Why California Is Going Broke

Rupert Pupkin · #1 11-15-2012, 10:27 AM

There is a city in California called San Bernadino that filed for bankruptcy in August. The problem there is the same problem we have throughout the state:

"Little by little, over many years, the salaries and retirement benefits of San Bernardino's city workers — and especially its police and firemen — grew richer and richer, even as the city lost its major employers and gradually got poorer and poorer."

"Unions poured money into city council elections, and the city council poured money into union pay and pensions. The California Public Employees' Retirement System (Calpers), which manages pension plans for San Bernardino and many other cities, encouraged ever-sweeter benefits. Investment bankers sold clever bond deals to pay for them. Meanwhile, state law made it impossible to raise local property taxes and difficult to boost any other kind."

http://www.reuters.com/article/2012/...8AC0HP20121113

What is bankrupting the state is these insane pensions. Some people would say that the state simply needs to raise taxes, but taxes are already way too high. The highest tax bracket now has to pay 13% in state income tax. When the federal tax goes up next year, the people in the highest tax bracket will be paying over 54% in state and federal taxes. And that obviously does not include all the money these people already pay in sales tax. The problem isn't that taxes aren't high enough. The problem is that the pensions are way too high and they are bankrupting the state. But the unions won't allow them to lower the pensions. And people in California keep electing these same liberal clowns who are in the pockets of the unions.

jms62 · #2 11-15-2012, 10:31 AM

Quote:

Originally Posted by Rupert Pupkin

There is a city in California called San Bernadino that filed for bankruptcy in August. The problem there is the same problem we have throughout the state:

"Little by little, over many years, the salaries and retirement benefits of San Bernardino's city workers — and especially its police and firemen — grew richer and richer, even as the city lost its major employers and gradually got poorer and poorer."

"Unions poured money into city council elections, and the city council poured money into union pay and pensions. The California Public Employees' Retirement System (Calpers), which manages pension plans for San Bernardino and many other cities, encouraged ever-sweeter benefits. Investment bankers sold clever bond deals to pay for them. Meanwhile, state law made it impossible to raise local property taxes and difficult to boost any other kind."

http://www.reuters.com/article/2012/...8AC0HP20121113

What is bankrupting the state is these insane pensions. Some people would say that the state simply needs to raise taxes, but taxes are already way too high. The highest tax bracket now has to pay 13% in state income tax. When the federal tax goes up next year, the people in the highest tax bracket will be paying over 54% in state and federal taxes. And that obviously does not include all the money these people already pay in sales tax. The problem isn't that taxes aren't high enough. The problem is that the pensions are way too high and they are bankrupting the state. But the unions won't allow them to lower the pensions. And people in California keep electing these same liberal clowns who are in the pockets of the unions.

So if they elect conservative clowns there is no chance of them eventually wind up in the pockets of unions. I missed something are they immune to special interests?

Rupert Pupkin · #3 11-15-2012, 10:52 AM

Quote:

Originally Posted by jms62

So if they elect conservative clowns there is no chance of them eventually wind up in the pockets of unions. I missed something are they immune to special interests?

Conservatives are in the pockets of different special interest groups, not unions. The conservatives want to do the exact opposite of what the liberal legislators have done. The conservatives want to stand up to the unions and cut spending.

That is not to say that there aren't problems with conservatives. I wouldn't want either side to have total control in state or federal government. The conservatives are in the pockets of the big corporations.

cal828 · #4 11-15-2012, 01:45 PM

http://www.pewstates.org/research/re...ap-85899371867 Here is some interesting reading on state pensions. The people that did this report claim to be non-partisan and pension problems seem to be a problem for all except a handful of states, no matter which party dominates the state legislature.

Rupert Pupkin · #5 11-15-2012, 02:53 PM

Quote:

Originally Posted by cal828

http://www.pewstates.org/research/re...ap-85899371867 Here is some interesting reading on state pensions. The people that did this report claim to be non-partisan and pension problems seem to be a problem for all except a handful of states, no matter which party dominates the state legislature.

That link is not working.

Pensions can potentially be a problem anywhere if they get out of hand. And they are obviously a lot more likely to get out of hand in a place where you have legislators that aren't going to say "no" to their constituents.

There is certainly a difference between places that have a tight budget compared to places that are going bankrupt. I'd love to see which parties dominate the governments of the places that are actually bankrupt due to the pensions. By the way, I'm not saying that pensions are the only reason cities go bankrupt. There can be other reasons too. But in California I think pensions are one of the biggest problems as the article about San Bernadino showed.

cal828 · #6 11-15-2012, 04:13 PM

http://www.pewstates.org/research/re...3;widening-gap... - Cached

Here's another one. I have that same problem with a lot of the links that people put on here. Not sure why that is. There's a lot of information on the Pew Research Centers. I think you can also just type in Pew Centers on the States on Yahoo or whatever you use to search.

Danzig · #7 11-15-2012, 07:12 PM

Quote:

Originally Posted by cal828

http://www.pewstates.org/research/re...ap-85899371867 Here is some interesting reading on state pensions. The people that did this report claim to be non-partisan and pension problems seem to be a problem for all except a handful of states, no matter which party dominates the state legislature.

pensions are getting hammered because interest rates are in the toilet. and it's been heading that way for years. but promises were made, so they're in horrible shape.