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Detroit has pretty much been ground zero in the rust belt for a long time. Once upon a time it was Motor City, the center of the thriving American automobile industry. With the decline of that industry the fortunes of Detroit have gone with it. There has been a very substantial decline in the population as people have moved out of the city for a variety of reasons. Many of them have relocated to other parts of the country in search of job opportunities. This has devastated the city's tax base. Much of the city looks like the economic disaster area that is  riddled with abandoned buildings and neighborhoods in obvious decline.

The Michigan state government is under Republican control and the governor has put Detroit city government under the control of an appointed emergency manager. He is attempting to take the city into a federal bankruptcy proceeding. One of his stated objectives is to obtain court authorization to make significant reductions to the public employee pension programs. The unions who represent those employees are attempting to use state law to block such action in federal bankruptcy court. Whether or not this actually happens or how it happens is yet to be determined. However, given Detroit's serious financial problems nobody is really surprised that this is happening.

Now let us hop across the country to San Jose, California, heart of Silicon Valley. It would be difficult to think of another American city that presents a more dramatic contrast with Detroit. Detroit represents the old economy, San Jose the new. Everything looks shinny and new. It's unemployment rate is less than half that of Detroit. There are poor people here, many of them Latino migrants. Somebody has to cut the techies' grass and flip their burgers. However,  this is not not a city that is in a general economic crisis like Detroit.

And yet, the City of San Jose is making a concerted effort to cut the pension plans of it public employees and is at war with the unions in a court battle.

Can San Jose cut pensions of current workers?  

After a five-day trial last month, a judge is looking at 13 issues in suits filed by unions and retirees against a San Jose pension reform. The big one is whether pensions earned by current workers can be cut.

Measure B, approved by 70 percent of San Jose voters last year, challenges the widely held view that a series of court rulings mean pensions promised state and local government workers on the date of hire become a “vested right” that cannot be cut.

Most attempts to reduce pension costs, including a statewide reform pushed through the Legislature by Gov. Brown last year, spare current workers but give new hires a lower pension, delaying savings for years or decades.

The California state constitution has provisions similar to the Michigan constitution that protect the pension benefits of public employees. Measure B was placed on the ballot with the endorsement of Democratic Mayor Chuck Reed and he is supporting it vigorously.  

There are a number of other California cities making efforts to cut back pension programs. Some of them have entered bankruptcy proceedings. There are legal issues being debated about the power of a federal bankruptcy judge to cut the pensions of municipal employees.

There are several factors that have increased the pressure on public pension plans. The economic crash of 2008 brought several years of declining tax revenues and declining investment returns on the assets of the pension trust funds. CalPERS the state pension agency gave local governments payment deferrals during the financial crisis. Now those back payments have to be made up. The infamous prop 13 has long reduced the property tax base of local governments. The relief that this provides to home owners is very politically popular and likely untouchable. However, it also provides the same reductions on commercial property.

Public employee unions have been able to negotiate increases to pension benefits in exchange for keeping increases in present salary to a bare minimum. This created future liabilities that are beginning to come due.

“These costs will exceed 25 percent of the general fund by 2017-18,” Mayor Chuck Reed said in his June budget message, “unless we implement the additional employee contributions and lower-cost pension option for our current employees, and get all new employees into the Tier II plan, as approved in Measure B.”
Politically most of California is under Democratic control. Until a recent special election they had a 2/3 super majority in both houses of the legislature and well as all of the state house offices. Yet, they seem to be unable to take action on these issues. You really can't bill this as a Tea Party attack on public employees. The public unions have a fair amount of political clout with the legislature, but they do not enjoy broad public support when initiatives show up on the ballot.

Reed and Santa Ana Mayor Miguel Pulido are pushing a proposal for a constitutional amendment that would give cities clear power to change the pension plans of current employees and not just new hires. Political prospects for getting the legislature to put it on the ballot do not look promising. That leaves the possibility of using an initiative proposition to put it there. That seems like a definite possibility. That is how Prop 13 came about.

Originally posted to Richard Lyon on Mon Aug 05, 2013 at 11:35 AM PDT.

Also republished by California politics, In Support of Labor and Unions, and Community Spotlight.

