Unions Greet Facts With Emotionalism

MAY 6, 2011

By STEVEN GREENHUT

Yet another report released this week confirms the enormous liabilities that California taxpayers must endure to pay for pensions for public employees. The study, released at a Pension Boot Camp for elected officials held in Citrus Heights by the reform group Californians for Fiscal Responsibility, echoed the points made by the Little Hoover Commission, Stanford University and others: “Public pension funds in California face massive shortfalls,” which are the result of pension benefits that are much richer than those received in the private sector.

The reaction from the state’s muscular public employee unions has been as predictable as they are comical. Union spokesman and Democratic activist Steve Maviglio blamed Wall Street greed and argued that “Pension reform is a Trojan horse for an attack on public employees,” as if the half-trillion-dollar unfunded liabilities and fiscal problems faced by state and local governments are mere fictions trumped up by “right-wing” Republicans to diminish government workers.

The silliest response came from pro-union organizations that sponsored the www.DontScapegoatUs.com Web site, which features the type of heavy-handed ad hominem approach perfected by the state’s public employee unions, which are used to bullying and threatening politicians into obedience. The site puts the heads of prominent pension reformers on the bodies of farm animals, spins some conspiratorial yarns about out-of-state billionaires and Wall Street greed. It even depicts some Progressive Democrats as “right-wing zealots.” Apparently, anyone concerned about the effect of these unsustainable pension promises on government budgets and taxpayer wallets is a right-wing zealot. Don’t expect any serious arguments from this group.

Such fact-devoid emotionalism ignores the key findings of the CFFR study: “The combination of retroactive benefit enhancements, lengthening lifespan, and some weaker than expected investment returns during recent years has led to deterioration in the condition of public funds in California. As of 2010, the five largest public pension systems are only between 61 percent and 74 percent funded for benefits earned for past service, based on the actuarial assumptions used by those systems. These measures would be even lower if they instead reflected the assumptions mandated for use by private sector plans, or those used by the United States with respect to federal employee pensions. The funded status amounts also do not reflect liabilities, if any, for outstanding pension obligation bonds.”

The union pension defenders argue that pensions only comprise a small portion of the state budget, but they neglect to mention the enormous portion of local governments consumed by such benefits and they conveniently ignore the unfunded liabilities – the fact that the state should be paying much more to cover these promises, but is instead running up an unsustainable level of debt.

They depict Progressive Democratic pension reformers at right-wingers without addressing the core Progressive argument for pension reform – without it, pensions will deplete public services and destroy public budgets. Here’s a relevant passage from the Little Hoover Commission, a nonpartisan oversight agency that is part of the California state government:

“Pension costs will crush government. Government budgets are being cut while pension costs continue to rise and squeeze other government priorities. As the Commission heard during its hearings, the tension between rising pension costs and lean government budgets is often presented today in a political context, with stakeholders debating the severity of the problem and how long it will last. In another five years, when pension contributions from government are expected to jump and remain at higher levels for decades in order to keep retirement systems solvent, there will be no debate about the magnitude of the problem. Even with the introduction of two-tiered pension plans, barring a miraculous market advance, few government entities – especially at the local level – will be able to absorb the blow without severe cuts to services.”

Union spokespeople like to blame Wall Street without noting that the public pension systems – especially the scandal-plagued CalPERS – are the epitome of Wall Street. They are some of the biggest investors in the stock market and CalPERS’ scandals in particular point to some of the greediest and most despicable tactics we’ve seen on Wall Street. It’s beyond hilarious to hear defenders of CalPERS lecture the private sector on ethics in investing. But the problem goes far beyond some pay-to-play deals that even a belated CalPERS report suggests was inappropriate.

The real problem is that unions elect public officials who then granted them an unsustainable level of benefits without worrying about future debts. They used standards that would never pass muster in the private sector and engaged in the type of greed that rivals the worst of Wall Street. Little Hoover explained how the unions played the system and how these tactics, not Wall Street ups and downs, are the culprits for a pension system that is crushing governments and taxpayers:

“The 2008-09 stock market collapse and housing bust exposed the structural vulnerabilities of California’s public pension systems and the risky political behaviors that have led to a growing retirement obligation for state and local governments, the scale of which taxpayers are just beginning to understand.

