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Pension "Reform" is a Form of Robbery

The state of Illinois is in the news because financial forecasts purport to show that it will not have enough funds in the future to pay all of its pension obligations. According to the Wall Street Journal, the pension will fall “nearly $100 billion short of what is needed to meet promised benefits.” It is impossible from the article and from most everything else that one reads to understand whether that hundred billion dollars represents money that needs to be in the pension fund at the moment or whether that hundred billion dollars represents the net present value of money spread out over the next 40 to 50 years. It also might represent the sum of the dollars that need to be spent on pensions without respect to discounting for the time value of money. We just don’t know.

Too often it seems that when politicians use the word “reform” it means that the state does not plan to fulfil its promises solemnly made years ago to employees coming into the system. Remember, that state employees took a smaller salary in return for the benefits provided by a pension system. They earned that pension, and the state promised them a pension for the remainder of their lives in return for many many years of loyal service. According to the Illinois Comptroller, “Pension benefits are a form of deferred compensation serving as a future payment for work that is currently being performed.” (See 5/11 issue of Fiscal Focus below at p. 9)

I suspect that the projections that are being used to calculate how much less employees should be getting are doctored in order to present the worst possible scenario.

Instead of trying to diminish the pensions of public workers who have already earned their pensions, we need to see how much additional monies need to be deposited into the pension fund over the next 40 or 50 years to keep it solvent and to maintain the payments level in terms of purchasing power. The state promised these employees a pension that would retain its purchasing power and now the state is being asked to foot the bill for some bad investment decisions that it made over the past 10 years, as well as negligent underfunding over many more years.

So far, the best figures I have been able to obtain are contained in the May 2011 issue of Fiscal Focus, a publication of the Illinois comptroller’s office, but they don’t answer the question of how much taxes must be raised to keep the state honest. The proposals to solve the problem all involve breaking the state’s promise and robbing their retirees of money they are legally entitled to receive. The idea that the citizens of Illinois might pay a bit more in taxes seems off the table, but the state itself has reaped the benefit of underfunding the pension fund and spending the money on something else.

Addendum 12/8/2013: Dean Baker points out that the shortfall in Chicago pensions amounts to 0.5% of the city’s projected income over the next three decades and 15% of projected city revenue. Read the article
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On Filibuster Reform: Good, But Not Far Enough

The Senate today revised its rules to allow a simple majority to confirm presidential appointments to the executive branch and federal judges below the Supreme Court level.

I think it's a good thing. I wish they had abolished the filibuster totally. It is a procedural device that allows a senator to ostensibly support a bill that he secretly opposes and knows cannot pass, even though a majority of senators ostensibly support it. It allows a senator to proclaim his support for a bill to his constituents and then vote against cloture, effectively killing the bill.

The House of Representatives often resembles a zoo, but one thing is certain: members of the House cannot hide behind the filibuster to kill a bill that they claim to support. Our senators need to be put into that position. Both Democratic and Republican majorities ought to be able to pass their bills, confirm their presidents' nominees, and then be forced to take responsibility for the consequences. The Byzantine rules of the Senate often prevent that from happening. The vote today was a move in the right direction.


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Draft Speech for Obama on the Killings Yesterday at D.C. Navy Yard

Imagining that I am President Obama’s speechwriter, here is what I would advise the president to tell the nation on the D. C. Navy Yard killings:

Fellow Americans: once again, I come before you in sadness and horror to address the wanton killings that occurred yesterday in the District of Columbia Navy Yard which has taken the lives of 12 innocent persons with no connection whatever to the killer.

I have been forced to make this speech too many times; indeed, just one such speech is too many. Today, however, will be my last speech on the subject, because there is nothing to be done about this killing and everyone should expect similar occurrences well into the future.

It ought to be obvious to anyone who observed the reaction and the aftermath to the killings in Newtown, that attempts to control the ownership and possession of dangerous weapons will come to naught. If there were ever a tragedy to have shocked the conscience of the nation into doing something about unlimited accessibility to semiautomatic weapons, that would have been it. There was much talk and little action.