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Comment Preferences

  •  This raises a good point. (8+ / 0-)

    Up to this point public workers took less pay in exchange for decent pensions. With the threat of killing pensions, how will the local governments draw talent if they can't promise a guaranteed pension?

  •  There are 100's of cities and counties (5+ / 0-)
    Recommended by:
    FG, nextstep, Sparhawk, Keith930, Victor Ward

    that will never be able to meet their retiree pension and health care benefit obligations. Eventually they too will follow Detroit into bankruptcy.

    If states could go bankrupt (they can't because under the US Constitution they are sovereign entities) there would be a line of them following the cities and counties.

    "let's talk about that"

    by VClib on Mon Aug 05, 2013 at 02:13:43 PM PDT

    •  No, they are able to, they just don't want to. (5+ / 0-)

      It just involves raising taxes to a point where the money is there and making it so that they don't give themselves "pension holidays" when the good times hit.  I suppose that somewhere there may be a government entity that truly cannot pay their debt to their employees, but I don't know who it would be...it damned sure isn't San Jose, there is lots of money in San Jose.

      75534 4-ever or until dk5

      by NearlyNormal on Mon Aug 05, 2013 at 03:17:54 PM PDT

      [ Parent ]

      •  There is a limit to how much you can raise taxes (4+ / 0-)
        Recommended by:
        FG, Sparhawk, llywrch, Victor Ward

        There are often legal limits where tax increases have to be approved by a majority of voters or in some cases a super majority of voters. In CA we have restrictions on property tax increases because of Prop 13. I think there are few cities where a majority of voters would approve a tax increase to pay public employee pensions and retiree health benefits.

        The other issue is people voting with their feet which is what happened in Detroit. The City of Detroit has the highest (or nearly the highest) property tax rates in the US. People just abandon the properties because the services they were receiving were not worth the taxes they were being charged. As these pension and health benefit expenses begin to take a larger share of city, county and state budgets we will see more people vote with their feet.

         In CA we now have the highest state income taxes in the US, 13.3% for income of $1.0 million or more. As more high income CA residents reach retirement, where they don't need to be physically present in CA any more, they are buying properties in Nevada, and other low or no income tax states, and moving their tax residence. We have a steady outflow of upper middle class and wealthy California taxpayers and an influx of lower income taxpayers. CA, in particular, has always counted on high income taxpayers for a very significant part of its total tax revenue.

        There is no easy answer. The public employees negotiated in good faith and earned the benefits. But what do you do if you are a City like Detroit and there are not enough revenues to pay for all of your obligations and a reasonable amount of public services?

        "let's talk about that"

        by VClib on Mon Aug 05, 2013 at 03:35:00 PM PDT

        [ Parent ]

        •  Oh sure, I know that there are legal limits (3+ / 0-)
          Recommended by:
          dksbook, linkage, betterdemsonly

          but there are also legal obligations.  I live here in CA as well, and I'm in a county that cries poormouth, but within a half mile of me are vacation houses of rich people that are worth 10's of millions of dollars.  Its not true to say that you can't make the payments that are owed for the work already done, its just that they don't want to.  Detroit as well can find ways to make the payments.  They may need to use eminent domain and reduce the supply and do other creative things, but the cost of public workers is a bare fraction of the wealth of the jurisdictions.

          75534 4-ever or until dk5

          by NearlyNormal on Mon Aug 05, 2013 at 04:44:57 PM PDT

          [ Parent ]

          •  The cities trying to cut the payments (3+ / 0-)
            Recommended by:
            VClib, Sparhawk, Victor Ward

            probably have a majority of the voters on their side. This is all going to have be sorted out in the courts.

          •  NN as a CA resident you know that the city and (4+ / 0-)

            county that you live in are severely restricted in the amount of property tax increases they can raise without obtaining a super majority of voters to approve the increase. So the property taxes on those multimillion dollar vacation houses will rise a maximum of 2% per year. Cities and counties can't impose income taxes and sales taxes are among the highest in the US. What would you expect the cities and counties to do? I don't think the State of California has the means or the will to step in and assist cities and counties with pension and retiree health benefit costs.

            "let's talk about that"

            by VClib on Mon Aug 05, 2013 at 04:53:04 PM PDT

            [ Parent ]

            •  What we need is a split roll (4+ / 0-)
              Recommended by:
              VClib, NearlyNormal, JenS, betterdemsonly

              that taxes residential and commercial property on different bases.

