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

To: research1234 who wrote (38324)	2/1/2013 2:00:09 PM
From: Sdgla	1 Recommendation Read Replies (2) \| Respond to of 85487

Maybe.. however the point is Ca state pension unfunded liabilities. Do you believe those obligations are not worthy of being part of the States budget ? I have neighbors here in Kauai that are in their late 40's, retired from 2 different California state jobs.. teacher and fireman.. total combined income from said jobs over $200K . The wife is working here again.. Do you agree with rat that the gov can eliminate those pension obligations from his budget ?

To: research1234 who wrote (38324)	2/2/2013 2:21:26 AM
From: i-node	4 Recommendations Read Replies (1) \| Respond to of 85487

The unfunded US Government liabilities that deficit scolds use to try to scare the country into massive reductions in government expenditures are in fact absurd fictions, because this measure only included liabilities, and ignores assets. In the case of the US government, assets must include the present value of future tax revenues which will be paid when the future liabilities will become due. If I understand what you're saying to be as you intend it, you are dead wrong. You are certainly wrong about unfunded liabilities being "absurd fictions". They do not, of course, ignore "assets" -- but that is a relatively minor issue, since the assets the trusts hold are immaterial in amount when compared with the unfunded liabilities. SS has about 2.7T which would be gone in three years if we didn't have people (generally referred to as suckers) continuing to pay into the fund. Medicare is in the same range (around 3T, 2011 net increase in the area of 50B, with total outlays in the range of 1.2T for the same period). So, you're talking about assets of $5 Trillion, earning next to nothing, and certainly nowhere what would be needed to counter the growth in the demand on those assets. The long and short of it is the assets of these trusts are just unimportant in the overall calculation. Still, when the unfunded liability is calculated, the asset base is taken into account, as are the anticipate cash receipts over the projection period. Net future receipts and disbursements are discounted appropriately to take into account the growth of the asset base due to earnings as well as drawdown of those assets as they are depleted. This part of the calculation isn't complicated and is something accountants and finance people do all the time. The complicated part, and the REAL error in estimation is the absurdly low projections of lifespans of those drawing benefits; there are very likely people alive today who will live to be 120, 130, even 150 or more years. Modern actuaries still haven't come to terms with the rate of change in lifespans that is happening quickly. So, these projected unfunded liabilities are far, far short of the actual figures. The programs are totally untenable at this point. And that is without even considering the crisis faced by public and private pensions.