200 New York Cities Headed for Pension Trouble
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  • Anthony

    Related: “What Detroit has really taught America.”

    “Nothing. Seriously. Not a damn thing. Oh the occasion is being used to opine on our state of affairs, but nothing is structurally taking shape in America to prevent the next Detroit from occurring. In fact, Detroit is occurring every day inside most of us. We are all getting bankrupt in so many little ways.”

    “America is in a precarious position. Our economy is based on consumption. Our consumption is based on our livilihood. Our livilihood is based on our employment, and in our jobless recovery, there just aren’t many decent jobs. With technological advances, it is likely to get worse.” (see Richey Piiparinen: What Detroit Has Really Taught America.)

    • Andrew Allison

      Agreed, in general, but on the individual level it remains a matter of personal choice as to whether or not to live within ones means. Are you perhaps arguing that the body politic is morally bankrupt? If so, I agree. One of the things which Detroit shows us is that the pensioners are perfectly willing to sacrifice both city services and pensions for current employees to maintain theirs. Similarly, the cities (and counties) who continue to fund current obligations with what should be pension contribution are unwilling to face the wrath of their constituents.

      I’d like to think that everybody would wake up one morning and realize that we have the Greek disease, but as in Greece what we see is the disgusting spectacle of Orwellian “take his/her’s, not mine”

      • Corlyss

        “Are you perhaps arguing that the body politic is morally bankrupt? If so, I agree. ”
        Me too. It’s about to get a lot worse, with the Dems having removed the work requirement for welfare and the practical limit on unemployment. I’d throw in their unionization of the TSA too, but that’s really just a drop in the fiscal bucket. The real moral and fiscal damage is their increasing the number of people on all kinds of entitlements, including Obamacare. The Cloward and Piven strategy was that once they signed up everyone who was eligible for NY state benefits and then some, they would literally break the system at which point the feds would be compelled to step in. Now that the feds are following that model, whether corrupt Dems or merely stupid Republicans, they are going to break the system. So who do they expect to save the nation? The 1%? They don’t have THAT kind of money.

        • Andrew Allison

          Are you trying to balance burbaric’s knee-jerk, “it’s all the fault of the ‘right'” LOL

          Seriously though, I question whether the automatic Dem vs US and vice versa is productive. We need solutions, not blame. As you point out, there simply isn’t enough GDP to meet the entitlement obligations which our Federal State and Local governments have foisted upon the taxpayer. Unhappily, the recipients of the largesse already outnumber the contributors, which suggests that the outcome will not be decided at the ballot box.

          The only solutions which comes to mind are a forced reduction in living standards à la grecque or via hyper-inflation. Anybody have any better ideas?

          • Corlyss

            Anthony, if I had any control over the solutions, or the offering thereof, or action thereon, I’d say its time to stop the blame fest.
            But we ain’t nearly there and the solutions won’t come from you and me. They will be handed to us with a “take it or else” message, much like Obamacare was handed to us as a solution.
            I consider it my sworn duty to place blame squarely on the Dems and weak-minded Republicans who think they can out-give the Dems to attain a permanent majority like they had after the Civil War (aka the good old days). Both teams should be flogged naked thru the streets and band from public office so the real work can get done. Unfortunately, it will never happen.

          • Andrew Allison

            On “Both teams should be flogged naked thru the streets and banned from public office so the real work can get done.” we can agree.

          • Corlyss

            I pass the baton to you, Andrew, and wish you luck.

            I’m older and tireder than you, and you’re still optimistic enough to try, God love ya! I’ve spent 18 years trying to get liberals to identify just the structural problems they’ve created. As long as there’s people around like George Lakoff to convince them their problems are all in communications and communications will defeat the evil Republicans, we’re nowhere near where we need to be.

          • Andrew Allison

            It’s a rotten job . . ., and I’m older than I look (74) ;<)}

          • bpuharic

            We’ve already had a forced reduction. Median income has dropped 4 percent since 2007. Except the 1 percent. They’re up 11 percent.

          • Jim__L

            How much of that 11% is paper gains on equities, (whose value would probably drop precipitously, if they attempted to realize them) and how much is real physical wealth?