We must finally come to terms with the reality that a sizable portion of the American people are opposed to measures that would reduce the carnage that annually destroys the lives of more than 11,000 people by homicide (2011), and even more through suicide, and that minority is sufficiently large and sufficiently committed that it can prevent even the most reasonable efforts to restrict the ownership of guns.

The simple fact is that too many of us love our guns more than we love our neighbors. When we rely on guns to secure ourselves from bad people the gun becomes the proverbial hammer and everything in the world becomes a nail. The killings are always caused by something other than the proliferation of guns, as the gun industry and its prime Astroturf and lobbying organization, the National Rifle Association, tell us everyday by their propaganda. For those of us who are not gun lovers, this obsession is clearly of pathological proportions. Proponents of unrestricted gun ownership have become resistant to facts and rational argument.

Consequently, we must accept the inevitability that nothing will change; more gunmen will attack schools and shoot innocent children and that more disgruntled employees will take out their frustrations upon their fellow employees and bosses with an AR-15 or worse. That more children will be killed playing with guns because trigger locks are not required to be placed on guns around children. That more girlfriends and boyfriends will be shot in anger because a loaded gun was at hand. That psychopaths will continue to find it easy to purchase guns at gun shows. None of these things can be helped, because while our society is literally saturated with firearms, the gun manufacturing industry is frantically seeking additional markets through advertising to previously peaceful and nonviolent demographics.

Therefore, and for the reasons I have just now given you, this administration will no longer have anything to do with gun control, other than signing a bill passed by the Congress. We have too many things to do that are actually achievable. Until I am presented with a gun-control bill to sign, you are on your own. Put your faith in Kevlar and hope for the best. Thank you.
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The Perennial Mr. Summers Is Back

Larry Summers, former secretary of the treasury under Bill Clinton, president of Harvard University, and Obama’s chief economic advisor, will almost certainly be Obama’s choice to replace Ben Bernake as head of the Federal Reserve Bank. The banking sector (Wall Street) is pressing hard on Summer’s behalf, because in the event of another crash, Summers will be far more likely to bail out the big banks than the logical appointee, Janet Yellen, a career Federal Reserve employee, now head of the San Francisco Federal Reserve.

Summers’s rôle in laying the groundwork for the 2008 crash has been well-documented elsewhere, as well as his hasty departure from Harvard, but all you have to know about Larry Summers is that he has favored the banks over the American people whenever there has been a choice. His economic beliefs are essentially neoclassical and his politics are slightly left-leaning neo-liberal. With Summers at the helm of the Fed, we are in big trouble.

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Thanks to Glenn Greenwald

Although many of us suspected that the intelligence establishment has been eavesdropping on Americans’ phone calls and emails, few of us comprehended the scope of the surveillance and the resulting threat to civil liberties it poses for all of us.

In a trenchant summary, Greenwald today has published a summary of what the spooks are now doing and what they are planning for the future, and it truly makes Orwell’s 1984 distopia look tame:

“The NSA is constantly seeking to expand its capabilities without limits. They're currently storing so much, and preparing to store so much more, that they have to build a massive, sprawling new facility in Utah just to hold all the communications from inside the US and around the world that they are collecting - communications they then have the physical ability to invade any time they want ("Collect it all, tag it, store it. . . . And whatever it is you want, you go searching for it").



“That is the definition of a ubiquitous surveillance state - and it's been built in the dark, without the knowledge of the American people or people around the world, even though it's aimed at them. How anyone could think this should have all remained concealed - that it would have been better had it just been left to fester and grow in the dark - is truly mystifying.



Perhaps the coining of a punchy phrase by the Washington Post to describe all of this - "collect it all" - will help those DC media figures who keep lamenting their own refusal to cover the substance of the NSA stories begin to figure out why they should cover the substance and how they can. The rest of the world is having no trouble focusing on the substance of these revelations - rather than the trivial dramas surrounding the person who enabled us to know of all this - and discussing why those revelations are so disturbing. Perhaps US media figures can now follow that example.”



