Government Spending

Schwarzie: "The public debt just for government employee benefits has grown so large that it is threatening to crush our private sector"

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True Lies 2, anyone?

California's lame-duck governor has written an op-ed for the L.A. Times advocating budget cuts and pension reform, not new taxes, to close the Golden State's latest $20 billion budget shortfall. Excerpt:

[H]igher taxes and more debt do not grow jobs. They kill them. Let's also not forget that in last May's special election, the voters overwhelmingly rejected higher taxes. That is why I am fighting for a budget that cuts spending, does not raise taxes and finally forces government to live within its means. […]

We must also reform California's pension system for government employees, whose costs to taxpayers for just one of our major pension funds have skyrocketed from $150 million a year a decade ago to almost $4 billion this year. Private-sector workers already struggle to pay for their own retirement. Now they are being forced to pay more and more for the government workers' retirement, at the very time their own retirement accounts have declined. What is worse, in five years those pension costs will grow to well over $10 billion per year, and keep growing from there.

Over the next 30 years, the state will spend hundreds of billions of dollars just to service existing retirement benefit debt — further hammering taxpayers and crowding out funding for education, infrastructure, healthcare and other critical programs. In fact this year, for the first time ever, we will spend more on government employee retirement benefits than on higher education.

Whole thing here.

Schwarzenegger, who really should have been Chris Christie but wasn't, has had a gubernatorial career shaped like some kind inverse barbell: Great (at least rhetorically) at the beginning and end, but unfortunately the bad stuff in the middle weighs the rest of the thing down. Reason on the man here.

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  1. From what I’ve read, aren’t we basically screwed on this, because pension benefits are thoroughly legally protected? Sure, we can put new employees on different plans, or (in theory) rewrite some civil service contracts so that current employees pay more in, or eliminate COLA adjustments, but are any of those things enough to make a difference? I suppose it would be a violation of equal protection to tax public employee pensions at a higher rate….

    1. You’re right, we’re screwed. I think it’s best if those facing the looming fiscocalypse just move to a city in a county in the middle of nowhere. Montana, Wyoming, South and North Dakota may be boring as hell, but there are hardly enough people to allow for huge swaths of public sector employees in the voting population.

    2. Christie was able to get the teacher Unions to contribute something –anything– to pay for a small percentage of their incredible benefits package. This alone was enough to make a dent in the deficit. It may not be much in the bigger picture, but it’s a start.

    3. Yep, public employees have been deemed to have a property right in their outrageous pensions. This means taxes will have to be raised to pay for them. Paying for them will drive businesses out of California more effectively than a statewide wildfire. This will cause the economy of California to collapse “like a bunch of broccoli!”

      So, essentially, public employees are saying the government of California must kill the state so they can feast on the corpse.

      1. Libertarian candidate for governor, actuary Dale Ogden, says that the State cannot legally declare bankruptcy, being a sovereign entity, but can repudiate debt and recast public employee benefit terms and contracts. He said, “if Jerry Brown could allow state employees to unionize, then I can disallow it.” If he is right, then that threat alone might be enough to get public employee unions to the bargaining table to help smooth out this horrendous mess. You can see him talk about this issue in his “OC” speech, which is available via YouTube. His official campaign platform statement is also there, but I find the speech to be just as informative, and more suggestive of the manner in which he might publicly conduct himself as governor.

  2. I think the real difference is that people in New Jersey are still connected enough to reality that they truly want to fix their problems, where most of the people in California are simply hopeless.

    I don’t believe any elected official is capable of fixing California’s problems, and the problem will only be resolved when the feds eventually tell them to drop dead and they go completely bankrupt.

    1. I don’t live in Cali but have relatives there and visit regularly. My limited impression is that the middle class is quickly disappearing from many areas of the state, leaving behind the poor (who don’t care about spending because they are on the dole and don’t pay many taxes anyway) and the super-rich (who want to live there regardless of the cost–lets face it, it is a stunningly beautiful state with perfect weather).

      1. I think it’s true; much of the middle class has fled for places like Nevada, Arizona, and Oregon.

        Factor in that aerospace and agriculture are being decimated, and they’re leaving themselves with a banana republic.

        1. Labor costs make it too expensive to grow bananas in California.

        2. I’m a 40+ year Nevada resident and before the housing meltdown I watched thousands of Californians move into western Nevada. A good many of them are left wingers who voted in as much socialism as they could get in California then obviously left there to escape the taxes and government bullshit. Now they are here with their Obama and “Jail Bush” bumper stickers and voting for every left wing hump who files for office. Reno has become California East and the mob of LA types in Vegas will about destroy what this state once was all about. Bah, Humbug!

          1. The “swarm of locusts,” you mean. A lifelong resident of California, I am old enough to remember how the State was before the swarm arrived here. California has always had less to fear from illegal immigrants from the South than from legal immigrants from North and East. They have remade my home State into a socialist nightmare, and now apparently are intent on the same thing in the State next door.

            Don’t we have pest control agencies that are charged with containing such infestations? Another failure of government, I suppose.

      2. Not to mention most of the super-rich pay accountants large sums of money to make sure that they never have to pay any of the insane taxes that they want to foist on everyone else.

        1. +1–a few bucks here and there for accountants’ fees, attorneys’ fees, and political contributions can go a long way.

      3. Pablo – I live in SoCal and you hit the nail on the head. The state is bifurcating into a 3rd world country of super-rich and mostly poor. While not wealthy my family is blessed with good jobs (so far) and live in a nice area (complements of our obscene mortgage). That said, we are planning on the eventual collapse of CA and will likely have to say goodbye to our wonderful weather in favor of a better future for our kids.

