Tag Archives: Pensions

Gov. Scott Walker Will Survive

Gov. Scott Walker's Political Career Will Be Decided June 5th

On June 5th, the battle will be over.  Will citizens of the Badger State vote to keep their ongoing prosperity or revert back to the old policies that drained the state of economic vigor?  Currently, the massive multi-billion dollar budget deficit has been balanced, unemployment is down, and property taxes have decreased for the first time in over ten years.  Hence, the reason why Gov. Scott Walker has maintained a healthy lead over his Democratic challenger, Milwaukee mayor, Tom Barrett.   This will mark the second time unions have tried to alter the balance of power in Madison.  The first being the $35 million dollar state senate recall election last summer that saw Republicans maintain control of the chamber.   After all mainstream media coverage and the protesting inside the capitol, the results of that election were the very definition of anti-climatic. Now, with this effort to oust Gov. Walker himself, I expect the same result, but with far more political ramifications.

DNC chair Debbie Wasserman Schultz has called this recall election a “dry run” for Obama come November.

CANDY CROWLEY, CNN: If the Republican governor should retain his seat up there, what will it say about the power of unions who have been fighting him and what will it say about putting Wisconsin in play this fall?

REP. WASSERMAN SCHULTZ: Well, I am going there Tuesday to campaign with Mayor Barrett. I think that he has a real opportunity to win. We have put our considerable grassroots resources behind him. All of the Obama for America and state party resources, our grassroots network is fully…

CROWLEY: But are there national implications?

WASSERMAN SCHULTZ: … engaged. And — well, I think what’s going to happen is that because of our on-the-ground operation, we have had an opportunity in this election, because especially given that Wisconsin is a battleground state, just like we did in the recall elections a year ago, to give this a test run.

And so what I think the implications will be is that ultimately I think Tom Barrett will pull this out, but regardless it has given the Obama for America operation an opportunity to do…

CROWLEY: Test run it.

WASSERMAN SCHULTZ: … the dry run that we need of our massive, significant, dynamic grassroots presidential campaign, which can’t really be matched by the Romney campaign or the Republicans because they’ve ignored on the ground operations.

I think Ms. Schultz and the rest of the institutional left are going to be disappointed this coming Tuesday.   Radio host Tony Katz gave his insight, and took down former Sen. Byron Dorgan in the process, into the absurdity surrounding this recall.  Stating how this “dry run” is costing the Wisconsin taxpayer another $20 million dollars and how Walker’s fiscal reforms are exactly what America is yearning  for in this anemic economic recovery thanks to the Obama administration. However, let’s see why the far left thinks Gov. Scott Walker is so evil.

 

Well, he attacked the parasitic relationship between government and public sector unions and curbed their collective bargaining rights.  That sounds scary,  but as Peter Ferrara wrote in The American Spectator, it was solely directed towards salary negotiations.  It didn’t touch benefits or safety regulations and rules.  It gave the local county governments the buffer it needed to maximize efficiency and curb deficits without laying off workers or putting the distribution of state services at risk.  How much of a difference would that make?

According to Ferrera, “since Walker’s reforms removed benefits from collective bargaining, government employers were freed to turn to competitive bidding on the open market, where many have found their coverage at substantially reduced costs. For school districts so far, the savings from this competitive bidding alone have amounted to $211.47 per student. Statewide that would add up to nearly $200 million in savings.”

This new economic elasticity derived from Gov. Walker’s reforms has benefited the Wisconsin taxpayer in other ways.  Indeed, “the state has also used this flexibility to halt fraudulent sick leave abuses that unions used to inflate overtime expenses. Workers had called in sick for their own shifts, and then worked the next shift on overtime pay. School districts have also been freed to pay teachers based on performance and not just seniority, and to keep better performing teachers rather than longer term time servers who have long given up caring about their job performance.”  Now we know why teachers were so irate.  After all, interjecting competition into a cartel, which is what a union is at its heart, inevitably leads to dissolution and “what a shame that would be for our children.”

