Best of the Web Today: Eine Kleine Trauermusik - WSJ.com: "This problem didn't begin with Obama, and you can't even blame George W. Bush: "The idea among Americans that they get back what they paid for, with some rate of return, dates to President Franklin D. Roosevelt's legislative marketing of Social Security nearly 80 years ago."
As future Enron adviser Paul Krugman noted in 1996, Social Security is a Ponzi scheme. So is Medicare. Politicians have conned workers into thinking of their payroll taxes as an investment and their future benefits as an asset that belongs to them. In reality, the government pays out benefits by taxing current workers and borrowing money--effectively a tax on future workers.
Like any Ponzi scheme, such a system is sustainable only as long as the number of suckers--sorry, workers--continues to grow and the number of beneficiaries doesn't grow too quickly." (read more at link above)
Andy Kessler: The Pension Rate-of-Return Fantasy - WSJ.com: "In June of 2012, Calpers lowered the expected rate of return on its portfolio to 7.5% from 7.75%. Mr. Milligan suggested 7.25%. Calpers had last dropped the rate in 2004, from 8.25%. But even the 7.5% return is fiction. Wall Street would laugh if the matter weren't so serious. And the trouble is not just in California. Public-pension funds in Illinois use an average of 8.18% expected returns. According to the actuarial firm Millman, the 100 top U.S. public companies with defined benefit pension assets of $1.3 trillion have an average expected rate of return of 7.5%. Three of them are over 9%. (Since 2000, these assets have returned 5.6%.) Who wouldn't want 7.5%-8% returns these days? Ten-year U.S. Treasury bonds are paying 1.74%. There is almost zero probability that Calpers will earn 7.5% on its $255 billion anytime soon."
Where Obama Staff Veterans Are Working in 2013 | New Republic: " . . . more than enough ways to cash in on a White House tour of duty that fall comfortably within the red lines governing Obama’s Washington. No one in the West Wing, from the president on down, would begrudge former colleagues the chance to make a buck so long as a modicum of tact is displayed.
The easiest place to accomplish this is at a Washington consulting firm that takes on corporate clients. For example, a group of companies might hire a firm like SKDKnickerbocker—a popular destination among young Obama operatives, run by former White House communications director Anita Dunn—to wage a P.R. campaign for certain tax advantages over their competitors. (The New Republic was an SKDKnickerbocker client.) “Ninety-nine percent of the time it’s two big rich companies fighting over something, and you pick a side,” says a former administration official now in the consulting world. . . . "
24 IRS workers in TN accused of theft | The Tennessean | tennessean.com: “According to the allegations in the indictment, while these IRS employees were supposed to be serving the public, they were instead brazenly stealing from law-abiding American taxpayers,” U.S. Attorney Edward L. Stanton III, who oversees federal prosecutions in West Tennessee, said in a prepared statement. The indictments come just weeks after a state audit found more than $73 million in overpayments were made by the Tennessee Department of Labor and Workforce Development over the past several years. That audit turned up 24 active state employees who received more than $126,000 in unemployment benefits and seven dead people who were paid out $12,387. The state said the majority of those cases involved fraud. . . ."
As economy flails, debtors' prisons thrive - CBS News: " . . . they reflect a justice system that in effect criminalizes poverty. "It's a growing problem nationally, particularly because of the economic crisis," said Inimai Chettiar, director of the justice program at New York University School of Law's Brennan Center for Justice. Roughly a third of U.S. states today jail people for not paying off their debts, from court-related fines and fees to credit card and car loans, according to the American Civil Liberties Union. Such practices contravene a 1983 United States Supreme Court ruling that they violate the Constitutions's Equal Protection Clause."
Constitution? That's just a small technicality in today's legal system in the United States!
Kentucky's pension reforms seen as positive for the state | Reuters: "pension crises persist in many places, most notably Illinois, which currently has a shortfall of $98.6 billion.
Kentucky is one of 14 states that have only made partial pension payments over the past seven years, according to Chris Tobe, who served as a trustee of the system from 2008 through 2012. In fiscal 2011, it had investment returns of nearly 19 percent, but assets "grew by only 1 percent due to the negative cash flows from underfunding," he said in a white paper last summer.
Almost every state has enacted pension reforms in the last five years, and political fights are erupting over the country over whether the reforms go far enough or if they are even legal. Many states only made changes to benefits for new hires, which proved too slow to solve the most pressing problems."