  3. Spartan: “Hold it! The Schwarzenegger Library?”

    Huxley: “Yes, the Schwarzenegger Presidential Library. Wasn’t he an actor?”

    Spartan: “Stop! He was President?”

    Huxley: “Yes. Even though he was not born in this country, his popularity at the time caused the 61st Amendment?”

    1. I don’t think I’ll ever understand how to use the three seashells.

  4. For at least ten years, I have been reading stories about business owners who have uprooted their entire operations, at great expense, and fled the regulatory and tax burdens of California.

    Do these stories somehow not make it to Sacramento? Or do California legislators assume they can make up the difference by gouging the the remaining suckers for that much more?

    1. gouging the the remaining suckers for that much more?

      Stick around.

    2. California legislators assume they can make up the difference by gouging the the remaining suckers federal government for that much more

      Those business owners are still going to pay to bail CA out, unless they moved offshore.

    3. I suspect that the legislators are in full denial. There reasoning probably goes something like “Those reports of businesses leaving California are just isolated cases.

      Also, there is a certain amount of business that will remain simply because somebody has to sell food, clothing, cars, etc., to the locals. The legislators know (and don’t care) that those businesses will simply pass along their costs to the customers.

      The most important thing that the legislators miss is the fact that new businesses – ones that do not have any current investment in California – simply go elsewhere.

  5. This works better when I put it in the right thread: Do you have any baby oil? It looks better with oil.

    1. Did Arnold patent the “shake your enemies to death” maneuver?

    2. Think on how much better the world would be if commenting on YouTube made you permanently sterile.

      1. Oh come on, this was a substantive critique:

        Travoltaxtreme34
        14 hours ago
        STOP THAT!STOP THIS!? EEHAHAYEAEWPEA QEEHQQYAHEH? EHAGGHA

  6. Too little, too late.
    All politicians preach restraint and prudence after they lose power.

  7. it is funny. None of the house liberal trolls ever show up on these threads. It is like they think that if they just ignore it the problem will go away. They are like dead beat creditors dodging calls from the credit card companies hoping the whole thing will magically solve itself.

  8. Is that Stephanie from Lazy Town in the picture?

    1. It might be either this woman or this man.

      1. God Gwen Stephani was hot back in the day. Pink hair and all.

        1. “I don’t know what a Hollaback girl is. All I know is that I want her dead.”

        2. Ugh.

  9. As a former NY state worker, I have a vested pension due me when I turn 55. I paid into it for 10 years (being a Tier 4, the states have played that game a long time) and was in a ‘overtime ineligible’ position (i.e. high enough and paid enough not get overtime or comp time). I did save up nearly 4 months of sick time over those 15 years that will go towards my longevity but I’m looking at about $1000/month (and I paid in $25k).

    Good, very good in this stock environment. But the big pension grabbers are politically connected persons, the cops, the firemen, etc. the ones the politicians protect and tout as heros and how dare anyone touch their benefits.

    We still need more anger about the exec bonuses. We all pay for those through the tax deductions that companies take for those (versus salaries).

  10. I live in Northern CA. Yes, CA is the “dumbest place on Earth.” A recent poll stated that Californians want the deficit fixed, but are opposed to any cuts in services. So, there ya go. That’s not the politicians, it’s the electorate. I love CA, the weather, geogrpahy, mostly easy – going people, but it is doomed. BTW, I’m posting this from a cabin in the beautiful Sierra National Forest, about 40 miles south of Yosemite. It’s beautiful here. Even better, the Redwood forests up north along the Eel River. Has to be one of the great natural wonders of the world. Ah well. Hopefully they will still be there after it all goes to hell.

  11. I used to think that Santa Cruz (roughly on your same latitude) was also in Northern California, until I went to the Ukiah area on vacation and my wife and I were introduced by one local to another as “a nice couple from Southern California.” Apparently, in that region and northward, anything south of San Francisco is considered “Southern California.” I think being in Yosemite itself (or perhaps Mariposa, where I went to high school) still qualifies as “Northern.” But living 40 miles south of the park certainly puts you at least on the borderline, as “real” Northern Californians appear to draw it. 😉

    Why don’t we just divide the State into three parts and be done with it? If only two parts, then I would probably draw the line between North and South at San Luis Obispo, passing through Bakersfield and Death Valley. I would reluctantly include SLO as Southern California, despite having been born there and thinking of it all my life as the southernmost extent of Northern California, because these days they do seem to be firmly in the gravitational grip of Los Angeles. Losing Morro Bay to the Southies would also be hard, but at least we’d still have Cambria.

    1. Not sure what the separation would do, other than maybe find some compensation for Northern CA for all the water sent south. Politically, Berkley, Davis and San Francisco are just as, or more politically liberal than SoCal. It’s just a freaking disaster and so depressing.

  12. I lived in California when Arnold was first elected. Yes, we hoped we had elected a Chris Christie. Alas, we elected someone who talked a good story but could not take the heat and pretty much caved in to the unions. I eventually solved my problem. My wife and I are both engineers and lived in the Bay Area. We were paying over $800/month in state income taxes, high rent, and high sales tax. We solved our problem by moving to Texas. I am afraid that this is the only option left to those of the middle class. You get taxed but receive little benefit but really can’t afford the rich lifestyle. All you do is get squeezed.

    However, in the bigger picture, California needs a Chris Christie who will take the heat to downsize government and pension costs. Will it be Meg? I do not know. However, since I am now a resident of Texas I really don’t care very much.

  13. Do you understand the feeling of missing someone? It is just like that you will spend a long hard time to turn the ice-cold water you have drunk into tears.

  14. higher taxes and more debt do not grow job,but kill them.

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