Tag: Albany

Reviewing the economic history of the past 35 years, one finds that two groups of people are getting richer: the executives who sit on each other’s boards and vote each other a rising share of private sector income, and the retired, particularly retired public employees and those approaching retirement, who control state and local government. Everyone else is getting poorer, a trend that has been covered up first by having a higher share of family members in the workforce, then by taking away their future income when they themselves reach old age, which doesn’t affect their current spending, and then by debt. There is, in other words, the executive class, the political and politically organized class, and the serfs, with the latter including members of generations born after 1955 or so in the former middle class. The point of intersection between the two advantaged groups is the projected rate of return for public employee pension funds, and the Wall Street firms that manage them.

A recent poll shows New Yorker are against all spending cuts and tax increases. These traditional telephone polls, in my view, are probably skewing older — toward Generation Greed, the one that ran up the debts and promised itself benefits for seniors it refused to pay for.

The only budget cut New Yorkers favor, according to the poll? Lower wages (but not retirement benefits) for state (lot local government or non-profiteer) workers. Of which there are relatively few, and which have absorbed a substantial share of the cuts already. The state has a $9 billion budget deficit I read, although that is likely an underestimate. According to employment and wages data from the Bureau of Labor Statistics, state workers earned a total of $12.3 billion in 2009, down slightly from the year before. That is actually down, not a diminished pace of growth.

It's hard, under the circumstances, to work up the motivation to write about the same things I've written about over and over, going back to a time when it wasn't too late to do something about it. Is it then technically impossible to avoid a repeat of the 1970s for public services, with higher taxes and the needy not being cared for (then senior citizen bag ladies abandoned by those younger, now younger people raped by the same people who are now older)? It is worse than being technically impossible. It is technically possible — with a decade of blood, toil and shared sacrifice — but politically impossible with Generation Greed still in change and fully vested under the deals they have made with themselves.

This city was almost destroyed in the 1970s, but the debts and pensions were paid. Taxes were paid in exchange for nothing. The infrastructure fell apart. Multiple generations of NYC children were not educated. How many members of the state legislature lost their jobs? Well, this time the destruction will be state wide, and in lots of other states too, so you may not be able to flee to the suburbs and leave and smoking ruin behind. Perhaps the folks elsewhere in New York will figure out a way to throw the bastards out without putting the other bastards in.

From a letter to Newsday: "Your story, "$9B deficit crisis" [News, Dec. 27] fails to mention that state retirees pay no state income tax on their pensions…As a private-sector worker, this is patently offensive to me. Why isn't everyone paying their fair share?"

It is patently offensive to me too. But as a current worker who does not wish to be cheating younger people when (if) I'm able to retire, I'm also offended that private sector retirement income is exempt from state and local income taxes up to $20,000, and Social Security income is exempt for all. Why should a retired couple with $80,000 in retirement and Social Security income pay no state and local income tax, while a family of four struggling with $50,000 in wage income pays at a high rate?

I was stunned to read on this website that millions of dollars was diverted from the MTA 15 years ago to bail out Nassau County, which is now being forced by a court decision to pay money back. Every party to that deal, everyone involved with it, did something very, very wrong. It is outrageous — an hidden debt from the point of view of Nassau County residents, a theft of funds from the point of view of the MTA. This should be investigated. How many other off the books debts like this are they? And if this is the common practice, should we be surprised that the state legislature and Comptroller are borrowing money from the pension funds?

Now that the New York Times is publishing more articles on the public employee pension disaster, I've noticed a pattern in the extensive comments. They are from all over the country. Some talk about the massive amounts public employees have contributed to their own pensions. Or how the government, which is to say taxpayers, failed to contribute their share, and taxes are not that high. Or how retired public employees would face destitution if their pensions were not paid, because they were not included in Social Security saving those taxpayers 6.2% of their wages. And all the state and local taxes pensioners have to pay. Everywhere in the U.S., public employees, who already had the richest retirement benefits, cut political deals over the past 15 years to get even richer pensions beyond what they were promised when hired, just as the top executives who already earned the most pay cut office political deals to grab even more. But many of the comments asserting that public employees have been robbed as well are true in many other places, the places the comments are coming from.

But not in New York City.  I ask that the reporting reflect those differences, and stop asserting that attempts to solve the problem solely at the expense of younger generations is an "of course" rather than yet more robbing the cradle. The national story is Generation Greed, and pensions are just one aspect.

Looks like New York lost another two seats in Congress, but NYC’s share of the state’s population is going up. I wonder how they are going to take one or both of those seats out of New York City, without putting existing suburban legislators at risk from being voted against by new voters?

Texas gains four. It seems that most of the growth is in Blue portions of Red states.

Over the past near 40 years, the share of the personal income of both Americans and New Yorkers spent by state and local governments on cash assistance for the needy has plunged, a long term look at data from the Governments Division of the U.S. Census Bureau shows, while the share spent on payments to private sector medical care vendors, generally under the Medicaid program, has soared. The data, in the attached spreadsheet, shows that public health and hospital spending has fallen as a share of personal income in New York while rising in the U.S. as a whole, while spending on social services has increased in both areas, though by much less than Medicaid-funded health care vendor payments.

From the Times: "Richard Ravitch, the lieutenant governor of New York, is among those warning that states are on an unsustainable path, and that their disclosures of pension and health care obligations are often misleading. And he worries how long it can last."

“They didn’t do it with bad motives,” he said. “Ninety-five percent of them didn’t understand what they were doing. They did it because it was easier than taxing people or cutting benefits. We’re getting closer and closer to the point where we can’t do that anymore. I don’t know where that is, but I know we’re close.”

I've noted that what motivates me to write here is the unsaid, the facts that are unrevealed and non-decisions that are not discussed because doing so is not in the interest of those in the game. When the unsaid is said, that is no longer necessary. So rather than write something, I'll just link something you should read. Actuary John Bury is up to 46 city pensions plans in 25 cities in his analysis, and the NYC situation looks really bad.

It appears to me the only way for the teacher's pension to get out of the hole would be to go pay as you go (or something close to it) for several years, shifting at least $1.4 billion per year and perhaps more (depending if the early retirees from the 25/55 deal are fully reflected here) from the classroom to the retired.  That would require not only drastically increasing class sizes, cutting extra curriculars, sports and student services, but also possibly knocking a year or two off the education most NYC children receive.  A repeat of the 1970s, in other words.