Public Pensions

[DoggerDan]

“It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them,”

Did the retirees pay into the system, or was their retirement and health care part of their work/retirement compensation? If so, then companies and government must honor those promises, period. Yanking it away because it doesn't seem fair would be the height of unfairness to those to whom it was promised.

[russ_watters]

Did the retirees pay into the system, or was their retirement and health care part of their work/retirement compensation? If so, then companies and government must honor those promises, period. Yanking it away because it doesn't seem fair would be the height of unfairness to those to whom it was promised. Is it fair to make others pay to fulfill those obligations?

[LaurieAG]

Is it fair to make others pay to fulfill those obligations?

It depends if it's a Pension scheme or a Ponzi scheme.

[Jimmy Snyder]

Is it fair to make others pay to fulfill those obligations?
When they calculate that 47% of Americans don't pay taxes, do they mean that they do pay taxes, but get the money back? Or are they lying?

[WhoWee]

Did the retirees pay into the system, or was their retirement and health care part of their work/retirement compensation? If so, then companies and government must honor those promises, period. Yanking it away because it doesn't seem fair would be the height of unfairness to those to whom it was promised.

As we discussed in the Rhode Island thread - when government over-promises - tax payers are left with either the bill or reduced services. Some of those taxpayers don't have any benefits (or less benefits) from their employers - is that fair?

[WhoWee]

It depends if it's a Pension scheme or a Ponzi scheme.

I'll defer to the Rhode Island thread again - from post number 54
http://www.physicsforums.com/showthread.php?t=544605&page=4

http://www.wpri.com/generic/target_12/probing
Basically, the state set aside $25.5 Million to fund $3.6 Billion in retiree health care benefits. Please watch the "Target12Investigators" video.

[russ_watters]

When they calculate that 47% of Americans don't pay taxes, do they mean that they do pay taxes, but get the money back? Or are they lying? It means 47% of people who fill out a 1040 come up with a zero or negative at the bottom of the form due to deductions and credits.

I'm not sure what that has to do with this thread, though...

[russ_watters]

It depends if it's a Pension scheme or a Ponzi scheme. So if, for example, a company's or government's pension fails due to mismanagement by the company/government, then you would say it is fair for the government to bail it out by having everyone else in the country pay for it?

[Jimmy Snyder]

Is it fair to make others pay to fulfill those obligations?

It means 47% of people who fill out a 1040 come up with a zero or negative at the bottom of the form due to deductions and credits.

I'm not sure what that has to do with this thread, though...
Social Security taxes don't show up on the 1040. If you count SS taxes as taxes, then the 47% figure is a lie. If you don't count them as taxes, then you are not making others pay to fulfill those obligations.

[Vanadium 50]

I've split off this obviously off-topic thread.

[WhoWee]

Social Security taxes don't show up on the 1040. If you count SS taxes as taxes, then the 47% figure is a lie. If you don't count them as taxes, then you are not making others pay to fulfill those obligations.

The Social Security deduction is referred to as a tax because it's a payroll deduction - but it's really a retirement benefit account - similar to an annuity or a private pension fund.

Specifically, the deductions from your personal income - benefit you in the future.
http://www.ssa.gov/estimator/

The main difference between the Social Security system and an annuity or a private pension fund is the government doesn't actually invest the funds in marketable securities. The government uses the funds to pay other beneficiaries or other expenses.

If you don't pay enough in to the system to cover the amount you take out - someone else will need to pay your share - won't they?
http://www.ssa.gov/oact/progdata/taxRates.html

[Vanadium 50]

Is it fair to make others pay to fulfill those obligations?

There is already some of that for private pensions. A private pension is insured by the federal government (PBGC). If the company goes bankrupt, PBGC pays the pension, up to a certain maximum. In principle, other companies pay insurance to PBGC (i.e. pay for others obligations) which covers the payments. In practice, they are about $25B in the hole because of some unfortunate financial decisions: they locked in losses with bonds, and then locked in more losses with stocks. This may not be surprising, as the agency bosses are political appointees, not pension fund managers. The outcome of this is that they will probably need a "one-time" infusion of funds from general tax revenues.

Things are more complicated for public pensions. These do not have insurance (states don't go bankrupt), and the people who would ultimately receive these pensions lobbied for the politicians who underfunded the pension plans.

[BobG]

Did the retirees pay into the system, or was their retirement and health care part of their work/retirement compensation? If so, then companies and government must honor those promises, period. Yanking it away because it doesn't seem fair would be the height of unfairness to those to whom it was promised.

Is it fair to make others pay to fulfill those obligations?

This is the core of the dilemma.

Social Security is the perfect example. It was a promise made by the government before most of us were even born (it was signed into law in August 1935).

Is it really ethical to make promises on behalf of future people and just expect them to fulfill promises they had no say in making? (In fact, you could say the same about a national debt that "we" never intend on paying, instead deciding that's something that someone else will have to deal with after we're dead.)

It truly is unfair to force people to pay into a retirement system (whether it's via FICA taxes or by an employer promising future pay in return for lower current pay) and then to renege on that promise when the bill comes due. It's also unfair to commit people that may not have been hired or even been born yet to promises they obviously have no say in.

It's a bad situation, but, hopefully, the democratic process will prevail. Thanks to good planning, us baby boomers made sure a lot of us were born at the same time, giving us a lot of political power. We also made sure not to have so many kids that younger generations would outvote us. And then, just to make sure our political power didn't evaporate through premature deaths, we started putting extra restrictions and taxes on unhealthy things like tobacco and alcohol and started putting extra safety restrictions on things such as vehicles. We planned things well!

And for the younger generation of complainers, just remember this - paying for our Social Security benefits are the only reason we had brats like you in the first place!

If you didn't want to pay so much in Social Security taxes, you should have planned your births a little better!

[Vanadium 50]

Social Security is also special in that it doesn't apply to all citizens. Public employees might not have FICA withheld, and they might not get benefits. Usually these are correlated, but in some cases people who did not pay into the system can still get benefits.