“Treated like another speculative house during the boom, the state allowed public agencies and employees to pull equity in the form of increased retirement benefits from the pension funds whose value was inflated by optimistic market return estimates. The retirement promises that elected officials made to public employees over the last decade are not affordable, yet this is a mortgage that taxpayers cannot walk away from easily.

“When the economy crashed, another lesson from the housing bubble became just as important. A public pension, like a house, is not a get-rich-quick investment. As a house is for shelter, a pension is for longterm financial security. Even the ‘teaser rates’ reflecting aggressive investment assumptions are re-setting, revealing a higher cost to maintain a level of benefits that have become more generous than reasonable.

“Boom and bust cycles are natural, if unpredictable, but political leaders agreed to changes in the pension system at the peak of a boom, and as a major demographic event began unfolding – the start of the retirements of the Baby Boomers.

“Pension benefits promised to retirees are irrevocable, as are the promised benefits that current workers have accrued since their employment began. It also remains difficult to alter the theoretical, yet-to-be earned benefits for current workers. This situation, reinforced by decades of legal precedent, leaves little room for state and local governments to control mounting retirement costs, particularly when the only venue for change is the bargaining table.”

No wonder union advocates avoid the facts and instead focus on blaming mysterious billionaires (who support pension reform in California) and Wall Street greed.

They also use dishonest arguments about the average size of public employee pensions, which often are two-to-three times the number they use when one looks at recent retirees, who are retiring under formulas that have vastly expanded over the past decade. Note the $100,000 Pension Club, with a membership that’s growing by about 71 percent a year. Virtually no one in the private sector retires at age 50 or 55 and virtually no one in that sector receives $100,000 cost-of-living-adjusted salaries, plus fully paid medical care and that’s all before the various and unseemly pension-spiking gimmicks that are view more as an entitlement than a fraud by public employees, especially those in the public-safety sectors that claim heroism in order to enrich themselves.

New pension initiatives are in the works, which would cap pensions and increase employee contributions and in one case create a hybrid system that combines a 401/k-style system with a less-generous defined-benefit plan. One by former Assemblyman Roger Niello of Sacramento would:

• Set the retirement age for all California public employees, including current workers in every classification, at age 62.
• Limit retirement benefits for a public agency employee to no more than 60 percent of the highest annual average base wage of the employee over a period of three consecutive years of employment.
• Split the employer/employee contribution to pensions equally.
• Exclude unused leave time from pension calculations.
• Ends retroactive pension increases.

Speaking at the Boot Camp, Niello called his vote for pension increases as a county supervisor the “worst decision” of his career. He explained how the unions have been picketing the Niello car dealerships, even though he has a minority stake in the company and is not involved in managing it. He accused the unions of punishing fellow working-class citizens.

The California Pension Reform initiative would create the hybrid system. It would cap pensions when the pension systems are underfunded and would require that disability benefits be paid outside the pension system, presumably through an insurance-type system common in the private sector. New hires would receive “retirement savings accounts instead of taxpayer-guaranteed pensions.”

Recent polls show that Californians, even California Democrats, overwhelmingly support pension reform. So expect more emotionalism and claims about scapegoating by a union movement that has few facts on its side.

(Editor’s note: I spoke at the boot camp about the pension issue.)

51 comments

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  1. John Seiler
    John Seiler 6 May, 2011, 12:26

    Good coverage and summary of what’s going on.

    In our many years at the Orange County Register, Steve and I often warned that the pension system would break down during the next economic downturn. Which is what happened. Union bosses, and deluded politicians like Schwarzenegger and Gray Davis, assumed that we never would enter another recession – that the business cycle had been repealed.

    But recessions strike every seven years or so. And severe recessions hit about every 30-40 years, the previous severe one being 1980-82. So, we were overdue. Any Econ. 101 class or textbook will tell you that. Or just being alive for a few decades.

    Sensible people plan for downturns by assuming that 7 percent to 8 percent returns on investments are not going to occur every year; that some years will see drops of 10 percent or 20 percent. But Davis, Schwarzenegger and Jerry Brown, along with the union bosses and pension-fund managers, are not sensible people.

