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Politics : Mainstream Politics and Economics -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (38294)	2/1/2013 12:32:19 AM
From: Sdgla	4 Recommendations Read Replies (1) \| Respond to of 85487

CA Unfunded Pensions Triple to $884 Bil Anyone else smell a rat ? AUG. 23, 2011 By CHRISS STREET The three largest California public retiree plans — CalPERS, CalSTRS and UCRS, which administer the pensions of approximately 2.6 million California state and local public current and retired employees — have been under tremendous scrutiny since last year’s release of the report of the Stanford Institute for Public Policy Research, “ Going for Broke.” The report concluded that California retirement plans’ liability was under-funded by more than $500 billion. The report blamed most of the shortfall on the pension plans’ expectation of future annual investment returns of 7.75 percent, versus a realistic expectation of a 4.14 percent annual return. The cabal of California politicians, bureaucrats and crony consultants that justified the granting of lucrative benefits to employees, while failing to contribute enough to support the true pension costs, solemnly dismissed the Stanford report as unsophisticated reflections by academics. But now that a swarm of local governments wants to abandon the floundering retirement trusts, the state plans are willing to credit only a 3.8 percent expected return. If the California state pension plans adopted the same 3.8 percent rate they are only willing to credit when participants want to leave, their published $288 billion in pension shortfall would metastasize into an $884 billion California state insolvency. It doesn’t take a Stanford MBA to realize producing consistently high investment returns since 2007 has been difficult in the extreme. The California state pension plans that currently control $432 billion in assets suffered $109.7 billion in losses during the 2008-09 recession. Paltry Employee ContributionsPension plans normally require employers and their employees to mutually increase contributions to make up pension shortfalls. But public pension plans are notorious for not requiring employees to make significant contributions. California police, prison guards, firemen and lifeguards can retire at age 50, but have never been required to contribute to fund pensions. With headlines that California plans are in big trouble, many government agencies applied to withdraw from the state plans. But as calculated below, compounding investments at 7.75 percent grows to more than three times the amount of compounding investments at a 3.8 percent rate of return. When I was elected as treasurer of Orange County, Calif. in 2006, I was flabbergasted to discover that the county’s $8 billion of retirement investments were covertly leveraged up by $22 billion of derivatives. I quickly learned that many unions see pension benefits as contracted rights; and pension investing as a no risk crap-shoot for extraordinary returns. If the pension investment returns skyrocket, the unions will bargain for increased benefits. If the pension investment returns crash, the public employees are protected by a rock-solid contract law that prevents any reduction in benefits. In 2007, I was fortunate to gain the support of enough Orange County Pension Trustees to reduce speculative derivative use by 90 percent. At the time, trustees for the California state public pension plans solemnly dismissed Orange County as unsophisticated. Shortly thereafter, the stock market crashed and the state pension trustees stopped making comments. Tarnished Golden StateOnce famous as the Golden State for leading the nation in high-tech growth industries that provided excellent wages, California is now tarnished for having the second-highest unemployment and worst state credit rating in the nation. Forbes recently quoted a top venture capitalist who compared the California business climate to France: “I try not to hire here, and I certainly would not launch a company here. But the wine is good.” For most taxpayers, the tripling of the burden of the under-funded pension liability to almost $1 trillion will probably ruin the taste of California wine. (Feel free to forward or follow our research at ChrissStreetAndCompany.com.) Chriss Street is the former treasurer of Orange County.

To: Wharf Rat who wrote (38294)	2/1/2013 8:50:58 AM
From: Brumar89	2 Recommendations Read Replies (1) \| Respond to of 85487

TX has been beating CA for a decade in job growth and CA has one good year (if its true) after years of terrible ones and you go ecstatic. Well go for it. And the balanced budget ... for a change as the daily kos piece said ... TX is always balanced. I don't root for Alabama or Oklahoma or Utah to suck Actually liberals DO root for that. Lastly, if CA is so fabulous, why are there so many SI liberals that are FORMER Californians?

To: Wharf Rat who wrote (38294)	2/1/2013 8:53:44 AM
From: Brumar89	2 Recommendations Read Replies (1) \| Respond to of 85487

Top 150 best workplaces: 8 of top ten in TX; 3 of top ten in Houston http://www.chron.com/business/article/3-local-companies-make-national-list-for-best-4237254.php Three locally headquartered companies rank among the nation's 10 best places to work, a new report says. Workplace Dynamics, which surveys employers to compile workplace rankings for 30 U.S. newspapers, including the Houston Chronicle, reported Thursday that eight of the top 10 companies in its latest National Top 150 Workplaces are based in Texas. ........ 30 of the 150 are in TX. 9 were CA and only 3 NY. The new backwater states. ;>) CA (some of it anyway) generally has TX beat when it comes to scenery and climate. It's a shame about the government.

