Pension Funds Push Back on Detroit Bankruptcy
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  • Jane the Actuary

    And no private entity has been able to use estimates of return on assets as the basis for measuring pension liabilities for a very long time — fighting over a 7% vs. 8% return seems utterly disconnected from reality when private companies use corporate bond rates for their accounting valuations and an adjusted government bond rate for minimum funding valuations.

  • Corlyss

    “charging that Governor Rick Snyder is violating the constitutional requirement that the state protect public pensions.”

    Well, no accounting for what Dem. political hacks in black robes will do, although it’s a good bet they will back the unions. But it’s strictly a supremacy clause issue, and will eventually be ruled as such by a federal court.

  • Kelly Hall

    I shed no tears for Detroit’s unions and retirees, as I’m sure virtually all of them spent decades supporting and voting for political hacks who continually promised them the moon, knowing full well the facade was crumbling around them. Party’s over, folks, and the bill has come due in full.

    • Thirdsyphon

      One could say much the same about current Medicare and Social Security recipients, which is probably why the GOP’s entitlement reform proposals test so poorly.

      • Corlyss

        I’m a Republican and over 65. I have no trouble saying “greedy geezers.”

        I’ve been a values voter all my political life and soon as the Eldercare/indigentcare problem was pointed out to me, when I was 49, it became my chief concern because of the jeopardy it put our national security in. But only part of the shame lies with the greedy geezers. The rest lies with the politicians who pander to them. Nobody has asked our demo to sacrifice. Nobody. The dialog mainly focuses on how can the society keep giving old and unproductive people the same amount (indexed of course to cost of living) so the most politically active will continue to vote for them.

        • Thirdsyphon

          Well said. I’m a Democrat under 45 and even *I* can see that Medicare in its current form is unsustainable and will have to be scaled back. Some kind of major reform is inevitable.

          But what bothers me about the GOP’s reform proposals (and I don’t think I’m alone in this) is that they refuse to consider anything short of “deep structural reforms” for people in my age group while painstakingly reassuring people in your age group not to worry about it because *your* gravy train will run forever.

          By embracing this message, the GOP is transparently lying to both of us.

          People my age and younger don’t believe for a second that “vouchercare” will provide anything close to the level of insurance that Medicare does now, because if it did there’d be no need for them to spend their every waking hour assuring people on Medicare that the reforms will never apply to them.

          Meanwhile, people your age and up should be very skeptical about the GOP’s assurances that this kind of two-tiered social insurance system will be politically sustainable. I haven’t seen any direct polling on this issue, but I strongly suspect that it would not be.

          • Corlyss

            I’m not particularly worried about changes adversely impacting anybody at this point because I fully expect to be dead before this new “civil war” works its way thru the system. And just to put a point on it, I think the deep divisions between the two points of view are as profound and intractable as the slavery issue was 150 years ago. I just don’t see how the spenders will ever compromise with the savers sufficiently to find a solution without bloodshed. However, I could be surprised, even after I’m dead. I plan to keep an eye on things from the other side.

            The consumer-based model of economic success is a post-war phenomenon that was never sustainable, just as the Social Security and Medicare/Medicaid programs were never sustainable. In the case of Social Security, policy makers realized almost immediately that it would produce fiscal catastrophe if not fixed. Well, here are. It wasn’t fixed. Enter, fiscal catastrophe.

            “People my age and younger don’t believe for a second that “vouchercare” will provide anything close to the level of insurance that Medicare does now, because if it did there’d be no need for them to spend their every waking hour assuring people on Medicare that the reforms will never apply to them.”

            You have the “cool clear eyes of a seeker of wisdom and truth,” 3rd. You spotted the tell in the snake oil pitch. The feds tried to sell their workers on the switch from a defined benefits to a defined contribution pension plan in the early 80s by touting all kinds of control and ROI bafflegab. They sent out software that had workers beavering away matching this algorithm against that one to see which gave them more money in retirement based on shifting assumptions about the stock market and all kinds of other crap. I didn’t have to switch, so I didn’t. My calculus was this: if it was any good for us, they wouldn’t do it.

            The cause of the problem is promising too much to too many. The solution is a “come to Jesus” moment when the statists come clean and admit they can’t fulfill the promises and simply stop wasting everyone’s money and time trying to. Neither the Dems nor the Repubs want to fix the problem, because they know the voters would destroy them politically; they just want credit for fixing it.

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