    So, now, cuts will have to be made in the pensions — big cuts. The massive increases in pensions of the past were unsustainable. There is no choice. To say otherwise is to perpetuate the delusion.

    Reply this comment
  2. Tylerle13
    Tylerle13 6 May, 2011, 15:39

    Of course the unions hired Snake Oil Steve Maviglio, that scumbag would strangle his own mother as long as the union’s check clears. Maviglio is the biggest Financial Rapist in California. Any time there is an issue that will screw the taxpayers, Snake Oil Steve is always an advocate for robbing the taxpayers blind. As long as there are unions trying to screw taxpayers, Snake Oil Steve will be on the front lines spewing lies.

    No one can look at the the current pension system and honestly say that these terms were negotiated in good faith and with the taxpayers best interest being represented. Not only are these morons blowing the states money on corrupt contracts, they are also killing off their sources of future income by driving taxpayers & businesses out of the state. Every time something blows up in their face, they just hire scumbags like Maviglio in an attempt to deflect the blame to the “Evil Businesses”. They can only pass the buck for so long until the taxpayers start to notice that they are the common factor in all of these disasters.

    Reply this comment
  3. John Gardner
    John Gardner 6 May, 2011, 21:43

    “Pension benefits promised to retirees are irrevocable, as are the promised benefits that current workers have accrued since their employment began. It also remains difficult to alter the theoretical, yet-to-be earned benefits for current workers. This situation, reinforced by decades of legal precedent, leaves little room for state and local governments to control mounting retirement costs, particularly when the only venue for change is the bargaining table.”

    Absolutely untrue. Public pensions are not covered by ERISA, the federal statute which governs private sector pensions. So unless there is some California statute which was slipped into place over the years …

    Reply this comment
  4. Bo diddly
    Bo diddly 7 May, 2011, 11:42

    Those bills that can be paid will and, those bills that cannot be paid, will not.
    Just because politicians intered into schemes with the unions, to bilk taxpayers, and then hid behind laws and statutes,does
    No mean taxpayers are required to pay off these obligations they had no voice in.

    Reply this comment
  5. john moore
    john moore 8 May, 2011, 15:45

    Mr. Gardener,with great respect for the tone of your statement,the holdings in the cases dealing with yet to be earned benefits of union employees do NOT say that the formula is inalterable. See the legal memo of expert Jeffery Chang on this point. Here in Pacific Grove,even after a relatively good year for Calpers,(13.3% gain) we are short 51 million in a 100 million dollar pension plan. Granted that may be the highest loss ratio in the state(we had some unbelieveablely ignorant city managers and city attys),but in fact the unions had no part in electing the city councils that voted for [email protected],unconscionable safety raises,etc..In fact,for the most part the councils didn’t even know what they were voting for.(The retroactive [email protected] pension increase for safety was enacted as part of the consent calendar,with no actuary evidence or public hearing)The whole deal was put together by the safety unions,the city managers and city attys. It didn’t even hit the news. No one knew that the financial destruction of the City had been enacted.With an 8% investment rate,a plan that is down over 50% must earn 16% per year on its’ assets to break even because the deficit grows by 50% per annum.One more stock crash and every city will be like Pacific Grove.Done In.Pension reform for work not yet performed is essential.

    Reply this comment
  6. john moore
    john moore 8 May, 2011, 17:18

    In the last line,above,I meant to say “because the deficit on the 50% deficit grows by 8% per annum”. One other point: Pacific Grove requested and received a buy-out sum from Calpers. As you may have guessed, that sum is larger than the simple debt/asset ratio because if a city is leaving Calpers,all the hidden metrics are reversed. If a city elected to value assets at higher than market,the market number will arise at that time as just one example. I don’t know all of the tricks the legislature has enacted to make Calpers look better than it is,but we were surprised at the cost leave. It exceeded our estimate by 10 per cent

    Reply this comment
  7. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 8 May, 2011, 18:01

    The reaction from the state’s muscular public employee unions has been as predictable as they are comical. Union spokesman and Democratic activist Steve Maviglio blamed Wall Street greed and argued that “Pension reform is a Trojan horse for an attack on public employees,” as if the half-trillion-dollar unfunded liabilities and fiscal problems faced by state and local governments are mere fictions trumped up by “right-wing” Republicans to diminish government workers.