              •  I agree - with one caveat (2+ / 0-)
                Recommended by:
                llywrch, Victor Ward

                California is already an expensive place to do business, and suffers from an anti-business reputation. All things considered commercial and industrial rents, where the triple net tenant directly pays the cost of the property taxes, are reasonable. The decoupling should be phased in over ten or twenty years so we don't drive more businesses out of state. We would also need someone with a $30-40 million war chest to finance the proposition, and election battle, to amend Prop 13 and separate commercial and industrial from residential property. I do think the concept would appeal to most voters, but the C&I property owners will raise a big fund to keep Prop 13 unchanged.

                "let's talk about that"

                by VClib on Mon Aug 05, 2013 at 06:09:55 PM PDT

                [ Parent ]

            •  Well, I think they should have to do without (3+ / 0-)

              services if they can't afford them, the way they are doing it now means they are attempting from those of us who did the work so that they can now have the services they want.  I'd like to go into the car dealer and get me a new Jag then tell the owner later on that I don't really have the money to pay for it but since I need a car I'm going to keep driving it.  The voters should either do without services they can't afford or they should pay for those services.

              75534 4-ever or until dk5

              by NearlyNormal on Mon Aug 05, 2013 at 06:53:25 PM PDT

              [ Parent ]

              •  Life does not come with guarantees. (3+ / 0-)
                Recommended by:
                Sparhawk, VClib, Justanothernyer

                The voters hold the ultimate power over public services. They can even amend the state constitution is they want to. There is going to be some kind of fundamental renegotiation on public pensions in CA. Things will not go on just as they have been.

              •  NN - there are no guarantees (1+ / 0-)
                Recommended by:
                Victor Ward

                As we have seen from the other CA cities that have gone bankrupt, everything is put on the table, including pensions and retiree healthcare. In the next decade nearly every major city and county in CA will go through a bankruptcy process. Their liabilities far exceed their assets.

                "let's talk about that"

                by VClib on Mon Aug 05, 2013 at 08:55:31 PM PDT

                [ Parent ]

                •  think about what you just said (3+ / 0-)
                  Recommended by:
                  VClib, Sparhawk, llywrch
                  In the next decade nearly every major city and county in CA will go through a bankruptcy process. Their liabilities far exceed their assets.
                  I don't disagree with you at all, but it's still a breathtaking remark.  And the scary part is that some in Congress want Washington to step in and bail Detroit out.  If Detroit is one of many yet to come...there's not enough money in the world for that.

                  Pumping money down a Detroit rathole will do nothing for our economy.  At the end of the day the money will be gone, and Detroit will still be Detroit, and nothing will have changed.

                  How could 22,000 retirees bankrupt a city of, what...700,000?

                  It's disgusting.

                  Cause he gets up in the morning, And he goes to work at nine, And he comes back home at five-thirty, Gets the same train every time.

                  by Keith930 on Mon Aug 05, 2013 at 09:14:47 PM PDT

                  [ Parent ]

                •  No Municipality has taken on Calpers (0+ / 0-)

                  Calpers continues to insist that pension obligations can't be touched, per the California constitution.

                  And so far, no town/city has been willing to take on Calpers.

                  When (if) SCOTUS rules on Detroit bankruptcy, this may change.

                  Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

                  by PatriciaVa on Tue Aug 06, 2013 at 12:01:45 PM PDT

                  [ Parent ]

          •  People can always pack up and leave (2+ / 0-)
            Recommended by:
            VClib, Victor Ward

            Move next door to places that aren't trying to expropriate their money to pay the past obligations of long-dead irresponsible politicians.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Mon Aug 05, 2013 at 05:20:52 PM PDT

            [ Parent ]

            •  These were not irresponsible obligations (3+ / 0-)

              It was the cost of doing business.  The really galling thing is that when the stock market was booming and the private sector wages were soaring, those of us in the public sector were often denigrated as not being willing to take the "risks" of private industry and all we were going to get was a pension.  Okay, risk means you can lose.  Now, pay the bills for what it cost to get the work done.  The pension was part of the deal, our part of the bargain has been completed.

