Archives for October 2011

Brown’s pension plan provides some hope, but has critics

From the Contra Costa Times:

Gov. Jerry Brown’s new pension reform plan signals he’s serious about restoring fiscal sanity to public employee retirement systems, but it lacks critical details and doesn’t stop the transfer of hundreds of billions of dollars of debt to our children.

Let’s give Brown credit: He finally demonstrated understanding that “we’re not on a sustainable path” and that taxpayers need financial protection as well as workers. What he proposed Thursday provides a minimum starting point for discussion.

After he unveiled his plan, many focused on the changes affecting new employees: mixing conventional pensions with Social Security and 401(k)-style retirement savings to reduce taxpayer exposure to market volatility; targeting pension payments to a reasonable 75 percent of salary; increasing retirement ages; and reducing pension spiking.

All good, and essential, ideas. But changes for new employees won’t provide substantial financial relief for decades.

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Cap-and-trade is expensive fraud


Thank you for printing Sen. Doug LaMalfa‘s remarks about the latest liberal flogging of the industrial/automotive emissions reality in the Sunday editorial, “Cap-and-trade is a high-stakes bet on state’s future.”

Air Resources Board Chairwoman Mary D. Nichols apparently hasn’t been looking at the collapse of the U.N.-mediated global warming pseudo-scientific fraud when she said:

“Cap-and-Trade is another important building block in California’s effort to create a clean and vibrant economy. … It sends the right policy signal to the market, and guarantees that California will continue to attract the lion’s share of investment in clean technology. When the nation addresses the growing danger of climate change, as I believe it must and will, California’s climate plan will serve as a model for a national program.”

No, Mary, how many Solyndras must we suffer? You need to read the Washington Examiner’s Oct. 23 Op-Ed contribution by Marc Morano, “Scientific case for man-made global warming fears is dead.” He documents his assertion with facts.

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Brown’s pension plan leaves out CalSTRS

From the Sac Bee:

What about CalSTRS?

Despite two years of lobbying from the teachers’ retirement fund, a plan to shore up CalSTRS’ finances was missing from Gov. Jerry Brown’s pension reform proposal this week.

The California State Teachers’ Retirement System faces a long-term shortfall of $56 billion – the gap between assets and estimated liabilities. The fund has been quietly pushing a plan to increase taxpayer contributions, and has stepped up its campaign in recent weeks.

Chief Executive Jack Ehnes, in a letter Tuesday to legislators, asked them to “give special consideration to a long-term funding strategy to protect our teachers’ retirements.”

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Redistribution of Candy

Income Tax Cuts Would Boost Jobs and Growth

From Townhall:

The modest uptick in economic growth is a welcomed breather in the bleak Obama economy, but it won’t reduce unemployment anytime soon.

The Commerce Department’s report Thursday that the gross domestic product (GDP), the broadest measure of the economy’s performance, grew at an annual rate of 2.5 percent. It means the economy is still weak — far from the 3.5 percent to 5 percent growth needed to put millions of unemployed Americans back to work.

The government’s estimate, and that’s what it really is, will be revised at least twice in the months to come and it may well be less than 2.5. But, whatever the real rate may be, economists aren’t expecting GDP to take off in the last three months of this year or next year, either.

“We are looking at very disappointing growth over the next year. It will be far short of what is needed to get businesses to hire more aggressively,” said Mark Zandi, chief economist at Moody’s Analytics.

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The Pension Follies of the Mayor Who Broke LA

From City Watch LA:

Mayor Antonio Villaraigosa, by failing to adequately address the unrealistic 8% Investment Rate Assumption for the 40% underfunded Los Angeles City Employees Retirement System, is making another boneheaded decision that reflects the unwillingness of Villaraigosa and the Garcetti-led City Council to make hardnosed, long term rational operational and financial budget balancing decisions for fear of alienating the City’s self-serving, campaign funding union bosses.   
And once again, this short sighted, politically motivated decision regarding LACERS will penalize the wallets of the next generation of Angelenos, even if the economy improves. 

Shortsightedness at City Hall is such an everyday occurrence that our Elected Elite now commonly refer to it as “kicking the can down the road.”  

In this particular case, involving LACERS and its $5.9 billion unfunded pension liability, the actuary once again recommended that the Investment Rate Assumption be lowered from 8% to 7.75%, the same rate used by the Fire and Police Pension Plans that is “only” 32% underfunded.

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L.A. should not play bank regulator

From the LA Times:

Even though it faces a budget gap of $200 million or more in the coming year, the L.A. City Council is considering a “responsible banking” ordinance that could raise its costs and reduce the income its investments generate. Why? Because some council members want to judge the banks and securities firms the city does business with in a new way — not by the value of the services they provide but by how well they perform on a series of poorly drawn tests of local service. Do we really have to say that’s not a good idea?

The idea comes from Councilman Richard Alarcon, who argued in the Huffington Post last year that cities should channel their “outrage” at the banks into a “cultural shift.” Rather than focusing on short-term gains, Alarcon wrote, local governments should try to produce more long-term growth “by investing our funds in economic growth opportunities that directly impact our communities.” His proposal languished for more than a year, but it gained new life this month as protesters aligned with Occupy Wall Street camped out on the City Hall lawn.

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Eliminate College Tenure – Flunk the Faculty

There are two solutions to the problem of the high cost of college.  The first:  just don’t go.  It’s crazy expensive, you’ll be buried in student loans, and the return on investment for a college education today is highly questionable.

The second solution is to eliminate tenure.  Why should some professors, adept at playing politics, have job security, and others not?  Who can demonstrate that tenured professors are better educators?  Take the average professor, just add tenure, and nine times out of 10 you’ve got the academic equivalent of Vernon Wells.