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Medical Rite of Passage

In the Deep South and the Southwest there is a ritual that repeats itself over and over between doctor and patient. After a lengthy examination, your doctor, in a grave voice, tells you that he has found something that concerns him and that he wants you to see a colleague in Houston. Since you are likely to be over fifty when this happens and have known friends and acquaintances who have gone through the same ritual, you will know immediately that your doctor has diagnosed you with cancer of one type or another and that it’s serious enough to send you to M. D. Anderson Hospital, a part of the University of Texas School of Medicine in Houston, the premier cancer treatment center of the South.

Thus did I find myself in that condition in January, when some discomfort led me to my gastroenterologist and ultimately to the urologist who had removed a benign tumor from my prostate gland in 1996. Unfortunately, the tumor turned out to be not so benign and seventeen years to the day after he removed the tumor, he announced that the tumor had not only returned but had grown very large and was putting pressure on the surrounding organs. He referred me to M. D. Anderson for treatment

M. D. Anderson Hospital is one of the most impressive medical organizations I have ever encountered. Besides employing some of the finest physicians and surgeons this side of the planet, the center promotes the use of teams assembled in accordance with the needs of each patient. It’s the place to go for cancer.

I travelled to Houston for an examination and later returned, where I underwent surgery for 11 hours on April 16 by a team of 5 surgeons and reconstructionists. I wasn’t able to return home until the 11th of May, so it should be obvious that updating this blog was simply out of the question until I improved.

Now that I’m healing, I’ll be commenting on some of the extraordinary events that seem to be occurring almost every day in Jackson, Mississippi, the nation and the world. We live in interesting times.

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Saul Landau on Chavez

An eloquent tribute to a man who served his country well, but was demonized in the U.S. because he did not follow the dictates of our power elite.

http://progresoweekly.us/20130313-chavez-changed-history-for-the-better/

Unfortunately, we have all been deprived of a penetrating, fearless writer who has educated us all:

http://progresoweekly.us/20130910-progreso-weekly-columnist-saul-landau-dies-cancer/


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You Reap What You Sow - The Plight of the American Legion

The New York Times ran an article today on the plight of the American Legion. As the WWII cohort passes away, membership is declining

It’s hard for me to be sympathetic. In the early 1980s, when I was on active duty in the Air Force, I expressed interest in joining the American Legion to several members in Norman, Oklahoma, and all I got was a snotty response that let me know they had all the members they needed and Vietnam-era veterans were definitely not welcome.

So…now I’m 67 and receiving invitations from the American Legion and the Veterans of Foreign Wars (VFW) in the mail once a month and haven’t the slightest interest in joining either organization. They are 40 years too late.

It didn’t help that both organizations vigorously supported the our engagement in Vietnam. The generation that were drafted and sent to fight and die in a rice paddy didn’t share that enthusiasm for bloodshed. They felt used.

The AFL-CIO made the same mistake; it alienated an entire generation of workers by its support of the Vietnam war. The results of that egregious error are now all too apparent.

You reap what you sow.

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Modern Rabelais: Lars Iyer

I just put down Exodus, the last of three volumes of what I call the Spurious Trilogy by Lars Iyer, Spurious: A Novel, Dogma: A Novel, and Exodus, and it has been an most entertaining ride. The three books relate the wanderings of two British philosophy professors, W., who teaches at the University of Plymouth, and the narrator, Lars, who like the author, teaches at the University of Newcastle. The theme is the decay of thought, a direct consequence of the triumph of capitalism, and the response of two men—whose entire careers are devoted to thinking deeply—set adrift by civilizational change.

Iyer has painted the characters ambivalently; they are both widely read in philosophy but discourse at length on obscure late nineteenth-century philosophers, non-mainstream bands, and Kafka. W., the senior of the two, drinks copious quantities of Plymouth Gin while making plans for great philosophical works that go nowhere. He also spends considerable time criticizing Lars, who he claims is at fault for his failures.