[russ_watters]

Social Security taxes don't show up on the 1040. If you count SS taxes as taxes, then the 47% figure is a lie. It's not a lie. Different statistics are different statistics. We've had many discussions about the pros and cons of that particular statistic in different contexts.

And you are mis-stating the issue: no one is claiming the social security tax (the payroll tax) isn't a tax, it is just a different from the federal income tax because - as you just said - it doesn't show up on the 1040. It is collected separately, under a separate structure, for a separate purpose. If you don't count them as taxes, then you are not making others pay to fulfill those obligations. Huh? The label that you put on "them" doesn't change what they are.

You're going off on an odd tangent here, since DD's post didn't mention Social Security. But regardless, Social Security is a strange hybrid of a forced retirement plan and a pyramid scheme. Depending on who'se doing the arguing, one might emphasize one aspect or the other. On the one hand, it looks kinda like a forced savings plan, where you get a retirement benefit based-on what you paid-in. Similar to a pension. But on the other hand, the pay-out is progressive, with people on the lower end getting paid-out a higher proportion of pay-in than those at the upper end. And the pay-outs overall are greater than the pay-in and the difference isn't made up with investment. So it requires a continuing pyramid-shaped pay-in/pay-out structure to sustain itself.

Now Social Security has been this way forever. Everyone grows up knowing they'll be paying for the retirement benefits of today's retirees and hoping tomorrows workers will pay theirs. But that's not what this was about. This was about private and government pensions. Entities that were never intended to be paid for by the general population, but rather funded by the workers themselves. So DD asserted it would be unfair to take away people's private and government funded pensions. I agree. But I also believe it would be unfair for the rest of the population to pick up the slack for such underfunded pensions. Someone's getting screwed either way when a big pension plan fails. I'd prefer the breadth of the screwing not be expanded.

[russ_watters]

There is already some of that for private pensions. A private pension is insured by the federal government (PBGC). Yes, and I don't think that's "fair" or more to the point, a good idea -- at least, in the absence of strict regulation to protect us from companies mismanaging their pensions (which apparently happens a lot).

[phyzguy]

Did the retirees pay into the system, or was their retirement and health care part of their work/retirement compensation? If so, then companies and government must honor those promises, period. Yanking it away because it doesn't seem fair would be the height of unfairness to those to whom it was promised.

What if the government or company made promises that it doesn't have the ability to keep? What then? There are many cases of this - Greece, many US municipalities, the US auto industry...

[russ_watters]

This is the core of the dilemma.

Social Security is the perfect example. It was a promise made by the government before most of us were even born (it was signed into law in August 1935).

Is it really ethical to make promises on behalf of future people and just expect them to fulfill promises they had no say in making? (In fact, you could say the same about a national debt that "we" never intend on paying, instead deciding that's something that someone else will have to deal with after we're dead.) I'm actually more OK with this promise than I am the promise the government makes to pay other people's pensions out of my pocket if necessary. At least with SS I have some way of predicting my own involvement in the program!

But that said, I do believe it is unethical to set up a retirement system that is not inherrently self-sustaining. Yes, SS will have lasted nearly a hundred years when it goes bankrupt, but everyone knows a pyramid scheme is unsustainable, even if they don't want to admit it. SS required forever continuing population growth and a halt to life expectancy growth, neither of which was reasonable to expect.
It truly is unfair to force people to pay into a retirement system (whether it's via FICA taxes or by an employer promising future pay in return for lower current pay) and then to renege on that promise when the bill comes due. It's also unfair to commit people that may not have been hired or even been born yet to promises they obviously have no say in. Yes....or to shift the cost from those who paid-in and managed it over to people who had nothing to do with either the pay-in or the benefits. That's the part my first question was about. It's a bad situation, but, hopefully, the democratic process will prevail. You really think it will? I see that as the key economic problem facing the entire world right now and I think it is because of the democratic process that it exists. The problem is simple: People who aren't born can't vote, so they can't vote against having to pay for today's spending (be it retirement spending or any other government spending). The democratic process encourages runaway debt!

And I think you do see that: Thanks to good planning, us baby boomers made sure a lot of us were born at the same time, giving us a lot of political power. We also made sure not to have so many kids that younger generations would outvote us. And then, just to make sure our political power didn't evaporate through premature deaths, we started putting extra restrictions and taxes on unhealthy things like tobacco and alcohol and started putting extra safety restrictions on things such as vehicles. We planned things well!

And for the younger generation of complainers, just remember this - paying for our Social Security benefits are the only reason we had brats like you in the first place!

If you didn't want to pay so much in Social Security taxes, you should have planned your births a little better!

[russ_watters]

What if the government or company made promises that it doesn't have the ability to keep? What then? There are many cases of this - Greece, many US municipalities, the US auto industry...
Well clearly, if the Greek government makes promises to its people that it can't keep, the Germans should bail them out! :uhh:

[russ_watters]

Social Security is also special in that it doesn't apply to all citizens. Public employees might not have FICA withheld, and they might not get benefits. Usually these are correlated, but in some cases people who did not pay into the system can still get benefits. That's part of the basis of liberals' objection to the 47% statistic and general progressiveness of the federal tax structure -- particularly as it pertains to the rich. Since the rich don't pay into it above a certain income level - and are also excluded from the benefits above that level - a snapshot-in-time view of taxes that includes SS implies a flat or regressive tax structure. But in a cumulative lifetime analysis, it cancels out and then some.

[Vanadium 50]

Well clearly, if the Greek government makes promises to its people that it can't keep, the Germans should bail them out! :uhh:

So why can't we demand the Germans bail out, say, California?

[ParticleGrl]

That's part of the basis of liberals' objection to the 47% statistic and general progressiveness of the federal tax structure -- particularly as it pertains to the rich. Since the rich don't pay into it above a certain income level - and are also excluded from the benefits above that level - a snapshot-in-time view of taxes that includes SS implies a flat or regressive tax structure. But in a cumulative lifetime analysis, it cancels out and then some.