    =================
    Spin is all the trough feeders have left, and just like the spin did not work for Prop 13, it won’t work on their pension scams either!

    So, the end of the scam is in sight, and when it comes, RTWD is throwign a partay!

    Reply this comment
  8. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 8 May, 2011, 18:07

    but in fact the unions had no part in electing the city councils that voted for [email protected],unconscionable safety raises,etc..In fact,for the most part the councils didn’t even know what they were voting for.(The retroactive [email protected] pension
    ===============
    John Moore, public unions spend TENS OFF MILLIONS of dollars every year to get officals elected, that is a fact.

    To say the public unions had no role in their 3%@50 scam is simply untrue-the public unions wrote the SB400 pension legislation, public unions got it approved by CalTRDS- whose board is over 50% public employees, and whose board faield to disclose the downside-fraud- and that was what started this scam.

    Reply this comment
  9. Tough Love
    Tough Love 8 May, 2011, 18:19

    John Moore,

    I certainly do not know the legal implications but if I’m correct, legally CalPERS owes the pensions to Calpers participants (not PG). So what would happen if Pacific Grove just refuses to pay … taking the position that it cannot afford to do so and provide essential services. Then (1) How can CalPERS “force” PG to pay? and (2) can CalPERS say they won’t pay benefits to CalPERS members from PG if PG doesn’t pay up?

    Reply this comment
  10. SkippingDog
    SkippingDog 8 May, 2011, 20:33

    The report just shows that the Republican propaganda machine is up and running at full speed with anonymous out of state funding. Marcia Fritz and her merry band can’t remotely claim any kind of grassroots support for their efforts now that they’ve clearly sold their name to someone from Heritage or Koch Industries.

    http://californiawatch.org/dailyreport/secret-out-state-donor-powering-pension-reform-group-9534

    Reply this comment
  11. SkippingDog
    SkippingDog 8 May, 2011, 20:40

    John Gardner – You obviously need to bone up on California law regarding public pension obligations. A quick way to do so is to read the recent opinion by the 2nd District Court of Appeals in which the efforts of Orange County to reverse a pension deal negotiated with their own deputy sheriff’s and law enforcement personnel was resoundingly beaten by 70 years of case law.

    Even if ERISA law doesn’t apply, the contracts clause of the US Constitution certainly does, as do multiple California state cases over the years.

    Reply this comment
  12. Tough Love
    Tough Love 9 May, 2011, 07:46

    SkippingDog, I did not see you refute (with facts) the SUBSTANCE of the report. That matters a lot more than who funded the study.

    And what’s more obnoxious, funding a study, or the quid pro-quo between our elected representatives and their Public Sector Unions benefactors …. where campaign contributions and election support BUYs favorable votes on Union members’ pay, pensions, and benefits? In any other venue it would be considered bribery and bribe-taking.

    Reply this comment
  13. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 9 May, 2011, 08:07

    And what’s more obnoxious, funding a study, or the quid pro-quo between our elected representatives and their Public Sector Unions benefactors ….
    ===
    Alex, Im going to go with the “quid pro-quo between our elected representatives and their Public Sector Unions benefactors” for $2,000 🙂

    Reply this comment
  14. Tough Love
    Tough Love 9 May, 2011, 08:35

    SkippingDog, Please take a look at the following article about a very typical non-Civil Servant couple trying to retire:

    http://www.nj.com/business/index.ssf/2011/05/couple_balance_childrens_colle.html

    It’s not the very RICH who fund the grossly excessive pensions of Civil Servants, it’s couples like THIS. They will struggle mightily so the very typical Civil Servant can retire with a pension RARELY worth less than $1 Million at the time of retirement (usually between age 55 & 60) and WITH access to heavily subsidized retiree healthcare.