              75534 4-ever or until dk5

              by NearlyNormal on Mon Aug 05, 2013 at 06:47:45 PM PDT

              [ Parent ]

              •  yes, actually, they were. (2+ / 0-)
                Recommended by:
                Samulayo, Victor Ward

                and where was the public in those negotiations?  You know...the ones who now have to pay the bill, either in raised taxes or reduced services, because all the city can afford these days is the pension and medical care for former employees.

                That's where all the taxes are going...id you want your trash picked up or chalk in your kids classroom...you have to float a tax levy to fund that.

                Cause he gets up in the morning, And he goes to work at nine, And he comes back home at five-thirty, Gets the same train every time.

                by Keith930 on Mon Aug 05, 2013 at 09:20:26 PM PDT

                [ Parent ]

                •  Where was the public? (3+ / 0-)

                  They didn't care. They were getting theirs and the fact that our pay didn't match theirs didn't concern them. It took me seven years as a teacher to make what I made as a laborer in the construction business. I didn't and don't begrudge laborers what they received. They earned every penny. However they weren't complaining about my lack of pay. They were only too happy to buy me off with a benefit package. It was less expensive for the taxpayer.

                  In the nineties when the private sector was making a killing, no one complained that the public sector pay didn't keep up. We had a difficult time getting math teachers because they could make more in the private sector. Math teachers were considered chumps by some who couldn't understand why we didn't chase the money.

                  Then the actions of the corporatocracy ... the vulture capitalists, the casino capitalists, the gangster capitalists ... stuck it to the private sector employees. But instead of placing the blame where it belongs, too many are attacking the public sector workers.

                  22,000 municipal workers didn't bankrupt Detroit. The greed, avarice and stupidity of the corporate classes did that. But guess who will pay.

                  A proud member of the Professional Left since 1967.

                  by slatsg on Tue Aug 06, 2013 at 05:04:02 AM PDT

                  [ Parent ]

            •  And, sure if they want to move to Nevada (1+ / 0-)
              Recommended by:
              codairem

              or Texas and live there, it won't bother me.  Nobody is trying to"expropriate" anyone's money in any unusual sense.  Its a regular taxation situation.  The government hires people to do things, it agrees on an amount and then when the work is done it has to pay for that work using tax money.

              75534 4-ever or until dk5

              by NearlyNormal on Mon Aug 05, 2013 at 06:57:02 PM PDT

              [ Parent ]

              •  There is no "the government" (3+ / 0-)
                Recommended by:
                Keith930, VClib, Victor Ward

                There are just taxpayers, many of which weren't alive when these agreements were made.

                And if your town has to be unincorporated because of population depletion, you'll definitely care about that. Someone has to physically live in your area to cover pensions.

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Mon Aug 05, 2013 at 07:14:46 PM PDT

                [ Parent ]

                •  I, for one, will be moving in the next 5 years (2+ / 0-)
                  Recommended by:
                  VClib, Victor Ward

                  and it will be to a rural/exurban area that is not obligated to pay for a burgeoning corps of retired municipal employees.  I can already see how cities are going to handle that shitwad...they are just going to tax their residents more and more, and provide less and less...so that Hundreds of Thousands go without basic services in order for about 25 thousand to get what they think is owed them.

                  Screw that.  

                  Cause he gets up in the morning, And he goes to work at nine, And he comes back home at five-thirty, Gets the same train every time.

                  by Keith930 on Mon Aug 05, 2013 at 09:27:44 PM PDT

                  [ Parent ]

                  •  So you will move out to an area (0+ / 0-)

                    with no services? How smart is that.

                    Actually one of the prime things that is screwing up muni pensions is the elected official who were setting their own pay at spectacularly high rates and then retiring at a pension based on their last 5 years of service rates.

                    Remember Bell California where the Mayor was getting paid something like $975k a year and the police Chief was getting over $1 million? Big scandal which has been forgotten. Since they had worked for the state/muni for the prescribed length of time and just topped out the last 5 years at the high pay they were to get extravagant pensions.

                    If pension funds just went to those who didn't set their own pay; who were civil service then the funds would be a lot healthier.

                    I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

                    by samddobermann on Thu Aug 08, 2013 at 04:00:29 AM PDT

                    [ Parent ]

        •  A likely outcome in some cities will be giving (3+ / 0-)
          Recommended by:
          Richard Lyon, Sparhawk, VClib

          existing public employees a choice between the current defined benefit penson with a hard freeze on wage increases over many years, or a new penson based on defined contributions (plus recognition of vested penson benefits) and wage increases that keep place with inflation.

