[quote=walterwhite]ooh, the special tax is clever. not sure if the state’s bankruptcy extinguishes pension obligaitons; i think the state is stuck with the current obligaitons. but the tax thing is sneaky.[/quote]
Interesting about the tax, yes.
People are lashing out at public sector workers and their benefits because they don’t understand why we got into this trouble in the first place.
CalPERS was “superfunded” (overfunded) in the late 90s, largely due to the stock market bubble. In a very unwise move, CalPERS and various politicians decided that many municipal and state governments no longer needed to contribute to the fund because they were fully funded (and then some, according to their calculations). This was mistake #1.
Because they had so much money, Gov. Gray Davis helped push through legislation that pushed pension benefits through the roof (and while I fully support defined-benefit pensions, this particular move was inexcusable). This was BIG mistake #2. See here:
The last piece of the puzzle was when CalPERS thought they could earn returns like those seen in the years prior to 2000 (because stocks, bonds, and real estate prices **ALWAYS** go up, right?), so they based all their calculations on bubble-era returns. Big mistake #3.
After making these fatal mistakes, our illustrious financial leader, Alan Greenspan dropped rates through the floor after the implosion of the stock market bubble, which marked the beginning of the final blow-off top of the credit bubble which has been growing since the Reagan years (IMHO). This helped CalPERS at first, as they could pretend that asset prices always rise, but it also forced them into riskier bets in order to get the returns needed to make their calculations work. They were heavily invested in all the “toxic” types of instruments that caused the bubble and the following collapse, not to mention their stocks, bonds, and real estate portfolios which were all hammered.
And then things collapsed…
So, while it’s certainly interesting to see people try to tear down public workers, these public workers were never the ones responsible for the problems with the public pension plans. Most of the public workers I know never fought for the pension boost, and found it rather surprising when it went through (a bit like an unexpected Christmas gift — a Ferrari, perhaps).
Like I pointed out above, the pension problems go right back to the financial sector, not the public unions or their workers.
Let’s keep our eye on the ball — the financial sector needs to be dismantled. Workers should not be turning against workers. We should be united in taking back our country from the financial sector parasites who’ve destroyed our middle class and destroyed our great nation.