    Reply this comment
  15. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 9 May, 2011, 09:49

    It’s not the very RICH who fund the grossly excessive pensions of Civil Servants, it’s couples like THIS.
    ================
    These gold plated trough feeder pensions are MAINLY funded by the poor and the middle class in the form of regressive taxes, such as the sales tax hwich has doubled int he last 25 years.

    We all know that, that is why the median income in CA is $33K, and the median comp for a GED educated CA cop, FF, Prison Guard and Life Guard are in the $150K-$200K raneg BEFORE any overtime is added in.

    Why thsi state and it’s muni’s are comping LIFE GUARDS $200K+ is beyond ridiculous, it is plain fraud and greed, nothing more.

    Reply this comment
  16. SeeSaw
    SeeSaw 9 May, 2011, 11:50

    Go to the actual employing entities and the actual Pension Plans to get your information. Everything else is pure propaganda.

    Reply this comment
  17. john moore
    john moore 9 May, 2011, 12:01

    Rex: When I said the unions had no part in electing the councils that enacted [email protected] w/retroactivity,I was talking about Pacific Grove only. In PG the unions and the city manager and city atty. simply defrauded the council(in my opinion). I realize the Unions are very active in electing councils in other cities. In Vallejo,a deal was evidently cut with the unions to forego challenging the retirement plan in Chap. 9.

    Reply this comment
  18. SeeSaw
    SeeSaw 9 May, 2011, 12:44

    Vallejo was bound by the CA Constitution, which protects public pensions in bankruptcy proceedings.

    Reply this comment
  19. Tough Love
    Tough Love 9 May, 2011, 13:14

    Everything is on the table in a bankruptcy …. that’s way they call it a bankruptcy.

    Reply this comment
  20. SkippingDog
    SkippingDog 9 May, 2011, 13:53

    TL – The problem with “studies” like this one, whomever funds them, is that they treat anecdotes and opinions as facts. Using cherry-picked data from the Little Hoover and Stanford reports does nothing more than promote a predetermined political agenda, which is really what this whole discussion is about.

    Attacking public employee unions, pensions, and benefits is just a method for reducing the political influence of the Democratic party. When I see people like yourself promoting a return to Reagan era income tax rates for both individuals and businesses, I’ll start to believe your agenda is really related to budget and deficit concerns, rather than just a politically motivated effort.

    Reply this comment
  21. SkippingDog
    SkippingDog 9 May, 2011, 13:59

    “Everything is on the table in a bankruptcy …. that’s way they call it a bankruptcy.”

    Actually, TL, your research on Chapter 9 bankruptcy is a little weak on this one. The court is constrained by, among other things, a work out plan that conforms with state laws in the state seeking its protection. That means in Chapter 9, a court does not have the free hand it enjoys in Chapters 7, 11, or 13.

    In California, for example, the state constitution prevents the discharge of public pension obligations through bankruptcy. That means the power of the court has been curtailed, not merely by the California law which would ordinarily be superseded by federal law, but by the federal law requirement that the bankruptcy court comply with state laws in constructing and approving the work out plan.

    Reply this comment
  22. Tough Love
    Tough Love 9 May, 2011, 14:03

    Skippy,, While I agree (to some extent) with your first paragraph, the first sentence in your 2-nd paragraph is ridiculous.

    Without doubt the attack on Public Sector pensions & benefits (but perhaps not the Unions themselves) is abundantly justified by the unfair excess that has been granted by corrupt/enabling politicians, at a “bargaining table” where no one at that table appropriately represented Taxpayer interests and between “negotiators” BOTH parties of which benefit from increasing pay, pensions, and benefits.

    Reply this comment
  23. Tough Love
    Tough Love 9 May, 2011, 14:10

    Skippy, I DO support substantially higher taxes for the wealthy and for corporations. But not $1 dollar of it should go towards supporting excessive Public Sector Pensions and benefits. We have a crumbling infrastructure and many other issues that severely need (and deserve) increased funding.

    Reply this comment
  24. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 9 May, 2011, 14:16

    Vallejo was bound by the CA Constitution, which protects public pensions in bankruptcy proceedings.