Public pensions are nothing less than a raid on the public treasury--hogs at the trough!
Kentucky's pension reforms seen as positive for the state | Reuters: "Under the new law, Kentucky will be required to fully fund its ARC by fiscal 2015, at a cost of about $100 million a year that is to be covered by changes to the state's personal income tax. Kentucky will also put new hires into retirement plans similar to those provided in the private sector and essentially eliminate cost-of-living adjustments for retirees.
"We believe acceleration to the full ARC will have a positive impact on the long-term trajectory of the state's pension liability," Fitch said. "However, the impact of the acceleration will be muted due to the significant underfunding level."
Last week another rating agency, Moody's Investors Service, noted Kentucky has one of the worst funded pension systems in the country, with the sixth highest unfunded pension liability of any state. The Kentucky Employees Retirement System only has enough assets to cover 30.2 percent of its liabilities. . . ."
NYPD Couldn't Find Mugger For 3 Weeks, Internet Commenters Catch Him in 1 Hour | Alternet: " . . . So what can we take away from the NYPD's 3-week fail and the Internet's 1-hour win besides a good (yet sad) laugh?
Perhaps an awareness that social media is not just the place where people post silly statuses and pictures with friends. Social media acts as a timeline of people's lives — accounts of their activities. And now they are playing significant roles in helping to solve crimes — most notably exposing the Steubenville rape case back in January." (read more at link above)
The first step in resolving a serious financial problem is to stop fueling the fire by spending money you don't have
Poor guy is going to clean up the Detroit "mess"--
Detroit manager to listen, then assess priorities - seattlepi.com:
Orr insists he has no immediate plan of action other than getting a sense of the city's priorities.
"You really want to look into the swimming pool to see if there is water in there before you dive in," said James Spiotto, a municipal bankruptcy expert at the Chicago-based Chapman and Cutler law firm.
But turnaround specialist James McTevia said he finds it hard to believe that Orr enters the job without any idea about what he intends to do. McTevia, who has closely followed the Detroit situation, suggests that one of his first steps should be an immediate freeze on debt spending.
"The first step in resolving a serious financial problem is to stop fueling the fire by spending money you don't have," McTevia said.
Early success could be crucial for Orr to win over citizens who are skeptical about whether an emergency manager really is needed, bankruptcy expert Doug Bernstein said. Such victories can be as simple as getting "street lights on and get police on the street," he said.
"Public safety is paramount," said Bernstein, managing partner of the Banking, Bankruptcy and Creditors' Rights Practice Group for Michigan-based Plunkett Cooney law firm. "This is such a hot area where people are passionate about whether there should or not be an emergency manager. It would likely go a long way to convince those who are against, or otherwise opposed to the concept, that this can lead to something good or rehabilitation for the city."
Beyond public safety, a host of other problems await Orr — including health care costs, pension concessions, privatizing services if necessary and, finally, weighing whether the only real solution is municipal bankruptcy.
Read more: http://www.seattlepi.com/news/us/article/Detroit-manager-to-listen-then-assess-priorities-4380350.php#ixzz2OV2HwhCD
The Big Sugar Sweetheart Deal with Uncle Sugar Daddy--
Carl Hiaasen: Big Sugar’s subsidy — how sweet it is - Carl Hiaasen - MiamiHerald.com: " . . . The major beneficiaries of this bailout would be cane growers in Florida and beet operations in Minnesota, Michigan and North Dakota. Big Sugar has outsized political clout in Washington, as evidenced by the silence of so-called fiscal conservatives.
Heavy campaign contributions are spread among Democrats and Republicans alike. Barack Obama took money from the sugar industry, as did Mitt Romney. Hefty donations went to both of Florida’s senators, Bill Nelson and Marco Rubio.
Every time somebody in Congress tries to kill the sugar subsidy, the measure gets voted down — by some of the same lawmakers who love to rail against public spending on welfare benefits, health care and education.
In Florida, the bitter taste of the sugar subsidy goes back decades. The program helped to make multimillionaires out of people who prolifically polluted the Everglades, and who for years fought all efforts to make them clean up their waste water. . . . .subsidies jack up consumer costs by about $3.5 billion annually . . . If you’re in the sugar business in this country, you can depend on politicians to restrict imports and guarantee a set price for your crop — the antithesis of free-market competition.
It’s not a one-time shot, either. It’s an ongoing gush of entitlement.
While we’re cutting scholarships for the children of dead war heroes." (read more at link above)