Calpers Might Come Clean

According to this article and another in the Wall Street Journal (subscriber only), California's public employee pension system might be prepared to admit that its projected 7.75% rate of return is nonsense. That means that it will also admit that even more devastating tax increases and service reductions and eliminations will be required. Required to pay for the unfunded pension enhancements of the past 12 years, resulting from deals between politicians and unions to increase their pension benefits (even as most workers get little or nothing), and deals to cut pension contributions (paying for two decades of special tax deals). New York's projected rate of return? Eight percent plus. Fraud, I as wrote here.

As pension systems collapse all over the country, just remember this: public employees just about everywhere else have contributed far more to their pensions than New York's public employees have.

Public employees in most states pay taxes on their retirement income at the same rate that workers pay, but they pay nothing in New York.

New York has the highest state and local taxes in the country as a share of its residents income, excluding (sometimes) oil taxes in Alaska and Wyoming.

Despite those high taxes, most NYC school children over the past three decades have not received a decent education (education is the biggest state and local government expense). No significant improvements have been made to the infrastructure. And parks and other amenities have remained viable only because people have donated to them ,over and above the taxes they pay.

Most of the tax increases and service cuts that are coming are the result of soaring pensions, debt and health care costs for prior to generations, not the recession. And unlike the recession, these are permanent.