay-as-you-go statute, which requires new non-discretionary spending to be offset with spending cuts or tax increases.
This is not just my criticism of Obama but one of the main reasons why many Americans are unhappy with their government. This sort of double talk has been going on for many years now and I could fill up a book with examples like the above.
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