    =====================
    Seesaw, you should go to law shcool before you start spouting off about the “CA Constitution”, because there is that little thingy called the SUPREMACY CLAUSE of the US CONSTITUTION that takes precedent over the CA -and all other states- Constitution.

    BTW-Vallejo never challened the pensions-so your claim is bogus as usual, because Vallejo still had a public union controlled clowncil majority who refused to go after them, if they did they would have, 100%, been given a haircut.

    Reply this comment
  25. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 9 May, 2011, 14:26

    “Everything is on the table in a bankruptcy …. that’s way they call it a bankruptcy.”

    Actually, TL, your research on Chapter 9 bankruptcy is a little weak on this one. The court is constrained by, among other things, a work out plan that conforms with state laws in the state seeking its protection. That means in Chapter 9, a court does not have the free hand it enjoys in Chapters 7, 11, or 13.

    ======================
    Skippy, I will give yopu the same advice I gave seesaw, go educate yourself in the law before you start popping off.

    Once the muni submits to the BK Court then the BK Court has the FULL JURISDICTION AND AUTHORITY to do whatever they want to do-they do not have to follow ANY of the bogus claims you and your public employee yahoo’s make up.

    Just more spin from people who do GED level jobs but get comped doctor wages. Nothing more. BK Court has a FREE HAND to make ANY adjustments it wishes to make. You and seesaw are like white belts in a karate class, you learn a few moves and you think you’re black belts and that is why you are a danger to yourselves.
    .
    .

    In California, for example, the state constitution prevents the discharge of public pension obligations through bankruptcy. That means the power of the court has been curtailed, not merely by the California law which would ordinarily be superseded by federal law, but by the federal law requirement that the bankruptcy court comply with state laws in constructing and approving the work out plan.

    ==============
    Once again, you GED trough feeders need a course in Con Law I, and II and III, the SUPREMACY CLAUSE trumps ANY CA law-ANY!

    Once the muni files the BK papers with the BK court the BK Court is free to do ANYTHING they wish, and your 100% BOGUS and TRUMPED up claims that a Federal Court (BK Courts are sub-division of Article III Courts) MUST COMPLY with ANY State law are as phony as your bogus claims that you public safety clowns die 3 days after you retire at age 50…………

    You public employees lie, cheat, scheme, defraud, swindle and are overall the biggest threat to the poor and middle class of America today.

    Reply this comment
  26. SeeSaw
    SeeSaw 9 May, 2011, 14:37

    Well, all’s well that ends well, Rex. It seems that you and TL are just grasping at straws, trying to find a way to take something away from someone. I don’t care how many thingys there are–most decent people do not want to desecrate others’ pensions. GAS stated in his 2010, State of the State Address, that it is both immoral and illegal to cut the pensions of the existing workers. By and large, the pensions are not excessive. There are slightly over 500,000 CalPERS annuitants at the current time, and 1% of those might be considered excessive. If you want to attack excessive pensions, start with the CM’s and other highly paid managers–that’s where the excess is–and these receivers of excess were not in unions. (I am not advocating that you take away from them–just trying to make a point.) The tales of union reps sitting across the table from employers and making bribe deals is ridiculous! Its called “Collective Bargaining”. Its not fraud! And, you can forget the standby whine that no one is representing the taxpayer. Everyone sitting at those tables is a taxpayer!

    Write about something else for a change, Author. There is plenty of fraud in the private sector for you to investigate.

    Reply this comment
  27. SkippingDog
    SkippingDog 9 May, 2011, 14:40

    Be sure to read the “Adjustment of Debts and Confirmation” section, as well as the law discussion about same. You might learn something new.

    http://www.abiworld.org/pdfs/municipal_primer.pdf

    Reply this comment
  28. SeeSaw
    SeeSaw 9 May, 2011, 14:40

    I sure hope you are rich, Rex–you know that old saying.

    Reply this comment
  29. SkippingDog
    SkippingDog 9 May, 2011, 14:44

    Go ahead and educate yourself by doing some basic research on Chapter 9. Here is the relevant provision you dislike:

    http://www.abiworld.org/pdfs/municipal_primer.pdf

    Reply this comment
  30. Tough Love
    Tough Love 9 May, 2011, 14:44

    SeeSaw, The word “desecrate” is usually in reference to religious or holy items. Has your pension become such ?