To: Wharf Rat who wrote (38294)	2/1/2013 2:00:45 PM
From: longnshort	3 Recommendations Read Replies (1) \| Respond to of 85487

Gov. Jerry Brown is telling everyone that California’s state budget problems are “ fixed” and predicting surpluses for years to come. It’s become sort of a tradition for the state to make rosy budget predictions and to then make downward revisions as the year goes on and reality sets in. Last November, for example, California’s nonpartisan Legislative Analyst’s Office wrote, “The 2012–13 budget assumed a year–end reserve of $948 million. Our forecast now projects the General Fund ending 2012–13 with a $943 million deficit.” And before that, there was the even bigger budget revision in May 2012, of which the Los Angeles Times reported at the time: Brown's revised budget reflects a steadily worsening fiscal picture for California. On Saturday, he announced via YouTube that the state's deficit had grown to $16 billion, nearly twice what he projected when he released his initial budget proposal in January. To make his budget proposal look balanced this time around, Gov. Brown makes another series of optimistic assumptions, including that the tax increases California voters approved last November won’t hurt the economy and the state’s economy and tax revenues will grow; that California’s millionaires, hit with higher taxes again, won’t pack up and move to low-tax states; that California’s housing market will improve and home prices will go up; that President Barack Obama and Congress won’t do anything to hurt the national economy; and that the stock market will rise. Beyond the hopeful predictions, the governor has also distorted how much money is actually being spent. Sacramento Bee Columnist Dan Walters notes: …there's been so much recent jockeying on how the state keeps its books that referring merely to the general fund as the budget is not only incomplete, but downright misleading to the voting and taxpaying public. The tendency has been to shift expenditures from the general fund to new special funds and that has the effect – intended or coincidental – of flattening out general fund numbers and thus making the growth of state spending look smaller than it has been. For all of Gov. Brown’s talk about spending cuts and “fiscal discipline,” his budget forecasts a 5 percent jump in state spending, rising from $93 billion in 2012-13 to $97.7 billion in 2013-14. But as Walters notes, you need to add in all the other spending that is not included in those numbers: nearly $41 billion in special funds and over $7 billion in bond funds. Suddenly, the state is spending over $145 billion in 2013-14, not $97.7 billion. Maybe that’s why even the Los Angeles Times isn’t fully buying this balanced budget: But even though it appears to be free of the deficit that dogged the Capitol in recent years, the state is no model of financial health. Sacramento is legally obligated to pay many billions of dollars withheld from schools, local governments and healthcare providers as lawmakers struggled repeatedly to balance the books. It owes Wall Street more per resident than almost every other state. And it has accumulated a crushing load of debt for retiree pensions and healthcare, now totaling more than taxpayers spend each year on all state programs combined. The budget Brown proposed Thursday addresses only a small portion of the overall debt, which stems from the same types of bills that drove cities like Vallejo, Stockton and San Bernardino into bankruptcy. The state is likely to find its debt consuming an ever larger share of money meant for the basic needs of government. The “crushing load of debt” is just one of the elephants in the room. The Department of Finance puts it this way: The state’s budget challenges have been exacerbated by the Wall of Debt—an unprecedented level of debts, deferrals, and budgetary obligations accumulated over the prior decade. In 2013-14 alone, the state will dedicate $4.2 billion to repay this budgetary borrowing—paying for the expenses of the past, instead of meeting current needs. Moving forward, continuing to pay down the Wall of Debt is key to increasing the state’s fiscal capacity. In 2011, the level of outstanding budgetary borrowing totaled $35 billion. The Department of Finance goes on to proudly say that the debt is “already” paid down to less than $28 billion. Of course that doesn’t include government employee pension and health benefits that have been promised but not yet funded. California estimates its unfunded pension and benefit liabilities total around $181 billion. Stanford University research, however, pegs the unfunded liabilities of California’s largest state pension systems a lot higher: The combined unfunded liability for CalPERS, CalSTRS, and UCRP under the 6.2 percent discount rate is $290.6 billion, equal to more than three state General Fund budgets. That figure represents an unfunded amount per household of nearly $24,000. Using a low-risk, or riskfree, discount rate, the combined unfunded liability for these three systems reaches $497.9 billion. There’s a parallel crisis in unfunded state retiree healthcare liabilities too, which a 2012 Pew Center on the States report set at $77.4 billion and growing. Worse, Golden State politicians have systematically skimped on making annual contributions to retiree pension and health systems (akin to making the minimum required monthly credit card payment), so future taxpayers’ tab to cover the cost of the “shadow” state workforce that’s no longer actually working continues to climb. Until California tackles its pension and retiree healthcare crises, it will simply be nibbling at the margins of its fiscal problems. Many had hoped that Gov. Brown, as a Democrat, would be uniquely equipped to bring about serious public pension reforms by negotiating with public employee unions. He has not. Similarly, he hasn’t fundamentally reformed the state budget. David Osborne, who led then-Vice President Al Gore’s “reinventing government task force” and was the lead author of the Clinton administration’s “National Performance Review,” authored a 2010 Reason Foundation study showing how to fix the state’s budget. In a nutshell, California would determine how much money it has to spend, zero-out every program, rank the state’s priorities (education, health care, transportation, etc.), make the programs all compete for the money, and then assign the money to taxpayers’ highest priorities. This type of budget, Osborne wrote, “can be summarized in one page per outcome: a list of programs to be funded, a line, and below that, a list of programs the state can no longer afford, because they don't produce enough value. Every citizen can understand it, because it reflects common sense and taxpayers' priorities.” The programs would all have to prove their worth. If a social program wants more money, it has to show why it deserves money that would otherwise go towards another program, like transportation or education. It would reveal the real-life trade-offs that Gov. Brown and state lawmakers should be making. Unfortunately, instead of fixing the fundamental problems, lawmakers are off doing victory laps for a state budget that has largely been balanced with smoke, mirrors and tax increases. Leonard Gilroy is director of government reform at Reason Foundation and editor of the Annual Privatization Report. In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

