The New York Times cover story today is about how some states are facing big budget deficits and are looking at a variety of ways to cut costs and fill gaps in spending. Those include reducing social services, freezing hiring and, of course, raising taxes. Michigan is even discussing salting roads less in the winter, a potentially dangerous misstep.
As states try to figure out how to cut costs and services to current taxpayers, it seems no one is talking about is rolling back the retirement age for government workers to help ease at least one part of the budget problem: massive pension burdens.
California, for example, has the nation's biggest state economy and also the biggest problems. The Golden State is facing a nearly $15 billion dollar budget gap and is desperately trying to figure out how to close that, likely through a combination of cost cuts and increased taxes and borrowing. CalPERS, America's biggest pension fund, has nearly 500,000 retiree members and 1.1 million more active and inactive members. CalSTRS, the teachers fund, had 812,784 total members and benefit recipients as of June 30, 2007. That's about 2 million active and inactive members between the two organizations in a state who's 2006 population was just over 36 million.
Pensions aren't the only problem, but they are a big part of them. The Sacramento Bee, citing a state analysts' office, reported back in 2004 that California's pension obligation will nearly triple in 2009-2010 to $3.3 billion, up from $1.2 billion in fiscal 2002-2003. At the same time, The Heartland Institute, the average retirement age of a California state worker was 59 years old in 2004. That's the average, meaning many workers are retiring at an even earlier age.
The problem also exists on the national level. According to Federal Computer Week, the average retirement age of a federal government worker was 58.7. Again, many workers therefore are leaving their jobs and collecting benefits in the early and mid-50s.
Americans are living longer than ever. The average lifespan in this country is around 80 for women, 77 for men. Assuming government workers live as long as the general population, retirement in the mid 50's could end up meaning their retirement is funded for 30 or more years. It's entirely possible many government workers will be living off pensions more years than they were employed and contributed to those pensions.
There are other issues as well. In that 2004 Sacramento Bee report, the paper also highlights the problem of "pension spiking." As most pensions are based on the highest level of pay achieved, many workers take a promotion, increase their salary and then promptly retire. That increases the level of their pension, even if they simply took the new job for a few months. Compounding the problem is that the more workers retire, the more training is needed to fill those slots. As state employees move from job to job to help push their pensions higher, more spending is needed to hire and train the new workers. The Bee reports this "pension spiking" and subsequent spending costs the state an extra $100 million per year.
The irony is that much of the news around GM, Ford and Chrysler involves their huge defined benefit obligations. Much of the debate around whether to put more government money into these companies tends to come back to the issue of pension and health care payments to those companies millions of retirees. Private workers may end up working longer to balance out the good news that they are living longer. Yet there is virtually no discussion of this with regard to government and public sector workers. I imagine that is because government workers tend to be the ones who vote on their own retirement ages.
Living longer is a good thing. I hope to be piloting a Sopwith Camel at 90. But living longer is an even better thing when it's fully funded and the huge financial burden doesn't drop on the current crop of taxpayers. Government needs to learn this before it lectures private sector companies on their own mismanagement.
So Obama had a staff of about 60 and a budget of $3 million. Try multiplying that by 500 senators and congressman. Think about that - 60 people to assit one senator??? How about we cut that back to 10 and budget of no more than $1,000,000 (which is still high). Now take the $2,000,000 saved for each senator and congressman and go do something productive. By the way that is about $1 billion dollars each and every year.
The pay for senators and congressman should be cut by 1/3 immediatley. We only need them to work about 3 months of the year so that is still a hefty wage. That will save an addtiional $30,000,000. We are starting to talk some real savings now -
November 17, 2008 at 8:22 pm
NationalEnquirier
Tell Rove he can't have my latest software, it prints up the neighborhood fliers for the entire US down to the BLOCK level profiling on race, income, etc. Over 500 categories.
Load it up with rules - say for single Hispanic mothers.
BAM - 171,932 zoned fliers, all easily sent off to each district office.
With this kind of voter issue localization / manipulation ? You could win 2012.
And to think, I only grabbed 1.3 tb of data from US census to do it.
