Tag Archives: spending

Another Failure of Modern Liberalism

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Illinois has a deeply bankrupt pension system—it’s in the hole by $100 billion: a state is in the hole by $100 billion, not a nation—a pension system that’s the worst off in the country.

Their solution?  A bill just passed that in total is claimed to save $160 billion over 30 years and fully fund the systems by 2044.  That’s a bit over $5 billion a year on that $100 billion arrearage.  And it naively, if not cynically, assumes that future state legislatures won’t change the thing for all of those 30 years.

Some specifics, with my comments: the bill

  • pushes back the retirement age for workers ages 45 and younger, on a sliding scale

Why a scale?  20 years to a nominal retirement at 65 is plenty of time for workers to adjust plans.

  • replaces annual 3% cost-of-living increases for retirees with a system that provides the increases on a portion of benefits, based on seniority

Why freeze the COL?  If there’s to be one, why not tie it to inflation?  Today’s inflation is in the neighborhood of 2%-2.5%. Larger COLs aren’t necessary.

  • gives some workers the option of freezing their pension and starting a 401(k)-style defined contribution plan

Why only some?  Why not move them all to 401(k) type plans?  The private sector recognized the usefulness of such plans decades ago, and they make the workers more responsible for their own futures, instead of having government usurp that responsibility.

  • has workers contributing 1% less to their own retirement

So workers will become even less responsible for their own futures than they were.  Oh, wait—those plans….

Don’t expect this to have any effect on Illinois’ failed system other than to allow it to get worse.

Union Leadership Greed in Illinois

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Details of a plan reached last week appear to show [Illinois] state legislative leaders are attempting to solve Illinois’ $100 billion pension crisis in part by changing workers’ retirement age, reducing automatic pension increases, and limiting their collective-bargaining privileges.

Public union leadership disagrees with this, though, and they’re turning on that Democratic Party leadership.  These union leaders consider carefully selected and targeted Democrats to be “persuadable,” and these unionists are going to do some “persuading.”

Never mind that the plan will save roughly $160 billion over 30 years, according to Governor Pat Quinn (D) and the leaders of the Democrat-controlled State Assembly.

Illinois’ public sector union leaders object to their unions paying their fair share.  They have theirs, and to Hell with anyone else, to Hell with the fact that Illinois is bankrupt in every way but the filing.  Pay up, suckers.

And So It Begins Anew

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Senate Majority Leader Harry Reid (D, NV) is at it again.  Interrupting his Nevada NPR host, he demanding that all talk of cutting taxes be stopped.  This Progressive does not approve of such speech, and so we have no right to hear it.  He also

said Republicans would have to agree on tax-revenue increases for Congress to achieve a large-scale agreement, but they instead have their mind set on “nothing more on revenue.”

“And until they get off that kick, there’s not going to be a grand bargain.  There’s not going to be a small bargain.

Straight from the horse’s mouth.  Never mind the $600 billion in tax rate increases he got earlier this year.  He wants more, with no spending cuts (that’s just “happy talk,” he says), or he’s perfectly willing to, once again, blow up negotiations and to threaten the viability of our economy.

All for Progressive ego.

Economic Incompetence Continues

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We must increase our debt limit so that we can pay our bills.

This is the thrust of President Barack Obama’s insistent demand that our debt ceiling be raised, and that it be done with no strings attached.  The graph below, via Zero Hedge, however, illustrates the foolishness of continually expanding our country’s debt.  It shows government debt as a percentage of GDP compared to the annualized rate of change in economic growth.

It’s hard to get any clearer than this demonstration of the inverse relationship between government debt growth and economic growth.  It’s not just that growing debt impedes economic growth; the reverse is true, also: reducing government debt (not just reducing debt growth rate) allows the economy to grow.

If you borrow money to pay your bills, you aren’t paying your bills, you’re just changing creditors.  I’ve said it before, and I’ll say it again: it isn’t sufficient simply to raise our debt ceiling.  Any raise must be coupled with commensurate real spending cuts—that is, cuts in current year spending, not pseudo-cuts in the out years.  It’s only by reducing current spending below current revenues that the current deficit can be reduced—which by itself still isn’t enough.  The current deficit must be reduced to the point it disappears, and a current surplus is generated.  Year after year.

Current deficits, after all, are current borrowings, and these only add to existing debt.  The only way we can reduce our country’s debt, and so to eliminate the need to raise the debt ceiling—the only way—is to cut current spending to levels below current income.  Any junior high student on an allowance understands that.

A Thought on Government Spending

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I’m prompted by Treasury Secretary Jack Lew’s testimony before the Senate Finance Committee Thursday.

The Wall Street Journal paraphrased him, in part, with this:

Given current spending and tax levels, the government would probably have to cut spending by at least 30%—or $100 billion—a month if the borrowing limit wasn’t increased.

This is an excellent argument for Congress getting spending under control.  Think about that: the Federal government, by Lew’s own claims, is saying it spends $100 billion per month more than it collects in tax (and other) revenues.  The Federal government, this year alone, is spending $1.2 trillion dollars more than it’s collecting.  That $1.2 trillion deficit goes right to our national debt; we borrow to cover that shortfall.  Getting this profligacy under control—eliminating that profligacy—is the only way to get rid of budget deficits, and the elimination of those deficits—not their reduction, but their elimination—is the only way to avoid having to repeatedly increase the amount of our borrowing, the only way to eliminate the “need” to repeatedly raise the debt ceiling—which is no ceiling, no limit at all, if it’s always raised for the asking.

Along these lines, Lew also said this (direct quote, no paraphrase):

I don’t believe there is a way to pick and choose on a broad basis.  The system was not designed to be turned off selectively.  Anyone who thinks it can be done just doesn’t know the architecture of our multiple [payment systems].

This is proof of our need to rationalize and streamline our payment systems, and the ideal time to do this is while we’re reducing and reforming our spending as a whole.