To: Wharf Rat who wrote (38294)	2/2/2013 11:00:52 AM
From: Brumar89	2 Recommendations Respond to of 85487

Texas Has Added Jobs Across All Income Levels. Trivia Tidbit of the Day: Part 962 -- Texas Beats America In Adding Low, Middle, and High Wage Jobs- In the past, I've linked to this Texanomics graphic showing Texas wage growth dwarfing that of every other state in recent years. Indeed, the Paul Krugman line about Texas only creating a bunch of worthless minimum wage jobs is complete bunk, yet that bogus misinformation continues all too often in places like Twitter or the Iowa Caucuses. I just wanted to quickly post a couple of slides from a recent Dallas Fed presentation on Texas' job situation. First, Texas has recovered all the jobs lost in the Great Recession and then some, while most other states are still working to break even: Moreover, yes, Texas has added quite a few low wage jobs, but it has also added more high wage jobs than the rest of the country. And more significantly, Texas has added middle income jobs while the rest of the country has lost them: Meanwhile, Texas has one of the lowest costs of living in the nation, so a low wage or middle wage job goes a lot further than on the Coasts. That being said, the lack of new middle income jobs outside of Texas seems like the real problem Krugman and others don't really want to face up to. On that note, expensive California is the state having trouble creating the high wage jobs of the future: Over the past decade, even with the current bubble, Silicon Valley's STEM employment, according to estimates by Economic Modeling Specialists Inc., has increased by a mere 4 percent over the past decade. In contrast, science-based employment jumped 25 percent in Seattle, 20 percent in Houston and 16.8 percent in Austin, Texas. The tech scene in the Los Angeles Basin is doing even worse. STEM employment in the Los Angeles-Santa Ana area is still stuck below 2002 levels, partially a residue of the continued decline of the region's once-globally dominant aerospace industry. The region, once arguably the world's largest agglomeration of scientists and engineers, has now dipped below the national average in proportion of STEM jobs. So, over the past ten years, Science-Technology-Engineering-Math jobs have increased 5 times faster in Houston-- and 4+ times faster in Austin-- than in the Silicon Valley. Texas has outpaced California for both STEM jobs and middle-skill jobs for a decade now. Not exactly minimum wage type jobs there. Indeed, Texas is " far and away the leader in total income growth" in recent years; Texas' income gains as a share of national income are bigger than the rest of the top 10 combined. And, while Midland now has the second highest per capita income in the nation, nearly every Texas metro area is in the top quintile for wage growth from 2009-2011, according to the Bureau of Economic Analysis. It's exasperating having such overwhelming evidence of what works and what doesn't, while seeing our country turn sharply and precisely in the wrong direction. http://www.willisms.com/archives/2013/01/texas_has_added.html Since The Beginning Of The Recession, Four Out of Five Jobs In America's Large Metropolitan Areas Were Created In Texas. Trivia Tidbit of the Day: Part 963 -- Texas Job Domination Since November 2007- The latest data continue to demonstrate Texas' job domination since the beginning of the last recession in November of 2007: Leading the way are two Texas markets -- Houston and Austin. Houston topped the nation by adding 121,600 private-sector jobs between November 2007 (one month before the recession began) and November 2012 (the latest month for which official figures are available). Austin was second with a raw gain of 45,800 positions. The two areas flip-flopped when the rankings were recalculated by percentages. Austin finished No. 1 with five-year job growth of 7.5 percent. Houston was next at 5.5 percent. click for larger version I highly recommend looking at the larger version. That's really how it was meant to be viewed. Just click the image or click here. FACT: Only 14 of America's 102 "major" metro areas have added jobs since November 2007. FACT: Texas' major metros together have added four out of five of all the new jobs created in America's major metros since November 2007. FACT: All 6 of Texas’ major metros are among the nation's top 8. FACT: Texas' 6 major metros added four times more jobs than the other eight job-adding metros combined. FACT: Texas' major metros have added four out of five (80.09%) of the new jobs created in America's major metros since November 2007. Of course, if you