          This approach meets CA legal requirements regarding penson rights.

          The most important way to protect the environment is not to have more than one child.

          by nextstep on Mon Aug 05, 2013 at 05:08:08 PM PDT

          [ Parent ]

        •  Pension holidays is a huge disaster (3+ / 0-)

          This is something that should just be outlawed. Most of the pension shortfall can be attributed to the pension holidays where the government skipped out on contributing to the pension funds.
          But ultimately pensions need to be run by the unions themselves. That way- there is a direct line of accountability.

        •  You conservatives are disingenous ... (0+ / 0-)

          with your constant focus on taxes regardless of context. "Detroit has the highest property taxes" blah blah blah. What you neglect is that Michigan has homestead laws that allow residents a deduction for their principal residence and, for poor residents, actually pay a credit to the taxpayer.

          Just like you and fellow conservatives claims that the Federal corporate income tax rate is the "highest in the world", once a reasonable person actually looks into the facts of the matter, it quickly becomes evident that book rate and rate actually paid are two vastly different things.

          •  edg - regarding Detriot's property tax rate (2+ / 0-)
            Recommended by:
            Sparhawk, alwaysquestion

            I think the view is nearly universal that the property tax rates are a significant part of why people have voted with their feet, and fled the city, and half the parcels are in arrears. Even many of those parcels that are primary residences are in arrears. Those responsible for putting Detroit on a sustainable financial footing need to address the property tax rates.

            Regarding US corporate income taxes, they are the highest statutory rates in the developed world and that does impact investment in the US by both domestic and foreign corporations. It is also a fact that many companies don't pay anything near the statutory rate, but lots do. I also think there is some bipartisan support for lower corporate statutory rates, along with simplifying the corporate tax code so that the effective rate, and tax revenues could be higher. I support that effort. But the bigger issue is that we don't have a national industrial plan and our tax code favors imports, and penalizes exports, which helps none of the tax payers in the US. It is also the opposite of how the top European countries have structured their tax laws.  

            "let's talk about that"

            by VClib on Tue Aug 06, 2013 at 11:42:08 AM PDT

            [ Parent ]

            •  It's complicated... (1+ / 0-)
              Recommended by:
              VClib
              I think the view is nearly universal that the property tax rates are a significant part of why people have voted with their feet, and fled the city, and half the parcels are in arrears. Even many of those parcels that are primary residences are in arrears. Those responsible for putting Detroit on a sustainable financial footing need to address the property tax rates.
              No doubt that low income earners have trouble affording higher taxes, but parts of Detroit are already filling up with young suburbanites, gentrifying sections of Detroit and taking advantage of Dan Gilbert's employee initiatives to live in the city.

              But those young people do not yet have children and to be sure, their children will not go to the nearby public schools and many will find themselves leaving for suburbia when they do have children.

              I think the reason many people left Detroit is not because of the tax situation, as many of them were just renting (some Section 8 Gov't housing) anyway.

              The reason many left Detroit was the violence and by extension, a really bad school environment.  Many left to give their kids a chance to grow up without violence and to not become gang members.  The fact that the police do not show up for an hour after someone gets shot isn't nearly a factor.  Not getting shot in the first place is the factor.

              My child sat in a classroom in a very nice suburb as a  recently transplanted child of Detroit told the "show and tell" story of his cousin being stabbed to death by gang members.  It was no mystery why his mother decided to move her section 8 housing allowance to a safe suburb for the future of her child.

              The idea of moving children to a safe suburb caught on fast and 10 years later, most of the suburbs look like the melting pot Detroit was known for in years past.

              To further complicate matters, the Detroit city council has been, oh, shall we say, blind to the needs of Detroit.  

            •  Most of the properties that are in arrears (0+ / 0-)

              are where the banks started foreclosures, tossed out the owners but never filed paper work with the county or paid taxes. They just walked away.

              That has been tracked down.

              And yes the corporate tax code needs changing and the high rates need to be lowered BUT there has to be a way to stop the now legal shenanigans that allow firms like Apple to transfer ownership of intellectual property overseas and let all overseas income go virtually untaxed.

              some of the solutions have to be worked out internationally. If all countries would cooperate to end the tax haven "legal" scams then we would all be better off.