Its actually somewhat tricky to do this cumulative lifetime analysis because poor people die younger. (see http://www.nytimes.com/2008/03/23/us/23health.html ) Along with an income gap, we are developing a life-expectancy gap. Maybe we should hunt down those numbers and work it out.

Also, I think the larger part of the objection to the 47% statistic is that excise taxes,sales taxes, many state taxes, etc are regressive. Even if we exclude payroll taxes as somewhat ambiguous, there are lots of regressive taxes that everyone pays, including the bottom quintile.

But that said, I do believe it is unethical to set up a retirement system that is not inherrently self-sustaining.

I think this is a problem with retirement systems in general. Basing a retirement system on the value of future capital (like 401ks) is as problematic as basing a retirement system on the value of future labor (social security). An increase in the ratio of old/young workers will mean economic slow down and lower expected returns to 401ks. See an economist at North Carolina discussing this on his blog http://modeledbehavior.com/2011/02/22/the-401k-pyramid/

This is compounded by the fact that young workers have substantially less wealth than they used to- so who buys the retiring boomer's stocks?

[WhoWee]

So why can't we demand the Germans bail out, say, California?

Let's start smaller - they can bail out Rhode Island with much less investment - and less risk of a growing illegal immigrant population seeking benefits.

[WhoWee]

Its actually somewhat tricky to do this cumulative lifetime analysis because poor people die younger. (see http://www.nytimes.com/2008/03/23/us/23health.html ) Along with an income gap, we are developing a life-expectancy gap. Maybe we should hunt down those numbers and work it out.

Actually, the best method to correct the system might be to adjust the lifetime payout to the life expectancy when the system was originally designed - then allocate those (lower amounts) payments over the new life expectancy?

For instance, if the original design was for a 5 year payout (feel free to insert the correct ages/times) - assume $15,000 per year = $75,000 - from 65 until 70 years of age and the current reality is a 20 year span from 65 to 85 @ $15,000 = $300,000 (to be "fair") why not split the difference to 12.5 years of benefits = $187,500 paid over the 20+ year span = $9,375/year average?

Please note, if all of the persons and conditions that were never intended to be funded out of Social Security are separated (they recently added 50+ categories to SSDI qualifications and have grown by a few million persons) are removed from this calculation and funded with a new "disability" tax - the cuts to retirement payouts would be much lower (and the program might be watched closer).

[russ_watters]

So why can't we demand the Germans bail out, say, California? Yeah, I get it - we kick them out of this union and make them join that one!

[russ_watters]

Its actually somewhat tricky to do this cumulative lifetime analysis because poor people die younger. (see http://www.nytimes.com/2008/03/23/us/23health.html ) Along with an income gap, we are developing a life-expectancy gap. Maybe we should hunt down those numbers and work it out. Here's some: http://www.urban.org/uploadedPDF/310667_Straight36.pdf

Interestingly, it shows how big of a problem Medicare is, with the pay-out to pay-in ratio being much higher than SS. Both show a lean to the left, but the SS part (figure 2) is about 1.3:1 for low income earners and a touch under 1.0:1 for high income earners.

For medicare, as one would expect, the ratios are much more tilted due to the fact that the pay-in is tied to your income, but the pay-out is not.

So for all Warren Buffets complaining that his secretary is paying more taxes (percentagewise) than he is: she's going to get it back and he's not. Really, it is a better illustration of the problem I keep harping on: the young paying for the benefits of the old. That burden is getting bigger and bigger. Also, I think the larger part of the objection to the 47% statistic is that excise taxes,sales taxes, many state taxes, etc are regressive. Even if we exclude payroll taxes as somewhat ambiguous, there are lots of regressive taxes that everyone pays, including the bottom quintile. Granted, but that's a complex conversation, since many of those are different from state to state. That's why the conversation generally focuses on the federal level only.

I think this is a problem with retirement systems in general. Basing a retirement system on the value of future capital (like 401ks) is as problematic as basing a retirement system on the value of future labor (social security). An increase in the ratio of old/young workers will mean economic slow down and lower expected returns to 401ks. See an economist at North Carolina discussing this on his blog http://modeledbehavior.com/2011/02/22/the-401k-pyramid/

This is compounded by the fact that young workers have substantially less wealth than they used to- so who buys the retiring boomer's stocks? I think that overstates the problem with 401k's/draws too big of a connection. If the federal government had just done some reasonable investing with Social Security funds, we wouldn't be in this mess.

[WhoWee]

I think that overstates the problem with 401k's/draws too big of a connection. If the federal government had just done some reasonable investing with Social Security funds, we wouldn't be in this mess.

I think some Government officials might agree - in hindsight.

http://www.msnbc.msn.com/id/37214423/ns/business-personal_finance/t/feds-get-earful-k-proposal/#.Tr_2wz1iSD4

"Government officials began seeking comments in February on a proposal to add an annuity option to retirement plans. Such an option would potentially turn a portion of a retiree's savings over to an insurance company in exchange for a monthly check."

[MarcoD]

Yeah, I get it - we kick them out of this union and make them join that one!

Well, the following states have a higher debt as ratio of GDP (http://www.usgovernmentspending.com/state_debt_rank): Colorado, Washington, Alaska, Rhode Island, South Carolina, Pennsylvania, New York, Kentucky and Massachusetts. Wanna kick them too?

I personally don't want them, except for New York, maybe, if it renames to its correct name: New Amsterdam. :wink:

[WhoWee]

Interestingly, it shows how big of a problem Medicare is, with the pay-out to pay-in ratio being much higher than SS. Both show a lean to the left, but the SS part (figure 2) is about 1.3:1 for low income earners and a touch under 1.0:1 for high income earners.

For medicare, as one would expect, the ratios are much more tilted due to the fact that the pay-in is tied to your income, but the pay-out is not.