    I’m looking for accruals for FUTURE service (NOT yet accrued) to be brought DOWN to a level no greater than that of comparable taxpayers who pay for it.

    It’s quite amazing that you have such a problem with it.

    And you said …”By and large, the pensions are not excessive.”, to which I can only respond … What planet do you live on ?

    Reply this comment
  31. SkippingDog
    SkippingDog 9 May, 2011, 14:47

    Go to the “Municipal Bankruptcy Primer” for ABI world. Easy to find with Google.

    Reply this comment
  32. SkippingDog
    SkippingDog 9 May, 2011, 14:50

    Sorry TL, Chapter 9 bankruptcy contains significantly more restrictions on the bankruptcy court than other sections of the code, all related to 10th Amendment concerns.

    Google “Chapter 9 Bankruptcy Primer” and you’ll quickly find that it’s not nearly as easy as you seem to think for any municipality to get out from under their debts, and you’ll also find that a chapter 9 work out plan must conform with state law.

    Sorry Rex, but those are the facts.

    Reply this comment
  33. SkippingDog
    SkippingDog 9 May, 2011, 14:54

    A little more information, courtesy of the Voice of San Diego website:

    “Question 3: Can bankruptcy judges overturn state laws?
    In the Bildisco case, the Supreme Court was primarily concerned with how to reconcile conflicting language in the National Labor Relations Act and the federal bankruptcy law, both pieces of legislation passed by Congress. The court did not, however, consider state constitutional provisions that provide explicit protections for public employee pensions and state laws regulating labor relations.
    This omission is important because, in many ways, Chapter 9 of the bankruptcy act occupies a constitutional gray area. While the U.S. Constitution gives Congress full authority to regulate the bankruptcy process, it also gives states full autonomy over their own affairs, including their municipal governments.
    Indeed, as Goldsmith has noted, the Supreme Court initially struck down the first Municipal Bankruptcy Act adopted by Congress in 1934 as an unconstitutional infringement on states’ rights. In 1937, however, Congress passed a nearly identical law, which the Supreme Court upheld. What changed was not the constitutional questions at stake, or the substance of the law, but rather the ideological composition of the court.
    In short, there is little doubt that efforts to use the bankruptcy process to overturn the benefits promised to San Diego retirees would implicate important constitutional questions that would give rise to years of lawsuits — litigation that will likely make its way all the way to the Supreme Court.
    Aside from the constitutional dilemma, however, there is also the language of the federal bankruptcy law itself. Chapter 9 explicitly states that any plan adopted by the bankruptcy court must obtain full “regulatory or electoral approval necessary under applicable nonbankruptcy law” — including state regulations and the San Diego city charter. A literal reading would suggest that a plan reducing existing retiree benefits, protected by both the state constitution and the city charter, would not pass muster under the current law.
    The bottom line is that bankruptcy remains a highly speculative option for San Diego, one that promises a highly uncertain outcome. Though the city could succeed in getting its retiree benefits reduced, the process will entail a long, hard, and expensive slog through various levels of federal courts that would take years to unwind. Put simply, regardless of what happens, bankruptcy will not provide a viable solution to the city’s short-to-medium-term budget problems.”

    Reply this comment
  34. SeeSaw
    SeeSaw 9 May, 2011, 15:39

    My pension is secure, TL. I just happen to care about other people, that’s all. I support public employees, past, present, and future. I would like to think that if grandchildren and great granchildren enter this world after I am gone, they will still have something to look forward to. I can consider my own pension sacred, if I wish.

    Reply this comment
  35. SeeSaw
    SeeSaw 9 May, 2011, 15:46

    I have always been glad that this world is occupied by many people, who are much smarter than I–way to go, SD!

    Reply this comment
  36. Tough Love
    Tough Love 9 May, 2011, 15:54

    SeeSaw, You said …”I would like to think that if grandchildren and great granchildren enter this world after I am gone, they will still have something to look forward to. ”

    Do you realize just how the excessive pensions granted to Civil Servants (at ALL income levels) are contributing negatively toward that goal ? Without their agreement or voice, this generation feels it appropriate to place an enormous burden on the next.