              I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

              by samddobermann on Thu Aug 08, 2013 at 04:14:28 AM PDT

              [ Parent ]

  •  One of the proposals being suggested by (1+ / 0-)
    Recommended by:
    VClib

    civil grand juries in some counties is that instead of defined benefit plans (pensions with a guaranteed payout), employees should be allowed defined contribution plans (similar to 401-k). Some have suggested that a current pension plan could be converted to a contribution plan with the current pension amount per employee being used as the starting amount for the contribution plan.

    It would solve the future pension problems while still providing a plan for retirement for employees.

    As expected, it is not an acceptable plan to the unions involved.

    I reject your reality and substitute my own - Adam Savage

    by woolibaar on Mon Aug 05, 2013 at 02:58:57 PM PDT

    •  Sure! (8+ / 0-)

      Gamble it away

      with your 401K

      Wall St. will love you!

      And you'll still be eating cat food.

      Irony takes a worse beating from Republicans than Wile E. Coyote does from Acme. --Tara the Antisocial Social Worker

      by Youffraita on Mon Aug 05, 2013 at 03:54:37 PM PDT

      [ Parent ]

      •  Hey (2+ / 0-)
        Recommended by:
        RainyDay, Victor Ward

        It's what the rest of us in the private sector have to deal with anyway. No reason at all the public sector shouldn't have the same deal.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Mon Aug 05, 2013 at 05:27:22 PM PDT

        [ Parent ]

        •  still a scam though n/m (0+ / 0-)
          •  Then fix it in the private sector (1+ / 0-)
            Recommended by:
            Victor Ward

            Until then, no reason for one class of citizens to get benefits another one doesn't.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Mon Aug 05, 2013 at 06:12:13 PM PDT

            [ Parent ]

            •  That language (2+ / 0-)
              Recommended by:
              slatsg, betterdemsonly

              Is the same language that has been destroying union popularity for decades. "If I can't have it, why should they?"

              Time is of no account with great thoughts, which are as fresh to-day as when they first passed through their authors' minds ages ago. - Samuel Smiles

              by moviemeister76 on Tue Aug 06, 2013 at 01:12:15 AM PDT

              [ Parent ]

              •  Because we are paying for it (1+ / 0-)
                Recommended by:
                Victor Ward

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Tue Aug 06, 2013 at 06:16:13 AM PDT

                [ Parent ]

                •  Well duh (0+ / 0-)

                  Taxes pay for a lot of things. There's a ton of stuff my taxes go towards that I am against, but I am not against them going towards people being able to stay out of poverty when they retire due to an agreement those people made with the government decades ago.

                  Time is of no account with great thoughts, which are as fresh to-day as when they first passed through their authors' minds ages ago. - Samuel Smiles

                  by moviemeister76 on Tue Aug 06, 2013 at 11:18:51 AM PDT

                  [ Parent ]

                  •  Re (0+ / 0-)

                    I have no opinion on what should happen to current retirees. Each town/state can make their own decision based on their current financial situation. Current workers can always leave if the burden gets to be too much.

                    However, there is no reason why any responsible government should offer pensions today. The rest of us are in 401ks. If the government wants to be generous, it could heavily match 401k contributions.

                    But then today's taxpayers would have to pay for it.

                    (-5.50,-6.67): Left Libertarian
                    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                    by Sparhawk on Tue Aug 06, 2013 at 02:03:04 PM PDT

                    [ Parent ]

                •  Government employees pay taxes too. (0+ / 0-)

                  In case you forgot.

        •  The private sector used to have pension funds and (0+ / 0-)

          many still do.

          Just because you are getting screwed the solution doesn't have to be to pull everyone one down to your level but to fight to get your own benefits improved.

          I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

          by samddobermann on Thu Aug 08, 2013 at 04:17:07 AM PDT

          [ Parent ]

      •  Actually your pension fund is also invested in (5+ / 0-)

        Wall St.

        •  Yeah. (3+ / 0-)
          Recommended by:
          slatsg, betterdemsonly, llywrch

          Ain't that a kick in the teeth?

          But as long as the corporation is making money, I expect them to cough it up, Wall St. wins or losses.

