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Detroit and the impact on pension reform ‘Nothing distinguishes pension debt in a municipal bankruptcy case from any other debt. ” These thirteen words come from a ruling this week by us bankruptcy judge steven rhodes.In strictly legal terms, they’re part of a larger decision that does little more than confirm the obvious:Detroit is bankrupt. But make no mistake.The judge has set off a seismic shock that will reverberate far outside detroit.For he has confirmed something fairly radical in the world of public employees:The law applies to workers for a bankrupt city much the same way it does to workers for a bankrupt company. Even for those who think this common sense has been a long time coming, it’s a tough hit for detroit city workers at or near retirement age.Not only does it mean they’ll get less than they were promised, the news comes late in their lives, at a time when they have little way to make up for it.And they won’t be the last, given the unfunded pensions across this country. In detroit, much of the ire from city workers has been directed at judge rhodes.That’s misplaced.A far better target would be their own unions. For years, public workers unions have behaved as though their cities’ financial and pension crises aren’t their problem, largely because they’ve deemed their pensions as sacrosanct.In michigan this sense of unreality was encouraged by a state constitutional amendment(Similar to one in new york)Which the unions and the political class took as a guarantee that pensions couldn’t be touched even if the city went belly up. Now, the economic solution to the pension mess isn’t that complicated.Cities need to move their workers from retirement plans that guarantee benefits to ones where benefits are based on contributions.The advantage to the city would be to eliminate the problem of unfunded liabilities, while the advantage to workers is that they’d own their plans outright so they wouldn’t ever face the dismal prospect detroit city retirees are now facing. The obstacle is almost all political.Mcmahon puts it this way: “The norm for city and state unions has been to press for maximum pension promises even if it meant accepting unfunded liabilities. ” This was entirely rational, by the way, given the assumption that taxpayers would ultimately have to make up any shortcomings.It also made sense for the unions because part of the old deal was union representation on the boards of these great big pension funds, which gave them enormous political clout. As for the public workers, many accept this arrangement because the deal they get is unbeatable by anything in the private sector where, as the manhattan institute’s nicole gelinas points out,”There is no way a cop or a firefighter could retire after 22 years and be confident of supporting not only himself but a surviving spouse for another 40 years. ” The hope is that younger public workers, watching what is happening in detroit, come to realize another fact of the status quo:The defined benefit systems for public workers really serves the lifers.Those who leave their jobs before retirement between 40 and 50 percent of teacher do so within their first five years lose out big time. Even in new york there are signs this might be dawning on some public workers.In an empire center poll of state teachers last year, 70 percent said they would have considered a defined contribution plan if one had been offered when they were hired.The things they said they liked about these plans were:They’d be fully portable, they’d give the owners control and they’d be fully vested after a year. City governments would be wise to looK at ways to start tapping into this desire for more choices by offering worKers incentives to opt out of louis vuitton sale the status quo.That liKely means hybrid models of defined contribution plans that use annuities to provide more security than, say, a standard 401(K). That won’t persuade everyone.But it’s progress.And it’s not hard to imagine a young new york grammar and elementary school teacher opting for the tiaa cref defined contribution system, which provides a good, secure retirement for state university teachers. Leaders of public employee unions will fight this every step of the way.These, of course, are the same people who assured their members it didn’t matter if the cities they worked for were going to hell they would get theirs no matter what. After detroit, it may be a harder sell. When you work in the public sector you are capped financially.In theory, someone in the private sector is only limited financially by circumstances, whereas a public sector employee is limited by fact.They are guaranteed a paycheck and a pension.That’s the trade off.Otherwise, they would be just another person in the private sector.For example, denzel washington played a cop in a movie and made 20,000,000.00.It would take a cop in california 200 years to make that amount.So leave the pensions alone.I really don’t believe police work is a job anyone can do and hate to see the day when it returns to being a job anyone can have.You’ll have the same cop always finding burglary alarms, cops going through your dead loved ones house while waiting for family to arrive.Take a look at lapd post gates;Rampart.Now magnify that nationwide on a jackson, mississippi scale.The job used to be crap and you had flat foots taking bribes and shaking down businesses right alongside the crooks.The majority of that went away when the loss of the job meant something more than losing another gig.It meant losing