They travel and lecture, getting as far as Nashville and Memphis, and, in the other direction, Eastern Europe. It is all to no avail; they come across as erudite, pitiful crackpots. Ultimately W. is made redundant at the university, but retains his job because of a legal technicality, and is exiled internally by being forced to teach physical training students a course on the ethics of badminton.

And then the lists. It wasn’t until the third volume that the lists caught my attention. Iyer, unlike François Rabelais (1494-1553), does not construct simple lists, like the one in Gargantua and Pantagruel of all the games that were played on one occasion. Iyer’s lists are annotated lists that go on and on, page after page, like the motifs of a tone poem, intensifying as they go. For example, W. describes what happened to his fellow post-graduates in a grotesque parody of the hymn “I Sing a Song of the Saints of God” that lasts many pages of the ebook I have been reading. Below is a sample paragraph from the middle of the passage:

* * * *

Some sold themselves as mercenaries, some as prostitutes. Some joined the FBI, others the Foreign Legion. Some sided with the rats and the cockroaches, and dreamed of being eaten alive by rats and the cockroaches. Some wanted to be devoured from the inside out, and longed for biting termites to creep into their nostrils, to crawl into their ears. Some came to side with viral life, with bacteria and protozoa, and dreamed of a world without humans, without vertebrates, without any kind of higher life.

Some, tormented by thought and the demands of thought, sought to destroy their very capacity to think. Some sought to slice off their own thinking heads; some placed a bit to their skull and began to drill. Some drove pencils through their nostrils into their brain. Some shot themselves through one eye, and then another. Some asked—begged—for lobotomy. Some, for their brains to be sucked out of their skull. Some, to be left perpetually asleep, aging silently, Some, to be forced into a coma; some, to be battered into a state of imbecility.


* * * *
In another passage, W. parodies Howard Gardner’s theory of multiple intelligences, by positing multiple stupidities: Linguistic stupidity, logical-mathematical stupidity, and so forth, to painting-and-decorating stupidity, romantic stupidity, culinary stupidity (the discount sandwich is the opposite of food!), and, finally, stupidity stupidity (“The stupid are invariably stupid about being stupid, W. says.”)

Rabelais wrote at a time when the old medieval civilization was giving way to the modern age, and his writings clearly reflect his ambivalence between two world-views. He was a cleric and a physician who was constantly at war with the faculty of the University of Paris. He wielded a humorous but savage pen that nearly caused him to be punished as a heretic were it not for the French monarch’s patronage. The Spurious Trilogy comes as the decay of our civilization is becoming obvious to nearly everyone who takes the trouble to think about it, and Iyer has created a most memorable story, both funny and sad, that captures the zeitgeist as well as anything I have come across in quite a while.

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More on the Minimum Wage

The blogosphere (and the rest of the internet, for that matter) has either been lukewarm or frosty about the president’s proposal to raise the minimum wage. As I have already stated, a higher minimum wage would be a very good thing.

The right-wing opponents of the minimum wage are ignorant of history and economics. Here’s how they are wrong:

1. Historically, increases in the minimum wage have not resulted in increased unemployment. In the few cases that wage hikes have been followed by increased unemployment, the economy was already in a recession and unemployment would have risen in any case, such as in 1981, when the Federal Reserve under Paul Volcker was putting the screws to the economy;

2. Low wages - insufficient to maintain a family when the wage earner is working 40 hours a week - are actually subsidies by the employees to the employer, who can run his firm at a far lower level of efficiency that he would if he had to pay his workers a living wage;

3. Most welfare recipients in Mississippi work full-time, and therefore their employers - companies like WalMart - are subsidized by the taxpayers by having their employees partially supported by public relief programs such as food stamps and Medicaid;

4. As I mentioned previously, increases in the minimum wage are spent immediately by the recipients and therefore increase aggregate demand very quickly. This is not the case with tax cuts for the wealthy, who have no real need for additional income.

5. This is the one that is anathema to conservatives and right-wingers: A higher minimum wage reduces inequality by raising the floor on wages. Apparently, making income even slightly more equal between the bottom and top is intolerable to these misguided ideologues.

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