“Publish or perish” is no joke to academics: if they don’t have at least one published book, or a bunch of articles in prestigious journals, or at least some interesting Twitter posts, they will not get tenure. If they don’t get tenure, they’ll have to do what the rest of us do for a living: make sense. Create value. Justify their existence to their employer.  Or get a real job.

Education, like healthcare, increases in cost far in excess of inflation, because both education and healthcare are driven by two powerful market forces: salaries and waste. Society pays much attention these days to the bloated, overcomplicated, creaking medical system.  That’s because we’re all getting older.   Not to be overly depressing, we’ll all get sick and die, and we’d rather someone else pay our medical bills.

Less attention is paid to the burgeoning cost of higher education because most voters have already completed their education. Unless we have college-age or almost college-age children, the high cost of education is immaterial to our lives. The problem is that most young people come out of college and especially graduate and professional school so saddled with debt that they can barely afford to get their adult lives started. It’s hard to get a home loan when your debt-to-income level makes your balance sheet look like a South American banana republic.  Or a European democracy, for that matter.

I taught freshman English for several years at a small, private college south of Boston. There, I made a startling discovery: most people in college shouldn’t even be in college. They should be working, learning a trade, or just getting married and starting a family. Unfortunately, we have fallen prey to the hype that without a college degree, your child will be ill-equipped to face the rigors of the marketplace. Now, too late, we discover that even with a college degree, our kids are so deeply mired in debt that they can’t pursue their dreams and must therefore grab practically any job that comes along. Or go camping on Wall Street.

And while your college educated kid is sleeping on the couch in your basement, or Occupy-ing something, his or her tenured professors are buying rental property.  With your money.

Ah, but what happens to professors who don’t get tenure, often because they are the wrong gender (male) and possessed of the wrong political views (conservative)?

The “lucky” ones find stable, non-tenured positions at colleges and universities often at some distance from their homes. They become academic nomads, but at least they’re teaching regularly and, even more important, eating regularly.

Others, less fortunate, pick up class hours at various community colleges, commuter schools, and other places of questionable academic repute and thus cobble together an all-too-often meager living educating the next generation.

They may be just as effective in the classroom, or even more effective, than their research-and writing-oriented brethren and, um, sistren. Let’s say they make $50 an hour teaching in a community college. With benefits, let’s call it an $75 an hour. The average class lasts thirty hours, so they gross $2,250 a class. If they teach four classes in a semester, their earnings work out to about $11,000 a semester.

You can hardly feed a cat on $11,000 a year, let alone pay off your own college and grad school loans, rent a share of an apartment somewhere west of Riverside, and lease a Kia.

But what’s that we see in the college on the hill? Tenured professors making $150,000 to $170,000 a year, teaching the same number of classes or fewer–and burning considerably less gas–than their community college colleagues?

If it is a public college or university, then we the taxpayers are paying for those cushy lifestyles. If it is a private college, the money is coming out of Mom and Dad’s 401(k), now a 201(k), or the student is taking out a loan, or both.

College educations have been sold to Americans as a necessity in order to compete in the economy. In actuality, they consist of a massive wealth transfer from the savings accounts of older Americans and the future income potential of younger Americans and taxpayers to those individuals tenacious, politically astute and politically correct enough to get tenure.

Maybe those professors know something the rest of us don’t know:  how to charge five to ten times the value of what they provide, with Mom, Dad, Junior, and Uncle Sam footing the bill.

Back to publish or perish.  Academics live and die for a book deal with an academic publisher.  No money involved; just the peculiar prestige of publishing a book that few will ever read.  That professor is thus able to charge five to ten times as much as a non-tenured prof for teaching the same class.  Add in salaries, benefits, and pensions, and the tenured crowd isn’t just eating their lunch.  They’re eating yours.

(Michael Levin is a New York Times bestselling author and runs, America’s leading provider of ghostwritten business books.)

AB 32 law choking jobs and growth

From Cal Watchdog:

As California’s unemployment rate hovers above 12 percent, even the state’s Democratic leaders — notorious for regulating, taxing and complaining about California’s business community — are talking about jobs. They are championing the occasional job expansion in Silicon Valley (i.e., a new Dell research and development center) and proposing their jobs plans, even if such plans ignore the reasons businesses aren’t growing here. (Hint: high taxes, punitive regulations, regulators’ hostility to the private sector.)

Meanwhile, the state is embarked on a massive utopian experiment that will soon push thousands more California jobs to neighboring states and other countries. The California Air Resources Board voted Thursday on final rules to implement the state’s cap on greenhouse gas emissions and the so-called cap-and-trade emission system that will force California businesses that can’t reduce their emissions to 1990 levels to buy credits in a government-created emissions “market.” The net result: Most manufacturers will either face a large new tax or will be forced to cut back production. A new bevy of brokers who trade in these emission allowances will do well under the new system.

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Why Occupy Wall Street Needs a Republican President

From Townhall:

There’s only one way the Occupy Wall Street movement can become like the tea parties, and that’s for Barack Obama to lose in 2012. Why? Because Obama is the most divisive figure in American politics today.

I suspect that sentence reads funny to some people because in the mainstream press, “divisive” is usually a term reserved for “conservatives we disagree with.” But as a factual matter it can apply to anybody who is, well, divisive.

Obviously, Obama divides the right and left. That’s not all that interesting or relevant (even if it does represent a failure to live up to his “one America” rhetoric from 2008). But Obama also divides everyone else. Independents, whom he desperately needs to win re-election, are split over Obama, with the bulk siding with Republicans.

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