Sorry Karl - maybe your team wasn't smart enough to go out and pull in SF4 from Census to get you SURGICAL marketing tools based on census data.
But winning elections is about manipulating the voter to vote for you right ?
You just have to think you're right, or not care and go under false pretense.
I'm not insane - we're just watching Savings and Loan from the Bush family part II.
Wow, now insurance companies are becoming S & L 's
wow.
Jojo's Crab Deep Fry is probably next in line at some strip mall.
Dear Mr. Paulson, or is it Dr. Paulson.
I run a fish fry and we're tight on funds.
JoJo isn't actually a real person now, but we need 2.8 million to expand and compete with our neighbors, we want to put them out of business.
2.8, call it an even 5 million
should do it.
thanks US Treasury
oh yeah, and we're now JoJo's Savings and Loan by the Sea on paper.
So, qualify us, and we'll be on our way.
Thanks Treasury
November 17, 2008 at 8:13 pm
NationalEnquirier
Let's look at the bright side to the failing of a nation state.
No more threat of terrorism, because there would be no more red target.
Gee, and we could have just sub primed ourselves into oblivion as a nation state and skipped the war on terror ?
November 17, 2008 at 8:07 pm
Matt
Example of wasting time as a politician - why would we have hearing about steroid use but not investigate Barney Franks initmate relationship with a Fannie Mae exec???
Steriods is a police matter, not congressional. Somebody hitting more home runs than he should have is just a little less important than the collapse of the mortgage market.
November 17, 2008 at 8:07 pm
NationalEnquirier
Maybe no one has any faith the government will be around long.
November 17, 2008 at 8:06 pm
NationalEnquirier
Hats off there Brian Sullivan
You made it to me someone actually cares club.
I'd like to take your last line there regarding living longer, and make that focus for a subject.
I continually ask myself, what good is any profit from oil if burning oil is so bad for my health.
For anyone who dares to question this, let's see them take just a quart of oil - and burn it in their home.
Probably immediate $20,000 loss on property value + easily 10% of property.
You wouldn't breath in burning oil, why breath in burning gas. You think China really care to spend on platinum catalytic converters ?
Best minds at Harvard in Atmospheric Chemistry ? show China's toxic sludge surviving in PLUMES in the US, as in, undiluted, intact as when they started their journey across the pacific. It's really fluke - but image that plume in your life, your lungs.
Forget China on mercury emissions, more folks at Harvard it seem, and this time Cornell seem to show direct correlation between childhood neurological deficit and rainfall.
I would argue what good is anything if health is forfeited.
Without health, nothing else matters.
And yet ?
some people forget about this and chase today's dollar robbing tomorrow's child blind of a potential for a healthy life.
And for what ?
cheap oil money.
'looky leeeeroy, it just pours outta the ground, let's sell it and people can burn it'
oil has had it's century, 100 years is enough.
same with coal.
Solar, wind and geothermal can power the grid, nuclear scarily enough is a better choice than coal or petro.
I'd say if anything that is disadvantageous to ones community is a crime as I define it ?
petro based auto's are a crime.
hmm
I never looked at the upside of a car jacking ?
no, there is no upside.
nor to a home jacking
IRA jacking
or in general, backbone of US financial sector jacking as of late.
in fact, let's forget car jackers
let's focus on Treasury jackers.
November 17, 2008 at 8:06 pm
James
Many federal employees WOULD continue to work but are required to retire by law. Talk to you Congress. Every federal law enforcement officer or agent is REQUIRED to retire at 57. A great many would continue working since the vast majority are healthy and willing.
November 17, 2008 at 7:53 pm
Jason
Is it any wonder that the private sector is dieing?
The federal government has been destroying it for many years. Most people quit the private sector in hopes of finding a government job. Great benefits, paid vacations, made up holidays, no accountability work, very little worry about losing your job, early retirement. What more could you ask for? Sure beats the hell out of trying to make a living in the private sector.
After these come the banking institutions, which are nothing more then leech jobs on the private sector. These include credit card processing and the rest of the usury institutions. I would bet if you did a study, you would find that most of the so called job creation done by all of the administrations over the past 25 to 30 years are banking and credit card related. One big giant blood sucking leech on the private sector.