want to quibble or qualify these numbers, you might say that these are "net" jobs or that it isn't fair to only look at cities that added jobs. Well, if you take into account all the cities that are still net job negative, Texas' story looks even more remarkable. Another quibble might be that these numbers completely disregard small towns. That would be a pretty good quibble, but that's simply not what we're looking at here and now. America does indeed have a lot of small and medium towns and cities, mostly in flyover country, that have collectively added an enormous number of jobs. One small/medium city, Midland, Texas, for example, has an unemployment rate of 3.0%. Then there's Abilene, at 4.6%, Amarillo, at 4.1%, Lubbock, at 4.6%, or San Angelo, at 4.5%. After all of that quibbling is finished, someone will throw the "yeah, but they're all _________ jobs." That blank is usually filled with "oil and gas," "low wage," or "government." All three explanations are erroneous. Yes, Texas has undeniably benefited from oil and gas exploration, but oil and gas as a percentage of Texas' Gross State Product has declined dramatically over the years as the economy has diversified, and only a small fraction of new jobs in Texas are oil and gas jobs. Moreover, states like California are sitting on enormous oil and gas reserves, they just have all too often chosen not to allow drilling. Indeed, with advances in technology, there's hardly a state in the nation without the ability to drill, baby, drill for shale gas. Arguing that "they're all oil and gas jobs in lucky oil-under-the-ground Texas; we don't have access to those kinds of jobs here in our struggling state" is simply not supported by any sort of fact-based analysis of reality. The next "blank" people usually falsely fill is the notion that Texas' jobs are all low wage. Wrong. And some people in the 2012 GOP primary argued that they're all or mostly government or federal stimulus-related jobs. Well, no. Only 4% of Texas' new jobs in the past year, for example, were government jobs. Texas is a longtime net donor state, and it received the second lowest per capita level of stimulus dollars of all the states. And Texas routinely turns down hundreds of millions or even billions of "free" federal dollars. So if it's not just a bunch of oil and gas jobs, low wage jobs, or government jobs (...which, by the way, are mutually exclusive-- have you ever heard of a low wage oil and gas job? Come on.), what is it about Texas? It's our relatively low tax climate. It's our tort reform. It's because our political leaders have been fiscally responsibility and fostered a predictable and reasonable regulatory climate over more than a decade now. It's because we're a right to work state. It's a lot of things. If you're landing here for the first time, click through the archives, because I've covered a lot of these over the years. http://www.willisms.com/archives/2013/01/since_the_begin_1.html Texas Versus California: A Story Of Welfare States. Trivia Tidbit of the Day: Part 964 -- California Is America's Welfare Capital- Did you know that California, with just 12% of America's population, has 34% of American welfare recipients? Or that Texas has both one of the lowest per capita welfare costs and one of the lowest percentages of its population receiving welfare benefits? It is so. There really are two basic models for governance in this country, and we're seeing the results play out in stunning high definition right before our very eyes. There's the California model, which stresses the primacy of radical environmentalism, the overregulation of both the big and the minutiae of daily life, the imposition of high and punitive taxes on success, the unquestioned supremacy of big, bossy labor unions, and the celebration-- or at least acceptance-- of expansive and nannying government. The result is perpetual fiscal peril, net domestic migration outward to other states, a scandalously horrendous education system, decaying infrastructure, stubbornly high unemployment, and the worst poverty in America. Other ominous signs for California: Los Angeles and Orange counties experienced a 15.6% decline in under-15-year-old population, highest among the nation's metropolitan areas, in recent years (Texas, Utah, North Carolina, and several other states saw increases). Atlas Van Lines' latest analysis of outbound versus inbound moving trucks shows that California is a net exporter of people to other states, while Texas is the nation's biggest net importer. As people flee the state, it's no wonder California's mortgage foreclosure rate is roughly double the national rate (while Texas' is nearly half the national rate). This graphic, from the San Diego Union-Tribune, shows just what an outlier California is in terms of its citizens collecting welfare benefits. Indeed, Texas is something of an outlier, as well: click image for larger version or click here for the original version from the San Diego Union-Tribune If you're trying to figure out what the quadrants indicate, the further to the right you go, the more a state spends per welfare recipient. The further to the top you go, the higher percentage of a state's residents are welfare recipients. As you can see, California is practically in a quadrant unto itself, indicating a lot of people receiving a lot each in welfare benefits. Meanwhile, Texas is situated precisely in the opposite corner of the graphic, indicating that a low percentage of Texas' residents are receiving welfare, and among those who are receiving welfare, they're receiving smaller benefits than those living essentially anywhere else in the country. Again, the original graphic is here, if you want to take a closer look. So what hath these experiments in politics and policy wrought? We already covered California, the most naturally beautiful and abundant state, with the best climate and best proximity to emerging global markets, which is a slow motion man-made nightmare. So what about Texas? Well, since the beginning of the recession (which has long been officially over), four out of five big city jobs in the entire country were created in Texas' big cities. Indeed, unlike the rest of the country as a whole, Texas has added and is adding jobs across all income levels, including in the middle class. Only 14 major U.S. metro areas have added jobs since recession began, and all six of Texas' major metros rank in the top eight. In Texas, you can get a degree that employers want for ten thousand dollars. Total. Eight Texas cities are in the top sixteen for wage growth over the past half decade (among the largest 200 in U.S.), and eleven Texas cities are in the top eighteen for job growth over that time. Meanwhile Texas' small cities also performed extremely well among the national list of small cities. Contrary to the "it's all minimum wage jobs" postulation from the likes of former Enron-advisor Paul Krugman, Texas is adding a disproportionately high number of high wage jobs: For industries paying over 150% of the average American wage, Texas could claim 216,000 extra jobs; the rest of the country added 495,000. In other words, the Lone Star State, with 8% of the U.S. population, created nearly a third of the country's highest-paying positions. Texas also added 49,000 positions paying 125% to 150% of the U.S. average; the rest of the country lost 74,000 jobs in that category. I'm not sure whether or not Krugman knows that Texas' income gains as a share of national income were bigger than the rest of the top ten states combined, but he probably wouldn't let that or any other fact get in the way of a good narrative. Since 2002, Houston has grown high tech STEM (science-technology-engineering-math) jobs five times faster than Silicon Valley. Austin four times faster, and, big-picture, Texas ranks at the top in terms of small business employment growth. And over the past couple of years, Texas accounts for nearly a fifth of the nation's total population growth. Texas cities dominated Forbes' latest annual list of America's Fastest Growing Cities. Business Facilities also just named Texas its " State of the Year" for its successes over the past year. Not surprisingly, five of the six fastest recovering cities in America are Texas cities. Fiscally, Texas has two separate "surpluses" of at least several billion dollars-- an $11.8 projected Rainy Day Fund balance, and an $8.8 billion revenue surplus, which, admittedly, will see a few billion whittled away due to past budget gimmicks and federal Medicaid mandates. Nevertheless, because of a growing tax base of new businesses and new workers, Texas tax revenues are coming in at robust, record levels; Texas sales tax revenue has risen for 33 straight months now. And, reminiscent of the California wine industry surging onto the scene some decades back, when California was still the promised land, a Texas single-malt whiskey even recently won a prestigious international blind taste competition in the United Kingdom. Texas will remain a thorn in the side of progressives until they can centralize everything-- Hunger Games-style-- in Washington, D.C., and reshape the whole of America in the image of California. We cannot let them succeed. http://www.willisms.com/archives/2013/01/texas_versus_ca.html