Original Medicare (Parts A & B) is the FFS or Fee For Service and MA means Medicare Advantage (Part C).

http://www.ama-assn.org/ama1/pub/upload/mm/399/nac_mafacts.pdf
"> The Congressional Budget Office reports that
21 percent of MA spending goes to plans that
are paid from 120 percent to greater than 150
percent of FFS costs"

[ParticleGrl]

Here's some: http://www.urban.org/uploadedPDF/310667_Straight36.pdf

Near as I can tell, this fails to make the adjustment I was discussing. Life expectancy is shorter for lower incomes, higher for upper incomes and near as I can tell this wasn't taken into consideration.

I think that overstates the problem with 401k's/draws too big of a connection.

Why? What solves this problem?

If the federal government had just done some reasonable investing with Social Security funds, we wouldn't be in this mess.

Nonsense, corporate pensions were heavily invested and the dotcom bust and housing crash have all but wiped them out. Its not just public pensions that are in trouble!

Interestingly, it shows how big of a problem Medicare is

Yes, thats why I've said several times that the long term budget problem is really a healthcare problem. Its also why health care reform is supposed to be a large long-term deficit reducer.

[klimatos]

Is it fair to make others pay to fulfill those obligations?

Yes. The people are and should be bound by the promises of their elected officials. Anything less is dishonorable.

Of course, the public sense of honor seems to have diminished in recent years. Some might argue that today's public have no honor.

[WhoWee]

Yes. The people are and should be bound by the promises of their elected officials. Anything less is dishonorable.

Of course, the public sense of honor seems to have diminished in recent years. Some might argue that today's public have no honor.

Why can't we just tell them the politicians lied - and fix the problem? Who would doubt such a statement?

[russ_watters]

Yes. The people are and should be bound by the promises of their elected officials. Anything less is dishonorable.

Of course, the public sense of honor seems to have diminished in recent years. Some might argue that today's public have no honor. You need to reread. I wasn't talking about people who made the promises, but people who had nothing to do with them, but are forced to pay for them nonetheless.

[skippy1729]

Private Industry:

1. Union and management negotiate wages, benefits and pensions.

2. Union answers to their members.

3. Management answers to the stockholders.


Public Employment:

1. Union and politicians negotiate wages, benefits and pensions.

2. Union answers to their members.

3. Politicians, in theory, answer to the voters.

4. Unions give massive financial and political support to their favourite politicians.

5. Go to step 1.


If the unions gave money to management we would call it corruption.

[russ_watters]

Near as I can tell, this fails to make the adjustment I was discussing. Life expectancy is shorter for lower incomes, higher for upper incomes and near as I can tell this wasn't taken into consideration. You're reading the statistics backwards. The fact that they don't take into account life expectancy biases them in your favor, not mine: Even though the poor don't live as long, they still get more back than the rich. If we adjusted for life expectancy, the poor's annual payback would be even better vs the rich. Why? What solves this problem?

Nonsense, corporate pensions were heavily invested and the dotcom bust and housing crash have all but wiped them out. Its not just public pensions that are in trouble! The fact that many pensions are also mismanaged doesn't make SS well managed. As my stats showed, the rich get less money out of SS than they paid in. If their 401k's did that, they'd shoot their accountants.

I'm investing my 401k conservatively and expect it to pay me back several times what I paid in to it. And all without forcing my kids and yours to pay for it! Yes, thats why I've said several times that the long term budget problem is really a healthcare problem. Its also why health care reform is supposed to be a large long-term deficit reducer. Depends on the reform, of course. We could always just expand Medicare to cover everyone, with the same flaws....

I'm pretty sure I've actually heard that suggested.

[WhoWee]

I'm investing my 401k conservatively and expect it to pay me back several times what I paid in to it. And all without forcing my kids and yours to pay for it! Depends on the reform, of course. We could always just expand Medicare to cover everyone, with the same flaws....

I'm pretty sure I've actually heard that suggested.

Part of the PPACA requires health care be "affordable" - yet the mandates increase cost. In 2014 the maximum deductibles will be $2,000 individual and $4,000 family - this will ABSOLUTELY increase premiums.

I'll oversimplify to make a point. If a mandated plan costs $20,000 per year (family of 4) and the employee contribution is limited to $1,500 - the company will either pay $18,500 or dump the person onto something comparable to the Government's GI (guarantee issue) plan.

https://www.pcip.gov/

There is a great deal of uncertainty amongst employers.

[ParticleGrl]

You're reading the statistics backwards. The fact that they don't take into account life expectancy biases them in your favor, not mine: Even though the poor don't live as long, they still get more back than the rich.

The way they calculate the lifetime benefit was to take the yearly benefit and multiply by the expected number of years, assuming everyone lived the same average life span. Because they didn't factor in the skew life-expectancy, their total benefit numbers are wrong. Hence, the lifetime benefits they calculate are high for the lower incomes and low for the upper incomes.

As my stats showed, the rich get less money out of SS than they paid in. If their 401k's did that, they'd shoot their accountants.

Keep in mind that the stock market can go decades at a time with no inflation-adjusted growth. Add in broker fees, and you are losing money. If you started pumping money into a stock portfolio in the mid 60s and started drawing down in the late 80s, odds are roughly half that you'd have less than you put in (not including said broker fees). The 80s and 90s saw rapid growth, but a lot of that was fueled by 401k money driving up stock prices (look at the steady increase in P/E ratios) . Also, a growing population is in part responsible for growing capital values. As the population starts to decline, so should the stock of capital.

I'm investing my 401k conservatively and expect it to pay me back several times what I paid in to it.

I wouldn't bank on that- again, the market can go decades at a time with little growth above inflation. See 1960 to about 1985, or 1995-now. Much of the equity market growth from the mid 80s on was the influx of 401k money, but thats going to be pulled out in the coming decades. This, of course, assumes its impossible to beat the market, but I think its fair to assume for these purposes. The '95 to now period is actually worse than the 60-85 because dividends have become more rare.

[WhoWee]

The way they calculate the lifetime benefit was to take the yearly benefit and multiply by the expected number of years, assuming everyone lived the same average life span. Because they didn't factor in the skew life-expectancy, their total benefit numbers are wrong. Hence, the lifetime benefits they calculate are high for the lower incomes and low for the upper incomes.