Then comes the insurance industry, which again, is a big giant leech on the private sector. To top that off, while all of this parasitic creation is being done, the real jobs are sent over to other nations so slave labor can be used to create cheap inferior products that we are forced to buy because the only jobs left are service related unless you have some overpriced college degree, in which case you can get a better service related job.
Then, because some schmuck went to college and earned the right to screw everything up and in the process jacks up their own salary to the level of a higher entity, and creates a sort of inflationary game based on arrogance, the people at the bottom who have to take all the crap service related jobs, just to eat, are left without a lifejacket because they don't have the option of giving themselves a huge raise that they deserve for working and not screwing stuff up.
What's the answer, who knows? The country has been busy creating the problem for so long, ignoring the truths while basking in their credit, and now seems willing to listen to the parasite telling the host why they are needed. As a person living in private sector hell, the only thing I can say is, I don't have a lot of blood left and may soon have to become a parasite to survive.
November 17, 2008 at 7:43 pm
Matt
This is a great story. It goes beyond state and local retirement. Why is there not talk of more cuts in personnel at all goverment levels. Why have w enot talked about cutting the enormously unfair retirement packages of senators and congressmen. How about cutting the budgets of senators and congressman by half?? They have several offices, a multitude of staff, expense accounts, salary and a lucrative retirement. And they have the gall to comment about Wall Street bonuses???
We need less goverment. Start by cutting their staff. In fact be a senator or congressman should only be a part time job. Most of what they do is a waste of time. Pay should be comensurate with a part time job.
November 17, 2008 at 7:36 pm
Alexandra
We're living in "get it while you can" mentality. It's always the ME, ME, ME.
Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block.
Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.
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Matt
So Obama had a staff of about 60 and a budget of $3 million. Try multiplying that by 500 senators and congressman. Think about that - 60 people to assit one senator??? How about we cut that back to 10 and budget of no more than $1,000,000 (which is still high). Now take the $2,000,000 saved for each senator and congressman and go do something productive. By the way that is about $1 billion dollars each and every year. The pay for senators and congressman should be cut by 1/3 immediatley. We only need them to work about 3 months of the year so that is still a hefty wage. That will save an addtiional $30,000,000. We are starting to talk some real savings now -
NationalEnquirier
Tell Rove he can't have my latest software, it prints up the neighborhood fliers for the entire US down to the BLOCK level profiling on race, income, etc. Over 500 categories. Load it up with rules - say for single Hispanic mothers. BAM - 171,932 zoned fliers, all easily sent off to each district office. With this kind of voter issue localization / manipulation ? You could win 2012. And to think, I only grabbed 1.3 tb of data from US census to do it. Sorry Karl - maybe your team wasn't smart enough to go out and pull in SF4 from Census to get you SURGICAL marketing tools based on census data. But winning elections is about manipulating the voter to vote for you right ? You just have to think you're right, or not care and go under false pretense. I'm not insane - we're just watching Savings and Loan from the Bush family part II. Wow, now insurance companies are becoming S & L 's wow. Jojo's Crab Deep Fry is probably next in line at some strip mall. Dear Mr. Paulson, or is it Dr. Paulson. I run a fish fry and we're tight on funds. JoJo isn't actually a real person now, but we need 2.8 million to expand and compete with our neighbors, we want to put them out of business. 2.8, call it an even 5 million should do it. thanks US Treasury oh yeah, and we're now JoJo's Savings and Loan by the Sea on paper. So, qualify us, and we'll be on our way. Thanks Treasury
NationalEnquirier
Let's look at the bright side to the failing of a nation state. No more threat of terrorism, because there would be no more red target. Gee, and we could have just sub primed ourselves into oblivion as a nation state and skipped the war on terror ?
Matt
Example of wasting time as a politician - why would we have hearing about steroid use but not investigate Barney Franks initmate relationship with a Fannie Mae exec??? Steriods is a police matter, not congressional. Somebody hitting more home runs than he should have is just a little less important than the collapse of the mortgage market.
