Wednesday, December 21, 2016

One Story in the Naked Country

- "Truth is like the sun. You can shut it out for a time, but it ain't goin' away."
- Elvis Presley

I have mentioned from time-to-time the growing crisis with state and local pension funds. It is like the children's story of the king parading naked. He believes he is wearing the latest style and no one will risk telling him the bad news. In a sense, we the taxpayers are the king because we provide the revenues for the system to function. No one in government will risk his job to inform us of the bad news.
There are a million stories in the naked city and over 300 million in our naked country. To relate to each would require enough space to fill a Congressional bill. It is no wonder that laws are passed by the legislature without reading the entire bill. In addition, we have presidents who sign these acts knowing they contain aspects that could cause trouble down the line. Their ego prevents them from vetoing the whole bill due to a "sneak-in" provision. That is a serious problem in our government. It is another story. Today, I will mention three.
"Bureaucrats know...
the price of everything, but the value of nothing." When the Fed speaks about their positive effects on GDP, they forget that within it are aspects that are neglected like the future cost of pollution to people and the environment. They make debt an asset when it is a liability. This leads us to
Dallas Police and Fire Pension System.
The Fed at the top echelon of bureaucracy and down to the smallest office, no one factors into the future equation, demographics. Dear reader, the baby boomers are one-fourth of the population. Social Security gets 10,000 applicants a day for benefits. This will happen for the next fifteen years. Dallas is a microcosm of this important economic cost. Officers are retiring. Word gets out that "red tape" is holding up their benefits. This has caused over $600 million in withdrawals from the fund. The alarm has sounded, and king taxpayer is not going to like the news. The mayor of Dallas has demanded that withdrawals be halted. as the fund has plunged to 36%. This translates to 36-cents for each recipient. It needs another 64-cents to cover. At present, there are another $154 million in a pending situation. The City of Dallas has indicated a "DOUBLE" property tax to get the $1.1 billion bailout for the fund.
Now, no one objects to fairness, but how fair is it to dump on all citizens for excess promises? This projected tax increase could and will cause a mass exit from the city. Property values will shrink which will only make all services suffer. This is like the spiral loss of tenants that makes malls disappear or downtown cities to appear as ghost roadways. No one foresaw what Detroit looks like today and their are many more examples, but the motor city is the poster child.
is a classic example of politicians not putting away for a rainy day. The state has to allow 20% of its budget just to meet obligations to pensions. Now, a story surfaced that Illinois is risking the honor of its lottery. Apparently, the lottery scratch-off has not awarded 40% of prize money. Steal a million here, steal a million there and you can cover some pension liabilities.
is watching what is happening in Illinois. A report released from Stanford says that California is short of its state pension obligations by $1 trillion. Yes, that is a "T."
Actions to these problems take time to develop. One option that won't be utilized is passing the buck. The poor kicked can is so dented from being kicked that it is unrecognizable.