Mutual Financial Companies In The Era of Generation Greed


Looks like some of those damn capitalists are making uncomfortable comparisons between executive pay and shareholder (or in this case policyholder) dividends again. From the Boston Globe: “Phantom stock and phony options still add up to nearly $200 million in very real United States currency, all of which (the former CEO) took out of Liberty Mutual in his last four years as chief executive…The only phantom anything are the dividends that never got paid to the policyholders that actually own Liberty Mutual. What these owners got were rate hikes, while Boston and Massachusetts residents gave the company $46.5 million in tax breaks, all to help fund an utterly grotesque level of executive pay.” The board members and current executives defend that pay. “Friday’s performance revealed that these guys are so out of touch that they truly, honestly believe they’re worth that million a week, or $192,000 a day, or $24,000 an hour – and can’t for the life of them imagine that you don’t. They actually believe the system is fair, the one they stacked with interlocking boards of directors of like-minded people paid a couple of hundred thousand dollars a year to approve each other’s pay.”

Generation Greed Wants to Use Up the Future and Dictate it Too


Last March featured one of the angriest opinion pieces I have ever read in Planning magazine. The subject was the Republican House Transportation bill, which seeks to eliminate dedicated funding for mass transit and other alternative modes while increasing funding for highways. This would restore the situation before the arrival of pro-choice Ronald Reagan, when the cities were taxed (in many cases into oblivion) to build infrastructure for growing suburbs, in a development pattern the free market would not have chosen. My interest in the article is not based on the specific issue – frankly given the damage it had done I wouldn’t mind if all federal infrastructure spending was eliminated, and everyone had to pay for their own. It is based on the “big picture” discussion at the end.

“Budgets allocate resources, demonstrate priorities, and determine winners and losers in any society. So where does this leave those who are now choosing different options when they are provided by the market? The Gen Xers and the Millennials are making very different choices than their parents or grandparents. Their brand loyalty is up for grabs. And that frightens the dumb growth industries that now seek to tilt the playing field back in their favor.” Aha. And guess what, aside from the one percent and future retired public employees, Gen Xers are poorer than Boomers, and Millenials are poorer than Gen Xers. And they are being forced to pay more for less government to offset the greed of the generations who went before, and control the government. They can’t afford the lifestyle older generations had chosen any more than the older generations could, which is why older generations made younger generations pay for it. You’d think older generations would leave them alone to get by as best they can. But no.

Who Are Those Similar Natural Gas Customers?


We try to be thrifty with our energy use around my house, so it’s natural for us to wonder how we are doing, compared with those in similar circumstances. To evaluate if there is something else we could be doing to use less. In the month to March 13, for example, we used 131 therms of natural gas according to our National Grid bill, for heating, hot water and cooking. Is that a lot or a little?

It seems that either National Grid sort of wants us to know, or there is some regulation requiring them to tell us. More likely the latter, based on the quality of information provided. According to our bill, “similar customers’ average usage high/low range” was 37 therms to 297. So what does that tell me about our 131? Nothing.

Posters and Politics


The Daily News had an article yesterday about the big money owed by former (and future) Mayoral candidates Bill Thompson, John Liu and Bill de Blasio for campaign infractions four years ago. “Putting signs on public property is a campaign no-no, and each citation carries a $75 fine” according to the News. Well yes that is the law, and always has been. But to understand what this city used to be, and still is under the surface, and might be going back to, you have to consider the way it used to be enforced.

Against challengers who were not a part of the political machine, but not against incumbents. The fines for the incumbents would be waved as long as they eventually took the signs down. Now just imagine that you are an ordinary citizen, an outsider, upset about the way things are going, and decide to run for a public office, as I did in 2004. But you did not know about this little tradition. You see other candidates putting up signs, so you put up signs, say 500 little photocopies. And then they come after you not for $37,500, but for $187,500, because they issue a new ticket every day. They can go after your house, if you have one. They can go after your paycheck, if haven’t had to leave your job because you were a candidate. The judges, all put on the bench by the local pols, might reach an accommodation if you had leaned your lesson. And not about putting signs on public property.

The Unions Cry Crocodile Tears About Tier VI


For the past few years, as taxes have been increased and public services have been cut, New York’s public employee unions have protested. We’re on the side of those who rely on public services, they claimed. We are the 99 percent. And now that the retirement benefits of future public employees have also been cut, the unions are protesting again. We are on the side of future public employees, they claim. So where is the money going? Who is getting better off, as most people, and just about all future people, become worse off? Have New York’s state and local taxes been cut? Have public fees, such as transit fares, been cut? Who benefitted? You know the answer.

New York City Actuary Robert North Should Be Fired, and Fired Now


Since I’m not from the political world, for me the questions are about what, not who. I generally discuss policy issues and trends in government and society at large, and seldom mention individual politicians. This keeps me out of the various flame wars, and away from the personal enmity, that characterizes both the political tribe and the internet. And I haven’t called for retribution against any individuals, with the possible exception of not voting for them.