NationalEnquirier
Maybe no one has any faith the government will be around long.
NationalEnquirier
Hats off there Brian Sullivan You made it to me someone actually cares club. I'd like to take your last line there regarding living longer, and make that focus for a subject. I continually ask myself, what good is any profit from oil if burning oil is so bad for my health. For anyone who dares to question this, let's see them take just a quart of oil - and burn it in their home. Probably immediate $20,000 loss on property value + easily 10% of property. You wouldn't breath in burning oil, why breath in burning gas. You think China really care to spend on platinum catalytic converters ? Best minds at Harvard in Atmospheric Chemistry ? show China's toxic sludge surviving in PLUMES in the US, as in, undiluted, intact as when they started their journey across the pacific. It's really fluke - but image that plume in your life, your lungs. Forget China on mercury emissions, more folks at Harvard it seem, and this time Cornell seem to show direct correlation between childhood neurological deficit and rainfall. I would argue what good is anything if health is forfeited. Without health, nothing else matters. And yet ? some people forget about this and chase today's dollar robbing tomorrow's child blind of a potential for a healthy life. And for what ? cheap oil money. 'looky leeeeroy, it just pours outta the ground, let's sell it and people can burn it' oil has had it's century, 100 years is enough. same with coal. Solar, wind and geothermal can power the grid, nuclear scarily enough is a better choice than coal or petro. I'd say if anything that is disadvantageous to ones community is a crime as I define it ? petro based auto's are a crime. hmm I never looked at the upside of a car jacking ? no, there is no upside. nor to a home jacking IRA jacking or in general, backbone of US financial sector jacking as of late. in fact, let's forget car jackers let's focus on Treasury jackers.
James
Many federal employees WOULD continue to work but are required to retire by law. Talk to you Congress. Every federal law enforcement officer or agent is REQUIRED to retire at 57. A great many would continue working since the vast majority are healthy and willing.
Jason
Is it any wonder that the private sector is dieing? The federal government has been destroying it for many years. Most people quit the private sector in hopes of finding a government job. Great benefits, paid vacations, made up holidays, no accountability work, very little worry about losing your job, early retirement. What more could you ask for? Sure beats the hell out of trying to make a living in the private sector. After these come the banking institutions, which are nothing more then leech jobs on the private sector. These include credit card processing and the rest of the usury institutions. I would bet if you did a study, you would find that most of the so called job creation done by all of the administrations over the past 25 to 30 years are banking and credit card related. One big giant blood sucking leech on the private sector. Then comes the insurance industry, which again, is a big giant leech on the private sector. To top that off, while all of this parasitic creation is being done, the real jobs are sent over to other nations so slave labor can be used to create cheap inferior products that we are forced to buy because the only jobs left are service related unless you have some overpriced college degree, in which case you can get a better service related job. Then, because some schmuck went to college and earned the right to screw everything up and in the process jacks up their own salary to the level of a higher entity, and creates a sort of inflationary game based on arrogance, the people at the bottom who have to take all the crap service related jobs, just to eat, are left without a lifejacket because they don't have the option of giving themselves a huge raise that they deserve for working and not screwing stuff up. What's the answer, who knows? The country has been busy creating the problem for so long, ignoring the truths while basking in their credit, and now seems willing to listen to the parasite telling the host why they are needed. As a person living in private sector hell, the only thing I can say is, I don't have a lot of blood left and may soon have to become a parasite to survive.
Matt
This is a great story. It goes beyond state and local retirement. Why is there not talk of more cuts in personnel at all goverment levels. Why have w enot talked about cutting the enormously unfair retirement packages of senators and congressmen. How about cutting the budgets of senators and congressman by half?? They have several offices, a multitude of staff, expense accounts, salary and a lucrative retirement. And they have the gall to comment about Wall Street bonuses??? We need less goverment. Start by cutting their staff. In fact be a senator or congressman should only be a part time job. Most of what they do is a waste of time. Pay should be comensurate with a part time job.
Alexandra
We're living in "get it while you can" mentality. It's always the ME, ME, ME.