Aren't poor people more likely to become beneficiaries at a younger age?

[klimatos]

You need to reread. I wasn't talking about people who made the promises, but people who had nothing to do with them, but are forced to pay for them nonetheless.

No need to be insulting, Russ. I read perfectly well. My point was and is that the "people who had nothing to do with them [the promisers]" are still bound by those promises. That is the essence of representative government.

Else, why should I pay for wars that I did not vote to start and do not agree with?

[klimatos]

4. Unions give massive financial and political support to their favourite politicians.



It's called democracy. You fail to mention that management also gives massive financial and political support to their favorite politicians. Why don't you object to that?

[WhoWee]

No need to be insulting, Russ. I read perfectly well. My point was and is that the "people who had nothing to do with them [the promisers]" are still bound by those promises. That is the essence of representative government.

Else, why should I pay for wars that I did not vote to start and do not agree with?

Again, the solution is simple - the politicians lied to us!

In the case of war - the money is already spent - now we might ask the liberated country to pay us back (regardless of what the liars told them).

In the case of entitlements - sorry - the politicians lied to get your vote - cuts are essential.

Is there anyone that won't understand the concept that politicians lied to them - made promises that won't or can't be kept?

:rofl:

[skippy1729]

It's called democracy. You fail to mention that management also gives massive financial and political support to their favorite politicians. Why don't you object to that?

That is not the point. The point is that they selectively give money to the representatives who negotiate the terms of their contracts.

Although it is slightly off topic, many people object to being forced to join a union to keep their job and have their dues given to politicians that they personally oppose.

Skippy

PS When dealing with public employees, "management" is the politicians themselves! So your statement makes no logical sense.

[klimatos]

1) Again, the solution is simple - the politicians lied to us!

2) In the case of war - the money is already spent - now we might ask the liberated country to pay us back (regardless of what the liars told them).

3) In the case of entitlements - sorry - the politicians lied to get your vote - cuts are essential.

4) Is there anyone that won't understand the concept that politicians lied to them - made promises that won't or can't be kept?

:rofl:

1) Whether politicians made promises that we don't want to keep is irrelevant. They made those promises as our legal representatives. those promises were accepted in good faith, and we are honor bound to honor them. If this means raising taxes, so be it!

2) The money is not already spent. Many of the bills have not yet come due. When they do, we can simply tell the defense industries that they have to take eighty cents on the dollar. If politicians can lie to labor, they can lie to industry.

3) Cuts are not essential. We can simply raise taxes.

4) Same answer as 1).

[klimatos]

1) That is not the point. The point is that they selectively give money to the representatives who negotiate the terms of their contracts.

2) Although it is slightly off topic, many people object to being forced to join a union to keep their job and have their dues given to politicians that they personally oppose.

3) When dealing with public employees, "management" is the politicians themselves! So your statement makes no logical sense.

Corporate management also gives money to the representatives who negotiate their contracts. If it is wrong for labor to do so, it is wrong for management to do so.

2) Many shareholders also object to their potential profits being given to politicians they personally despise. Perhaps we should make all group (as opposed to individual) political donations illegal.

3) You know good and well that I was referring to corporate management.

[BobG]

Again, the solution is simple - the politicians lied to us!

In the case of war - the money is already spent - now we might ask the liberated country to pay us back (regardless of what the liars told them).

In the case of entitlements - sorry - the politicians lied to get your vote - cuts are essential.

Is there anyone that won't understand the concept that politicians lied to them - made promises that won't or can't be kept?

:rofl:

Anyone that financed the nation's debt by buying treasury bonds.

Following that line of thought, would it be better to default on promises to non-voters (foreign debt holders) or on promises to voters (domestic bond holders and social security recipients)?

That's pretty much the dilemma Greece (http://money.cnn.com/2011/11/01/markets/thebuzz/index.htm) was facing by considering putting the proposed recovery plan up to a vote. There was a real possibility that voters would choose to see creditors (and those bank investors) go bankrupt than to see their own finances hurt.

[WhoWee]

3) Cuts are not essential. We can simply raise taxes.


Do you mean raise everyone's taxes or only a small minority group of persons that can't defend themselves (with votes)? Don't you think it's high time we call this what it is - discrimination?

The reason I ask this question is tax hikes on the 47% of the population that don't pay federal income tax now - would largely be a cut in benefits provided under re-distributive programs.

[BobG]

Do you mean raise everyone's taxes or only a small minority group of persons that can't defend themselves (with votes)? Don't you think it's high time we call this what it is - discrimination?

The reason I ask this question is tax hikes on the 47% of the population that don't pay federal income tax now - would largely be a cut in benefits provided under re-distributive programs.

There was a time I was pretty sure you were a conservative. Now you go shocking me by urging tax hikes for as many people as possible in order to protect minorities! :rofl:

[lostcauses10x]

Unequal, is the term that should be being used in this thread,

Other than that it is simple: Don't make contracts that can not be held.

[WhoWee]

There was a time I was pretty sure you were a conservative. Now you go shocking me by urging tax hikes for as many people as possible in order to protect minorities! :rofl:

:rofl:What else can you call the 1% - but a minority?

[WhoWee]

Unequal, is the term that should be being used in this thread,

Other than that it is simple: Don't make contracts that can not be held.

"Unequal" is the topic of conversation best held at work - IMO. Tell your employer there is inequality between the owners wage and yours - I'm sure it will be a fun and informative debate.

[ThomasT]

Did the retirees pay into the system, or was their retirement and health care part of their work/retirement compensation? If so, then companies and government must honor those promises, period. Yanking it away because it doesn't seem fair would be the height of unfairness to those to whom it was promised.I think we're heading toward retirees getting compensated according to need. That is, eventually the SS retirement fund will be administered on the basis of means testing, as will medicare and medicaid.

[WhoWee]

I think we're heading toward retirees getting compensated according to need. That is, eventually the SS retirement fund will be administered on the basis of means testing, as will medicare and medicaid.