    If they’re smart, they’ll tell us to “stick it” and not pay.

    Reply this comment
  37. SeeSaw
    SeeSaw 9 May, 2011, 18:26

    No, I fear that once they decimate the middle class, our grandchildren and great grandchildren will have nothing to look forward to but minimum wage jobs and hand to mouth existences.

    Reply this comment
  38. Tough Love
    Tough Love 9 May, 2011, 18:40

    SeeSaw, Do you realize that the the self-interest of Civil Servants (who represent 15% of the middle Class) are heavily contributing to that “decimation” of the other 85% that are not Civil Servants.

    Reply this comment
  39. SeeSaw
    SeeSaw 9 May, 2011, 20:00

    I don’t believe that. That 15% is part of a larger group which includes spouses and other family members who come right along with them.

    Reply this comment
  40. SeeSaw
    SeeSaw 9 May, 2011, 20:01

    TL, its the private sector, Wall Street, banks, et al, who have decimated the 85% that are not Civil Servants. Turn your attention there, for a change.

    Reply this comment
  41. Tough Love
    Tough Love 9 May, 2011, 20:18

    SeeSaw …Wake up !

    Reply this comment
  42. SeeSaw
    SeeSaw 10 May, 2011, 00:12

    My eyes are wide open!

    Reply this comment
  43. SeeSaw
    SeeSaw 10 May, 2011, 00:13

    You must not have seen, “Inside Job”, TL. You must–talk about waking up.

    Reply this comment
  44. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 10 May, 2011, 02:49

    Be sure to read the “Adjustment of Debts and Confirmation” section, as well as the law discussion about same. You might learn something new.

    http://www.abiworld.org/pdfs/municipal_primer.pdf

    =================
    I read it-it does not make any claims to ANY of the BS you said.

    Reply this comment
  45. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 10 May, 2011, 02:51

    Sorry TL, Chapter 9 bankruptcy contains significantly more restrictions on the bankruptcy court than other sections of the code, all related to 10th Amendment concerns.

    ===================
    No, it does not, and some nonsense you Googled does not chnage that.

    Reply this comment
  46. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 10 May, 2011, 02:53

    Indeed, as Goldsmith has noted,
    =============
    Skippy, stop cutting and pasting Goldsmith’s OPINIONS, he was a hack judge (an appointed judge) and he is a hack city attorney.

    Here is some good advice to you Skippy, NEVER trust a dork who wears a dead squirrel on top of his head.

    Reply this comment
  47. SeeSaw
    SeeSaw 10 May, 2011, 10:14

    What is your point Rex? I think we have all seen that cities and counties are loath to declare bankruptcy. The only two entities in CA, that have done so in the past decade, Orange County and City of Vallejo, have not harmed pensioners. Are you cooking up some new bomb in your basement or something?

    Reply this comment
  48. SkippingDog
    SkippingDog 10 May, 2011, 10:15

    It wasn’t Goldsmith’s opinions being relied upon in the primer by the American Bankruptcy Institute, it was the law.

    Too bad you don’t understand that simple fact. Chapter 9 won’t do what you’d like it to do.

    Reply this comment
  49. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 10 May, 2011, 22:41

    Chapter 9 won’t do what you’d like it to do.

    ===================
    You’re a white belt pretending to be a black belt, just posing.

    Reply this comment
  50. SkippingDog
    SkippingDog 11 May, 2011, 11:08

    Even a white belt has more real knowledge that the guy who just sits around reading Karate Magazine.

    Reply this comment
  51. BUD
    BUD 14 May, 2011, 07:58

    Let me understand this. Since government agencies have been underfunding pension plans in good years retired employees should give up part of their pension which they can never recover to fund that poor policy. Why not stop paying for stadium bonds, redevelopment, port terminals and the like. Or let us exempt retirees from federal, state and local taxes. We can require business to charge less for services to retired folks.

    I know it is vogue to beat on retired government employees they provide the perfect scapegoat for spending sprees an things government should never have been involved. Oh and the greenie weenie movement otherwise known as the economy killer

    Reply this comment

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