a retirement and future.You pay for what you get, but you won’t see the fruits of this tree for 20 years. Middle class non union workers have drank all the corporate kool aid.Mcmahon of the empire center?The empire center, alec.Etc are conservative think tanks funded by the koch brothers and the like.Look it up!There are 3 sides to every story, yours, mine and the truth.The fact is private sector unions let these corporations take away their defined benefit pensions.That’s on them!Do youReally think corporate america couldn’t afford those pensions!Really!The last time i looked, union workers are subject to the same taxes as everyone else.Are there pension abuses in the public sector?Absolutely, and they were addressed in nys by the creation of tier 5 and tier 6.The nys pension fund is running at 97%, the strongest in the country.It’s very easy to blame someone you can put a face on. Unions are not to blame its the commie leeberals that cause all the headaches with their social programs for all of lazy america.Florida is smart!Make them take drug tests.You fail you get nothing!Fair more than fair.Cash payment should not be given to pay for drugs, and luxury items that are not a necessity.Our new mayor wants to increase the rolls, and his leeberal constituents will have a rude awakening in his district when taxes go up property values go down, and lawlessness will take over their streets in crook lyn. Stop paying the government cheese to lazy slugs.We have mentally retarded, and physically disabled americans working in both the public, and private sectors! .The pensions are controlled by city government, and the benefits and health and welfare are controlled by the unions.I see welfare slugs walking around with coach and louis vuitton bags and they are not knock offs.The city pays out the ghetto lottery to each and every person that files a claim of notice for damages.Nyc smartened up and they are going to trial with everything.Do what all state insurance does refuse to settle and go to trial.Make the shyster lawyers waste their time and efforts, and not see any income! .You have people living in public housing paying 235.00 a month based o their dead auntie, or granny’s lease agreement, and making 100k in income.I wonder how many born in 1914 are still alive, and living in the projects? .You want reform see how many high income earners live there, and bank rolling money! .You want to live there pay market value.There are thousands of families in need of public housing but live in shelters.Yes they deserve it, and then some.Corporate america is going to leave nyc my tax accountant did and moved to jersey city.He was at 1350 bway, and pays 50% less in square feet for rent, and less in taxes in operating costs.He told me5 years ago nyc is going to become industrialized again, and will be comprised mostly of blue collar, and municipal workers.Wake up liberal america look what the progressives did in detroit.They destroyed it.Pay cash and food stamps, and provide free housing along with cable benefits.I hade no cable when i was a kid.The black and white tv was good enough watching the network shows.Didn’t get color tv till 1986 when i started high school and my parents made better money.But to the lazy new yorker its free get it all.Don’t work.But to the working new yorker who has built a nest eggretirement a house car, and falls ill to a stroke or critical illness he or she is doomed to loose it all. The union is not at fault here.The pension system is jointly administered between management and the union.The union never gets to decide on its own what happens at the bargaining table management has to agree.So all of you middleclass people who hate unions should wake up a little.Banding together and working as a group for a common cause is as american as it gets.You guys swallowed the corporate pill against your own interests. Notice you never hear any business owners complain or knockthe chamber of commerce?Kind of funny thatthey have successfully convinced the workers to bash theirs. This pension issue is a management problem. I wrote an open letter to kevyn orr a couple of months ago on this very topic if the unions wish to argue that their pension liability is merely $650 million, the city should wholeheartedly agree to fully fund their request with one important condition.The unions must either a)Agree to a fixed annual contribution to the defined benefit plans going forward, or b)Cease using a defined benefit plan and move to a defined contribution plan going forward for all of their employees.These politicians should face a 100% wealth tax and a 100% excise tax on future income and face execution if they can’t pay enough to liquidate the pension problem they caused. The unions and workers were foolish, greedy and venal, but they aren’t the louis vuitton uk ones who caused the problem.The politicians who permitted improper accounting for pension liabilities for decades on end are the real miscreants here.We need to punish them so hard it never happens again. It’s time for city councils or municipal supervisors to take a close look at detroit and their municipality, if unionized.Those municipal leaders who dealt with union leaders who got their positions because they were the best at using muscle, intimidation or politician donations to get the union goodies, private or public, andnever imagined that themoney flow would stop. But in the private sector they faced bargaining and faced greater push back.They still managed to putindustries out of business.

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