Social Security, Medicare, and Medicaid are already coordinated based on need. The SS program LIS (Low Income Subsidy) helps medicare beneficiaries with Part D. Medicare beneficiaries are further qualified as SLMB, QMB (and others) to receive additional assistance. A dual eligible person qualifies financially for both Medicare and Medicaid.

[mheslep]

Well, the following states have a higher debt as ratio of GDP (http://www.usgovernmentspending.com/state_debt_rank): Colorado, Washington, Alaska, Rhode Island, South Carolina, Pennsylvania, New York, Kentucky and Massachusetts. Wanna kick them too?...Those debt/GDP numbers don't reflect i) the outlandish pension guarantees made to California government employees which will cause future debt increases, shortly, ii) that California is already maxed out on its tax rates compared to most other states, so that it can not raise taxes to pay those pensions.

[mheslep]

The OP raises a point about fairness and obligations of government, specifically on health care benefits. Medicare beneficiaries will receive anywhere from a 3:1 to 5:1 payout, depending on wage level over what they paid in as of 2030. Is this not clear to all? The more appropriate question is should benefits be immediately be cut back to 1:1 after inflation?

[ParticleGrl]

Medicare beneficiaries will receive anywhere from a 3:1 to 5:1 payout, depending on wage level over what they paid in as of 2030. Is this not clear to all? The more appropriate question is should benefits be immediately be cut back to 1:1 after inflation?

So the question becomes- do we bankrupt the government or bankrupt private citizens with healthcare costs?

[mheslep]

So the question becomes- do we bankrupt the government or bankrupt private citizens with healthcare costs?I don't accept the premise, but in any case one can only start to have the discussion after putting to rest the notion that everyone is "entitled" to 3 or 5:1 more than they paid in to Medicare.

[DoggerDan]

So the question becomes- do we bankrupt the government or bankrupt private citizens with healthcare costs?

I've never really understood the high cost of healthcare. These days I see a doctor about once a year, mostly for various screenings. In previous years it was sometimes more, sometimes less. I've had a couple of things were I needed ER treatment, including a wicked inner ear infection caused by a perforated eardrum, a wrenched back, a scratched cornea, and some intestinal somethingorother that resolved itself despite the doc scratching his head bald trying to figure it out. Had a couple of warts removed as a kid. When I started gaining weight, I changed the foods I ate and exercised more.

I keep pretty good records, and the total cost, in today's dollars, comes to less than $15,000. That's about $283 a year, including the few times I've been on medications.

Why is it that healthy families of 3 are paying $10,000 a year in medical insurance costs? Are their doctors performing unnecessary tests or procedures? Do their insurance companies think their doctors might perform unnecessary tests or procedures?

The only people among my circle of friends I hear mentioning doctors' visits with any regularity are seriously unhealthy. They drink too much, smoke, fail to exercise, eat badly, and usually in combination. That's not to say everyone who's unhealthy is a self-fulfilling prophecy. Given what I see on the street, however, I'd say most suffer from preventable illnesses or complications thereof.

I am not immune, either. A couple of months ago, I suffered from a mild ischemic stroke, characterized by an impairment in my vision that grew rapidly over a three minute period before I called my doctor. He knows I'm a heavy clotter (I don't bruise very easily at all), so he said, "Chew and aspirin and stay on the line with my nurse." Thirty minutes later it was gone and there were no other symptoms, so he said, "Begin taking a baby aspirin a day and come see me in the morning." I had an annual check-up due in two weeks, so two weeks later he pronounced me healthy as a horse, but said while my diet is fine, I needed to get back into regular i.e. daily cardio.

So, I did. Cost of the visit and all tests: $250. Hopefully, that'll last me another year.

So what's costing an average of several thousand per year? That's why I don't get. Most people aren't that sick! Is it the few who are who're driving up the costs for everyone else? Am I getting close to suggesting if one leads an unhealthy lifestyle one should either bear the burden of high insurance premiums or the cost of high medical bills?

But what about those who do all the right things yet still wind up with various diseases which, while treatable, are very expensive to treat? Should they before forced to "unfairly" pay more than their "fair share?" But life just isn't fair, is it? Why should someone who is blessed with health be forced to dole out serious chunks of cash for those who aren't healthy? And how do we separate the ones who're merely unfortunate from those who willingly did all the wrong things, health-wise?

I'm sorry for raising so many questions. As I see things, though, there doesn't seem to be a "best answer." My solution is that I don't carry health insurance because I am healthy, take pains to keep myself that way, and refuse to pay premiums the vast majority of which would be used to cover those either not as fortunate as I am, or those who willingly trashed their physiology over the years. While I feel bad for the former, I have no mercy towards the latter.

In summary, this is not a simple situation with a simple answer. As for me, if I'm beset with something serious, I'll make a decision to either exhaust my life savings or simply give up the ghost.

One thing I do, have, is a policy cap which costs very little. It covers only those expenses above a very large ceiling. So, I really won't have to exhaust my life savings. Just a third of them. If the prognosis for recovery is good, I'll do it. Otherwise, I'll do what I can without the expensive treatments and leave my nest egg to my progeny.

[ParticleGrl]

I don't accept the premise, but in any case one can only start to have the discussion after putting to rest the notion that everyone is "entitled" to 3 or 5:1 more than they paid in to Medicare.

Obviously a 3 or 5:1 ratio isn't sustainable, its why the long-term budget problem IS health care. The question is how to control the costs- putting caps on the plan and leaving people at the mercy of the individual insurance market seems silly. Insurance works best with a large risk pool- using the size of a government risk pool to negotiate bargain pricing seems likely more effective.

The first steps needs to be reforms to drive us to at least comparable efficiencies to other countries (we spend a lot more as a nation, but we don't see much by way of results), Unfortunately, our political system is so horribly broken that any talk of reform drops to the level of the "debate" surrounding obamacare- horrible misinformation and idiot retirees at town hall meetings demand the government "keep its hands off my medicare!"

