Tuesday, January 15, 2013

First Rule of Holes: When you are in a hole, stop digging


We have hit a bit of a bump in the road to our liberal paradise in CT recently. First Governor Malloy discovered raising taxes on everyone, not just the wealthy, doesn't mean the budget will be balanced, and today some rather disturbing news on CT state pension obligations.

From a CT Mirror story:

The state employee pension system fell to a 24-year-low this fiscal year as investment losses and more conservative projections for future earnings left the fund with enough assets to cover just 42 percent of its obligations, according to a new report. 
According to the latest actuarial valuation, prepared by Cavanaugh Macdonald Consulting of Kennesaw, Ga., the fund had $9.74 billion in assets and $23 billion in obligations for a funded ratio of 42.3 percent. 
Analysts typically cite a ratio between 70 and 80 percent as fiscally healthy.
There is a table (page 9) from the actuarial valuation report that caught my eye:

Since 2007 the amount the state of CT owes to its pensioners has increased from $18 billion to $23 billion while the amount saved to pay these retirees has been flat. Meaning the ratio saved has fallen from 53.6% to 42.3%. 

Most of corporate America moved away from pensions to 401-K's years ago. They did it to remain competitive. Since there is no competition for government, there was little incentive to do so. Cities like San Bernadino are suffering from their past prolificacy. The unfunded liabilities of the Social Security System, Medicare and Medicaid, the pillars of the New Deal and the Great Society, make CT's finances look sound. 

But not to worry, because according to Nancy Pelosi, 

Well I think as far as Social Security is concerned, this is an insurance initiative, that was very masterfully put together so it's not a poor people's program. It is an insurance program that people pay in, thee and me, we take out. 
Why do Democrats have such veneration for programs that are literally (thanks VP Biden) driving the country bankrupt? And why do Republicans talk the talk and talk the talk and talk the talk and talk the talk?


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