          Every single person on his/her own trying to invest? We have neither the time nor the expertise -- and even the experts get it wrong a lot. We are not Oracles of Omaha, we are schlubs, and much of our "invested" money disappears in the form of ... wait for it ... fees to our Wall Street "handlers."

          It's a scam of epic proportions.

          Irony takes a worse beating from Republicans than Wile E. Coyote does from Acme. --Tara the Antisocial Social Worker

          by Youffraita on Mon Aug 05, 2013 at 09:14:53 PM PDT

          [ Parent ]

          •  You do the best if you manage your 401k (0+ / 0-)

            conservatively and put all into index funds not into actively managed funds which do no better and cost you a lot more.

            I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

            by samddobermann on Thu Aug 08, 2013 at 04:20:02 AM PDT

            [ Parent ]

    •  That has actually already happened (1+ / 0-)
      Recommended by:
      Dave925

      in a couple of places for new hires. It is making changes for current employees that is the source of controversy.

      •  The Federal government did something similar (2+ / 0-)
        Recommended by:
        Richard Lyon, llywrch

        but only as applied to hires after 1983.

        The Reagan administration changed the civil service retirement system. CSRS versus FERS:
        Civil Service Retirement System: No payment into Social Security. Payroll contributions into CSRS equivalent to Social Security, plus the portion allocated to Medicare Part A. A defined-benefit pension based on a percentage of high-three years of salary and service time.

        Federal Employee Retirement System: Small payment to CSRS, PLUS full payment to Social Security and Medicare. Small defined-benefit pension (not anything one could live on), plus Social Security. In addition there is the Thrift Service Plan which functions like a 401k but is authorized under a slightly different piece of the tax code. All federal employees can contribute to the TSP but FERS employees receive partial matching (1% of pay automatically even if the employee doesn't contribute; partial matching up to 5% of base salary) while CSRS employees do not.

        Back in 1987 when FERS was rolled out, there was a concerted attempt made to get CSRS employees to switch over to FERS. I can't speak for everyone but when the pitch was made I had to ask myself why I'd give up a guaranteed, livable pension for something based on the quirks of the financial market. There may have been some people who'd have benefited from such a change but I can't believe most of my colleagues would have done anything other than what I did which was to roll my eyes and laugh.

    •  Obligating future taxpayers (1+ / 0-)
      Recommended by:
      Sparhawk

      I don't think a government ought to be able to create a contract that imposes an unknown future liability on future taxpayers.  If they want to have a pension program - defined benefit or contribution - fine, but pay for it as you go.  The government should not be in the business of running a pension fund, with the complexities of current income, investments, and future obligations.  If there is going to be a pension fund, then it should be contracted with a private fund, and governments should pay in every month for their current employees.  When employees retire, the pensions are paid by the private fund, and there is no ongoing obligation of taxpayers to fund the program.  

      I'm still mad about Nixon.

      by J Orygun on Mon Aug 05, 2013 at 09:33:49 PM PDT

      [ Parent ]

  •  As a public employee in SJ (5+ / 0-)

    who makes less than $40k/year--and who holds a graduate degree---too many "managers" are being hired who mostly just go to meetings. And my 13 yr tenure and pension are being up for grabs for these a**holes?

  •  Detroit compared w/Milwaukee (0+ / 0-)

    Cities are good for the environment

    by citydem on Mon Aug 05, 2013 at 04:38:47 PM PDT

  •  The rich get rich and the poor get poorer (3+ / 0-)

    To us, it's an old song lyric. To wealthy conservatives, it's a government policy.
    Won't be able to change this system. It's like saying we'll make arsenic non-poisonous, we just need to work on it.
    Only fix to this system is to completely re-do it. Or make a new one (with a parliament).

    Ash-sha'b yurid isqat an-nizam!

    by fourthcornerman on Mon Aug 05, 2013 at 05:07:02 PM PDT

  •  Okay, this is bad. (1+ / 0-)
    Recommended by:
    VClib

    But how is actually possible to pay out what was promised? What gets cut? Where do the taxes come from?

  •  Time for a nationwide general strike? (0+ / 0-)

    Like say on Election Day, even if only for an hour? For horrible socialist goals like a living wage, the right to unionize, bank re-regulation, an end to corporate 'personhood,' etc. No DC rally-on-the-mall, but local protests in front of the crooked banks, the Walmarts, greedy corporate hq's etc?