[Vanadium 50]

idiot retirees at town hall meetings

That's the way to convince them that your point of view is correct! You get 'em!

[WhoWee]

Obviously a 3 or 5:1 ratio isn't sustainable, its why the long-term budget problem IS health care. The question is how to control the costs- putting caps on the plan and leaving people at the mercy of the individual insurance market seems silly. Insurance works best with a large risk pool- using the size of a government risk pool to negotiate bargain pricing seems likely more effective.

The first steps needs to be reforms to drive us to at least comparable efficiencies to other countries (we spend a lot more as a nation, but we don't see much by way of results), Unfortunately, our political system is so horribly broken that any talk of reform drops to the level of the "debate" surrounding obamacare- horrible misinformation and idiot retirees at town hall meetings demand the government "keep its hands off my medicare!"

my bold
Doesn't the Government already control the price of health care services through their reimbursement rates? Why do you think the Government will all of a sudden become an efficient medical services purchasing agent?

http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/medicare/the-medicare-physician-payment-schedule.page

[phyzguy]

I've never really understood the high cost of healthcare.

My solution is that I don't carry health insurance because I am healthy, take pains to keep myself that way, and refuse to pay premiums the vast majority of which would be used to cover those either not as fortunate as I am, or those who willingly trashed their physiology over the years. While I feel bad for the former, I have no mercy towards the latter.


I edited down your long post. You raise some good points, but let me ask you a question. What if you take this approach, as many do, and have some major medical problem, say a car accident. Will you then say, "I guess I rolled the dice and lost, please let me bleed to death on the side of the highway?" I'll wager you will not. You will accept the emergency care that the hospitals are required by law to give you, and those of us who do carry health insurance will pay for your treatment. This is why everyone should be required to carry health insurance, because everyone needs medical care at some point in their lives.

[WhoWee]

I edited down your long post. You raise some good points, but let me ask you a question. What if you take this approach, as many do, and have some major medical problem, say a car accident. Will you then say, "I guess I rolled the dice and lost, please let me bleed to death on the side of the highway?" I'll wager you will not. You will accept the emergency care that the hospitals are required by law to give you, and those of us who do carry health insurance will pay for your treatment. This is why everyone should be required to carry health insurance, because everyone needs medical care at some point in their lives.

Because the majority of large medical claims come from either accidents or major illness - plan designs have been flexible. A 20 something in perfect health may want a $10,000 deductible to keep premiums low and have preventative and emergency care in place. Then, for a few dollars per month, a $10,000 accident plan (or term life) can be added to offset the large deductible - just in case.

If choices are limited - premiums will increase (IMO).

[klimatos]

Those debt/GDP numbers don't reflect i) the outlandish pension guarantees made to California government employees which will cause future debt increases, shortly, ii) that California is already maxed out on its tax rates compared to most other states, so that it can not raise taxes to pay those pensions.

I live in California. I know of no law that says that we are "maxed out" on our taxes, nor any law that says we cannot raise them even further. If you know of such a law, please provide a citation.

Many states have higher state taxes than does California; and California taxes have been higher in the past than they are now.

While many Californians would agree with you that some pensions are "outlandish", nevertheless, the promises were made and accepted in good faith and we are both legally and morally bound to honor them.

"A promise made is a debt unpaid."

[mheslep]

I live in California. I know of no law that says that we are "maxed out" on our taxes, nor any law that says we cannot raise them even further. If you know of such a law, please provide a citation. The reasons, not laws, that I had in mind preventing California from raising taxes include i) working people leaving the state and ii) California taxes being higher than the states to which Californians are traveling. From BLS statistics: (http://data.bls.gov/timeseries/LASST48000003)

Ca labor force
http://i55.tinypic.com/34gkjuq.gif

Texas labor force
http://i56.tinypic.com/34fk4zn.gif

Many states have higher state taxes than does California...;I do not think so, unless two make many. Only Oregon and Hawaii have higher top income tax rates than California's 10.3%. Of those two, Oregon has zero sales tax, Ha's is 4%, while Ca's sales tax (state and local) is 8.3%.
http://www.taxfoundation.org/UserFiles/Image/maps/stateincome_c_small.png
California's business tax is 8.8%, with only a few states topping that - Il, DC, Pa, NJ.

So there is no law saying California can not raise taxes further, but I think it is a safe bet that Ca will gain no further revenue from doing so, i.e. Ca taxes are maxed out.

[mheslep]

Obviously a 3 or 5:1 ratio isn't sustainable, its why the long-term budget problem IS health care. Agreed.

... (we spend a lot more as a nation,Agreed. And too many people go uncovered.

but we don't see much by way of results),Disagree. Meaningful results mean to me good and prompt medical outcomes: cancer, heart operation survival rates and the like, and not how many die from accidents or homicides, or whether a particular gene pool reflects low incidents of heart disease. The latter cases won't be changed by reforming the health care system. My research indicates nobody beats US medicine on these terms. It is medical excellence that I want to keep intact in the reform of the system, which I agree is needed.

[ParticleGrl]

Meaningful results mean to me good and prompt medical outcomes: cancer, heart operation survival rates and the like

But you can add to that infant mortality, preventable deaths, etc.

My research indicates nobody beats US medicine on these terms. It is medical excellence that I want to keep intact in the reform of the system, which I agree is needed.

It depends on the marker. By most quality of care studies I've seen, the US is a mixed bag. We are great at using a great deal of money to extend a cancer patient's life by a year or two. We are pretty poor in categories like preventable deaths and infant mortality.

[mheslep]

But you can add to that infant mortality,I don't think so. The reported difference between the US and France/Germany is down to ~3 per 1000. (http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_imrt_in&idim=country:USA&dl=en&hl=en&q=infant+mortality#ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_imrt_in&scale_y=lin&ind_y=false&rdim=country&idim=country:USA:FRA:DEU&ifdim=country&hl=en&dl=en) Some 3/4 of infant mortality in developed countries is now in the first several weeks of life. The US reports to the letter, but elsewhere (http://www.who.int/bulletin/volumes/86/6/07-043471/en/):
It has also been common practice in several countries (e.g. Belgium, France, Spain) to register as live births only those infants who survived for a specified period beyond birth.In other words what's recorded as fetal death (stillbirth) there might be an infant death here.


