The deal would allow the city to slash its police and fire pension liability. That's partly because it would switch them to the actuarial assumptions of the state fund, which assume higher investment returns and lower pension increases. It's also because the deal would give the city 11 more years than it has under current law to fully fund the two plans' deficits...
However, the deal would come with several costs for taxpayers. First, the city agreed not to oppose a firefighter bid for a last-minute boost in their pensions to bring them to parity with police. That would cost the city $7 million in future pension costs, figured in today's dollars.
Moreover, the deal would substantially boost the checks for police and fire pensioners, all of whom were hired before mid-1980. The police pension would jump by 43 percent to $64,000 in 2015, for example.
So, they actually increase their liability, but increase their assets via more optimistic return assumptions. That a bunch of adults find this solution attractive is rather disturbing.
6 comments:
More of the same. Kick the can down the (dead end) road. This is a good illustration of why the dollar is toast. Nothing else will stop these idiots as their attitude is common at the Fed, State, County and City levels. Any attempt to point out the fact that governments at all levels have taken on more fiscal obligations and debt than could ever possibly be paid -- is met with ridicule, ad hominem, anger and kill-the-messenger. By the time people are ready to face the music it will be too late. The party is over when the dollar is abandoned and the bond market crashes. Best guess is around 5 years, so there is still time to prepare and protect yourself.
Maybe you should call Congressman Paul Ryan and ask him what his solution is. After getting hundreds of thousands in campaign contributions from the Insurance industry lobbyists (his #1 contributor) and hundreds of thousands from health care professionals (his #4 campaign contributor) he seems to have all the "solutions" to Medicare.
Or maybe ask those guys who risk their lives to save you from a fire or save your daughter being raped, you could take a few moments after and ask if they would take a 10% pay cut, 'cuz you're so tired of those municipal taxes.
Or you could come up with a magical pension fund equation and sell it as a $63 book. It would be a MAGICAL free market solution.
Sure it's an attractive deal. The relevant question is: Attractive for whom?
Looks like your typical "grab-the-money-and-run" approach.
Ted, under your rationale, couldn't firefighters and police ask for annual 25% raises? At what point could the argument that "they protect us from fire and rape" NOT be used to justify ANY level of compensation?
@Anon@3:34pm
TedK's attitude is exactly the mentality that I mentioned above and the tactic is called extortion. It has been used for years by politicians and the trough feeders to scare people into more taxes and debt. When faced with a budget crisis the first thing cut is police, fire and schools. The public outrage soon yields more spoils (i.e taxes or bonds) for the politicians to distribute to their patrons. But this time it really is over, the dollar will be abandoned and the devastation and drastic drop in standard of living will not be pushed onto our grandchildren, regardless of people's tantrums.
TedK disparages the free market but without the free market (and the profit principle) it is impossible to set prices or wages. (See the history of USSR and how they had to co-opt price and wage data from other freer countries to set policy). Govt wages are set by comparison to free market wages (for equivalent jobs) not by the subjective value and impossible-to-implement principle of not wanting to get raped or robbed or killed in a fire. ALL studies show that current govt wages (and pensions) are FAR above the value of equivalent employment in the private sector This is unsustainable and grossly unfair.
One final point... TedK's attempt to emotionalize the situation by dragging EF's daughter into the issue is revealing in that he and his ilk no longer have any plausible arguments to offer and are reduced to rank emotionalism.
Also, EF never said that firemen and policemen don't deserve a pension. All he did was criticize the crazy accounting, by which public officials increased the liabilities and pushed the costs of funding of the plan into the future. This is irresponsible. Ted K, be careful what you ask for. I wouldn't want an unfunded pension plan backed by the promises of politicians. Your leaders are deceiving you. Ponzi schemes always fail.
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