    Election day is perfect - both a regular workday and a symbol of our democracy, the one that seems to not so slowly being taken away from us.

    Just thinking out loud, that's all...

    A nationwide general strike this election day? Why not?

    by Miscweant on Mon Aug 05, 2013 at 07:46:46 PM PDT

    •  only if you can get millions to (0+ / 0-)

      come out and participate.

      Let's face it. Our little protests do nothing.

      The Latino one day strike for immigration was hugh but few paid a lot of attention. They got attention and at least some action by turning out huge numbers in the 2012 vote.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Thu Aug 08, 2013 at 04:27:32 AM PDT

      [ Parent ]

  •  One Problem With Pensions (0+ / 0-)

    The revenue projections when they were created were simply not realistic -- more along the lines of wishful thinking. I can't max out my credit card by saying that by the time it's due I'll be making more money. How do I know I'll be making more money? Maybe I'll be out of work. The municipalities did these workers a disservice by dreaming up future revenue streams with no idea how to achieve them.

    That said, you promised something and signed a contract. Either honor it or renegotiate in good faith.

    The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.

    by The Lone Apple on Tue Aug 06, 2013 at 03:24:06 AM PDT

  •  Silicon Valley needs to tax commercial land more (0+ / 0-)

    In most of the commercial cities, a high percentage of the workers are from more affluent areas. So while there is a lot of "sandwich trade" business to keep unemployment relatively low, I'd guess the median income of San Jose residents is quite a bit lower than the median of people working there.

    Any ideas about that?

    400ppm : what about my daughter's future?

    by koNko on Tue Aug 06, 2013 at 03:53:50 AM PDT

  •  Tax Base Sharing (3+ / 0-)
    Recommended by:
    nominalize, llywrch, betterdemsonly

    Detroit is the first, but there are numerous cities that are in trouble, and a large cause of the problem is people who get the benefits of the city but pay taxes to the suburbs where they live.  The fair solution would be tax base sharing, where the entire metropolitan area pays some share of their taxes to the city - after all, the MSA would not exist if not for the city.

    As far as I know, Mpls-St. Paul is the only MSA that has this and they do it only for commercial property taxes (details here). But it is desperately needed in all our MSAs, especially those with large minority populations and white flight to the suburbs.

    Alternatively, we could do what a few cities (eg, Jacksonville) do and draw the city lines to be essentially the entire MSA.

  •  In Wisconsin, the state legislature along with (0+ / 0-)

    the governor have pushed laws into effect that are intended  to 'loosen' the city of Milwaukee employee residency requirements for public workers (police, teachers, firefighters, etc.). This would allow city employees to live outside (read flee) the city limits(tax base).

    Rules about residency are present in the state constitution, and the city is fighting back. Some city employee union members say things like 'well, city employees should be able to live anywhere they want'.  

    Perhaps it would be wise for employees and new hires to be 'educated' on the city work envrionment, urban flight, impact of and 'benefits' of employer provided pension benefits, etc.  

    There is an unfortunate and perhaps fatal flaw in the education of our citizens in the area of labor history, labor law, and employee/employer rights.

    •  The Fire and Cop unions endorsed Walker (0+ / 0-)

      He paid them back by not killing their bargaining rights and by authorizing these predominantly white union members to move out of a predominantly black/hispanic city without having to give anything at the bargaining table. It all fits the GOP racist play book.

      Cities are good for the environment

      by citydem on Tue Aug 06, 2013 at 08:59:07 PM PDT

      [ Parent ]

    •  absolutely. Labor law history should (0+ / 0-)

      be taught in Civics classes. Now how do we get civics classes on the menu?

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Thu Aug 08, 2013 at 04:30:34 AM PDT

      [ Parent ]

  •  One big similarity between Detroit and San Jose (1+ / 0-)
    Recommended by:
    samddobermann

    Both are classic examples of sprawl, which, as Paul Krugman has recently been reporting, tends to reduce social mobility.

    San Francisco, close to San Jose but a prototypical high-density city, is thriving.

    What is valued is practiced. What is not valued is not practiced. -- Plato

    by RobLewis on Wed Aug 07, 2013 at 09:34:01 AM PDT

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