...preventable deaths, etc. Such as those caused by hypertension, smoking tobacco, high cholesterol, malnutrition, STDs, etc? These are behavior related, having little or nothing to do with any health care reform proposals on the table.

...By most quality of care studies I've seen, the US is a mixed bag. We are great at using a great deal of money to extend a cancer patient's life by a year or two. I'm reluctant to get into another country comparison discussion, but the difference for cancer survivors is not a "year or two." Five year survival rates are up to 5-20% better US vs Europe, or were back in 2007. For at least some cancers, the large majority of relapses occur inside 5 years, meaning if you survive 5 years it is likely something else will end up doing you in.
http://www.ncpa.org/images/1703.gif
http://www.thelancet.com/journals/lanonc/article/PIIS1470204507702462/abstract

[MarcoD]

In other words what's recorded as fetal death (stillbirth) there might be an infant death here.

Infant mortality is very clearly defined as the number of children dying in their first year. Numbers are here (http://en.wikipedia.org/wiki/List_of_countries_by_infant_mortality_rate).

[WhoWee]

Did the retirees pay into the system, or was their retirement and health care part of their work/retirement compensation? If so, then companies and government must honor those promises, period. Yanking it away because it doesn't seem fair would be the height of unfairness to those to whom it was promised.

This issue seems to have been placed on the back burner. The reality is millions of retirees face the loss of company paid health coverage due to the elimination of a tax credit. These people will be forced onto original Medicare, a Medicare Advantage plan or a Medigap plan (if they can afford the premium). This will also increase the burden on the Medicare system.

http://www.nytimes.com/2010/03/30/business/30subsidy.html
"An association representing 300 large corporations urged President Obama and Congress on Monday to repeal a provision of the health care overhaul that prompted AT&T, Caterpillar and other companies to announce substantial charges for the current quarter.

Times Topic: Health Care Reform
The association, the American Benefits Council, said the provision — which reduces the tax deductions for companies with drug coverage for their retired employees — would deal a significant blow to corporate profits and would discourage companies from hiring more workers.

AT&T announced last week that it was taking a $1 billion charge because of the provision. Deere & Company announced a $150 million charge, Caterpillar a $100 million charge, and 3M a $90 million charge.

Many companies said they were taking these charges now, before the current quarter ended, to comply with accounting rules. But some corporate critics asserted that the companies’ rapid response to the health legislation was aimed at pressing the administration to repeal the provision.

James A. Klein, the president of the American Benefits Council, called the provision “a serious mistake that is having negative and unintended consequences.”

White House officials defended the provision, saying it was a deliberate effort to eliminate what they said was an unusually generous tax loophole."

my bold
Given the current discussion of "jobs" and eliminating "tax loopholes" (consider consequences) - this is an important topic.

[mheslep]

Infant mortality is very clearly defined as the number of children dying in their first year. Numbers are here (http://en.wikipedia.org/wiki/List_of_countries_by_infant_mortality_rate).You missed the point. The question is about what constitutes a live birth, and that definition varies by country.

[MarcoD]

You missed the point. The question is what is about what constitutes a live birth, and that definition varies by country.

Ah. I doubt it, the definition, really varies between the developed countries, but point taken.

[WhoWee]

http://www.dol.gov/ebsa/Publications/retiree_health_benefits.html

"Providing for health care is an important part of retirement. Some employees are fortunate: they belong to employer-provided health care plans that carry over to retirement.
However, an important question arises for employees and retirees: How secure are my health care benefits after retirement? Under what circumstances can the company reduce or terminate my health benefits?
Employees and retirees should know that private-sector employers are not required to promise retiree health benefits. Furthermore, when employers do offer retiree health benefits, nothing in federal law prevents them from cutting or eliminating those benefits--unless they have made a specific promise to maintain the benefits.
The key to understanding your retiree health benefits lies in the documents governing your plan.
Review Your Plan Documents
To understand the terms of employer-provided retiree health benefits, you should first review your plan documents.
The Summary Plan Description (SPD) is a summary of the terms of the plan. Employers are required to provide a copy to you within 90 days after you become a participant in the plan.
For retirees, the SPD that was in effect when you retired may be the controlling document. You should save a copy of it. You also should save any SPD changes affecting your benefits after you retire.
In addition, there may be formal written documents that outline how your health plan is operated. These may include a collective bargaining agreement or an insurance contract.
You Should Know-Coverage Can Change
If your employer has reserved the right in the SPD or controlling plan document to change the terms of the plan, you may lose coverage at any time during your retirement. If your employer made a clear promise that you will have specific health care benefits for a definite period of time or for life, and did not reserve the right to change the plan in any formal written plan document, you should be covered."

[DoggerDan]

White House officials defended the provision, saying it was a deliberate effort to eliminate what they said was an unusually generous tax loophole."[/I]

Hmm... So it's ok for the government to raise public debt by trillions, but it's not ok for corporations to use an intentionally-created tax break valued in the millions.

Apparently, it's also ok for the Obama administration to falsely slight those who created it by wrongly referring to it as a "loophole."

I agree with the points you make, WhoWee.

[WhoWee]

Hmm... So it's ok for the government to raise public debt by trillions, but it's not ok for corporations to use an intentionally-created tax break valued in the millions.

Apparently, it's also ok for the Obama administration to falsely slight those who created it by wrongly referring to it as a "loophole."

I agree with the points you make, WhoWee.

I think calling this a "loophole" is very deceptive. Likewise, calling it a "tax break" implies the companies are receiving some type of benefit. This tax deduction is designed to account for payments made by the employer for the retiree benefits. If the companies have to pay taxes on the funds they've spent - they will stop paying. This (IMO) should be a legitimate business expense.