Until now.

Census FY 2009 Public Finance Data: Taxes, Other Revenues, and Debts


The following post analyzes changes in local government revenues per $1,000 of personal income for FY 2002 and FY 2009, comparing New York City, the rest of New York State, and New Jersey to the U.S. average, using data linked from this post. My general take on this data over the years is that everything is locked in in New York and nothing ever changes, but in this case some things definitely did.

The upshot on revenues? In FY 2009 New York City’s state and local tax burden, as a percent of its residents’ personal income, was 53.2% higher than the national average, up from 34.4% above average in FY 2002. This despite the fact that the U.S. average increased as well, from just under 10.2% of personal income to just over 10.4% of personal income. New York City, based on long term Census Bureau data attached to this post, had not been that far above the U.S. average since 1987 – it had been more than 50.0% above average from 1977 to that year. The combined state and local tax burden for the rest of New York State, taken together, increased from 22.2% higher than the U.S. average to 34.4% higher. The rest of the state had never been that high above average according to the data I have available, for 1972 and all years from 1977 to 2009 (except a couple when the Bureau did not collect it). The tax burden of New Jersey had been about average in FY 2002, as it had been for some time before, but was 12.2% above average in FY 2009.

Non-Profits in An Era of Institutional Collapse


Things sure seem to have changed at the New York Times. After a couple of decades of being the veritable mouthpiece of the non-profiteers, the Times has recently been raising questions about how much New York City and State pay them, much of it under the Medicaid program, and how little is received in return. In the latest article, the Times examined at-home services for the disabled, for which the city state and federal governments pay $45 to $67 per hour to non-profit organizations that dispatch aides paid $9 to $15 per hour. The huge profit margin allows the non-profits to pay big salaries to those who run them.

This is just one example of what has happened in the city’s “non-profit” “charities” over the years. They have become a big part of the reason that New Yorkers pay so much in taxes, and receive so little in return. What is particularly disturbing is that this problem has infected a type of organization that was thought of as the solution 40 to 50 years ago, due the failures and ripoffs of public employee unions, government bureaucracies, and government contractors.

New York City’s Last GASB?


Confirming its prior analysis, and the analysis of independent actuary John Bury, the Center for Retirement Research at Boston College has once again found New York City’s pension plans to be among the most dangerously underfunded in the United States, this time in light of the new rules proposed by the Government Accounting Standards Board (GASB). The New York State pension plans, which also cover local government workers in the portion of the state outside New York City, are once again found to be among the best funded.

Noted actuary Girard Miller who writes for Governing Magazine, for those plans scheduled to run out of money in less than 25 years “without causing a panic, it's clear that the time has come for stakeholders, trustees and plan sponsors in these systems to ask penetrating questions and get to work on solutions — pronto. That includes the unions whose members must contribute to the solutions and stop playing the ‘not me’ entitlement game.” He lists 28 plans among those in desperate shape, including the New York City Teachers and New York City Employees, but the Boston College report only included larger plans. Other analyses have shown the NYC Police and Fire pension plans to be worse off than the NYC Employees retirement plan, though not as bad off as the Teachers. “This abyss,” said Miller, “is the result of a decade or more of benign neglect by all parties at the table.” Actually in New York, there have been additional retroactive pension enhancements in the past decade, and deals to borrow money from the pension plans to pay pension contributions, which is much worse than benign neglect.

Another Pension Ripoff May Be Coming


According to the Wall Street Journal, Governor Cuomo is negotiating with public employee unions to use pension funds to pay for infrastructure. So how much interest is Governor Cuomo going to pay on those loans from the pension funds? They assume an 8.0% rate of return – starting from the peak of the stock market bubble in 2000. If they didn't, New York’s state and local governments would have to admit that, for example, NYC pension contributions would have to rise far higher than the 40.0% of payroll they are now. Taxes would have to rise, and or public services would have to be further gutted, to make up the difference. Above and beyond the devastation already being visited on less politically influential New Yorkers.

Either Cuomo is looking to raid the pension funds, perhaps offering even earlier retirement in exchange, with the cost deferred. Or the pension funds are looking to raid whoever will be paying back the debt, by having the state pay a higher interest rate than it could get by just issuing bonds. Or perhaps Cuomo hopes that by locking public employee pension funds into a lower rate of return, and then jacking up local government contributions to the funds to make up for it, he can force local governments to fund the state budget. Regardless, when politicians and pension funds get together, there is no doubt who is being made worse off. Future generations of less well off people who don’t even get pensions themselves. Because both pension funds and municipal bonds are tax free, it makes no sense of pension funds to invest in municipal bonds. This is just another way for Generation Greed to defer the disaster it has created for the future, now the present, into the later future. Hey Governor, if you want to borrow, put a referendum to the voters, as the state constitution requires. If the pension funds want to invest in the bond issue at the market clearing interest rates, they would be free to do so.