          • bpuharic

            That’s an argument you can ask about equities markets since their founding in the 17th century Netherlands. The fact is the 1 percent have taken care of themselves

            The middle class not so much

          • cubanbob

            The solution is good governance. Florida which has no state income tax and can’t float general obligation bonds has passed a bill that cities and counties must fund their pension funds even if it means no pay raises for public sector employees.

    • Loader2000

      During any time of technological disruption, those with capital to take advantage of the change make huge fortunes while those whose jobs have been obsoleted by the change face serious employment problems resulting in an excess of labor during the transition period. However, in every historical case, the in-balance corrected itself, eventually, as the working class invented new ways to suck money from the upper class. The tragedy in England during the industrial revolution was that it it took about 2-3 generations for this transition to take place. During the transition period, huge sections of the London population were desperately poor. Part of the reason for this was that the wealthy class in Britain spent a great deal of their money on imports and on overseas re-investment, instead of investment at home. Another reason for this is that the agricultural workings in England will very poorly equipped, educationally, to take advantage of the new technologies. The Key in any transition period is not to halt or delay it, that would be an exercise in futility. It is to push through to the other side as fast as possible. It is the transition period that is killer, not the end result.

      • bpuharic

        Suck m oney from the upper class?

        I guess that’s why the US has the greatest inequality of any western country, why corporate profits are at record levels and why wages, as a percentage of GDP are at the lowest point in over a century

        It’s all that oppression of the rich, you see.

        The right is becoming a parody of itself.

        Poe’s law

  • Pete

    “One wonders how these cities plan to pay off these obligations in the future, ….”

    I think they’re betting (hoping) that the Fed will eventually bail them out by buying their junk debt.

    This could shape up into another aspect of the rational that the Fed & the political class use to justify their insane policy of QEing to infinity..

    • Andrew Allison

      There aren’t enough printing presses to make that possible.

    • f1b0nacc1

      Since these pensions are inflation-indexed, printing more money won’t help…they will simply swallow up the additional funds

      • Jim__L

        Not all the additional funds. Instead of a wage-price spiral rebalancing the economy towards workers, you’ll have an entitlement-inflation spiral, which rebalances the economy in favor of pensioners…. who don’t contribute to the economy, by definition.

        The War on the Young (not to mention the War on Arithmetic) continues.

        Hayek was right, all government policy does is provide preferment to one interest over another.

        • bpuharic

          The people most in favor of doing away with govt are the crooks

          Which is the fons et origo of the American right.

  • Corlyss

    “The Comptroller’s office, which signed off on more liberal deferral rules introduced by state Governor Andrew Cuomo for the current fiscal year, declined to comment.”
    An enabler.

  • USNK2

    How many of these 200 cities in New York are questioning why one third of their extremely high property taxes, a dictate from Albany, are funding the most generous Medicaid model in America?
    One of every four New York residents qualifies for Medicaid.
    Ironic that Obamacare has a mandate that prevents New York from reforming their monster Medicaid.
    And Andrew Cuomo tries to sell the idea that only 10% of Medicaid is lost to fraud. ROFL if that was not so pathetic.

    • Andrew Allison

      The stats regarding the loss of tax revenue due to migration suggest that at least some of them are. It’s a death spiral the results of which we have already seen in Detroit, and I wouldn’t want to be the last property owner out.

  • bpuharic

    What’s amazing is the fact all these problems happened after the financial sector collapse of 2007 when we lost 19 trillion in equity and 8 million taxpaying jobs. Almost as if the financial sector had something to do with this.

    But rather than fix the problem we insist on treating the symptoms.

    • Loader2000

      The money permanently lost in the financial sector collapse was never really there. It was all based on over-estimation of value. If the financial sector had been better run, most of that 19 trillion would never have been made. The only difference is that the pensioners might have known a lot sooner that they couldn’t meet their obligations, and maybe, therefore, the fall-out would be less sever. However, they would still have had to either cut retiree benefits or dramatically raise taxes and hope that somehow, people and business wouldn’t simply leave.

      • bpuharic

        John Thain and John Paulson…the 2 of them…made $6 billion in 2007 as Goldman Sachs collapsed. THe money WAS there…it just got transferred from the middle class to the wealthy. The wealthiest 24 hedgefund managers make more than all 80,000 NY city school teachers. And we lost 8 M taxpayers. A scale of financial loss of that magnitude had tremendous effects on pensions and city budgets

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