Gov. Scott Walker also decided to put the lid on the cookie jar.  As Chris Christie has done in New Jersey, he made public employee unions contribute more to their pensions and health care plans.  Unlike what unionized labor may tell you, the contributions are beyond modest.  Ferrera writes:

After all the yelling and screaming in Wisconsin, in the end these government workers were only required to contribute 5.8% of their salaries towards their pensions, which is matched by their government employers (taxpayers), and 12.6% of the costs of their health insurance, with the other 87% paid by taxpayers. This compares to private sector workers paying on average 21% of the cost of their company health insurance, with most private sector workers having no pension at all.

The state budget reforms also made payment of union dues voluntary for government workers, empowering these workers to each decide for themselves if they want to be full dues paying members of the public employee unions. That is a potential savings for families of $1,000 a year for each government worker in the family. This forces the public unions to focus on serving their members and convincing each one that their services are worth the dues, just like every other private sector institution in American society.

After seeing union leadership blow $35 million in a state senate recall election, I WOULD HOPE those employees would be ecstatic seeing their dues be spent responsibly, or better yet, opted to keep more of their hard earned money.  In conclusion, the results have been “disastrous.”  A whopping $1 billion in savings in the first year alone with not one one cent raised in taxes to balance the budget.

Concerning property taxes, an issue that forced my family to flee New Jersey, the rates have fallen for the first time in twelve years. According to the Wall Street Journal:

the property tax bill for the median home fell by 0.4% in 2011, as reported by Wisconsin’s municipalities. Property taxes, which are the state’s largest revenue source and mainly fund K-12 schools, have risen every year since 1998—by 43% overall. The state budget office estimates that the typical homeowner’s bill would be some $700 higher without Mr. Walker’s collective-bargaining overhaul and budget cuts.

The median home value did fall in 2011, by about 2.3%, which no doubt influenced the slight downward trend. But then values also fell in 2009 and 2010, by similar amounts, and the state’s take from the average taxpayer still climbed by 2.1% and 1.5%, respectively. In absolute terms homeowners won’t see large dollar benefits year over year, but any hold-the-line tax respite is both rare and welcome in this age of ever-expanding government.

The real gains will grow as local school districts continue repairing and rationalizing their budgets using the tools Mr. Walker gave them. Those include the ability to renegotiate perk-filled teacher contracts and requiring government workers to contribute more than 0% to their pensions. A year ago amid their sit-ins and other protests, the unions said such policies would lead to the decline and fall of civilization, but the only things that are falling are tax collections.

As the new jobs report showed we only added 69,000 jobs last May and prompting the unemployment rate to go up to 8.2%, Wisconsin has seen its level of unemployment fall below the national average.  As Jason L. Riley of the Wall Street Journal wrote, “Wisconsin’s unemployment rate is 6.7%…according to the Bureau of Labor Statistics, the state added more than 23,000 jobs last year. And a recent survey found that Wisconsin employers were eager to hire—an indication that Mr. Walker’s policies have made the state more business-friendly.”

With unemployment down, property taxes at its lowest in over a decade, a $3.6 billion dollar budget deficit completely wipe out, and $1 billion in savings; I  hope the smart Wisconsin voter would know who to vote for and who saved them from economic catastrophe.  That narrative has gained traction with Gov. Scott Walker leading Democratic Milwaukee mayor Tom Barrett 52%-45%.  The far left and some elements in the mainstream media have tried to put forth this “war on workers” narrative aimed at Gov. Scott Walker and conservatives. That is grossly, spectacularly, and demonstratively wrong.  We’re freeing union workers to make decisions with their own finances.  As a result, union membership has dropped, not due to belligerent smashing tactics, but because it removed the coercive nature of union dues and membership.  As Investors Business Daily aptly noted, it’s really big labor vs. taxpayers in this fight.  Big labor being a cornerstone of support for a particular left-leaning party and its effete leader who currently occupies the White House.  In all, these reforms:

 Together…ensure that unions can’t deliver much in the way of economic benefits, and they give workers a way to respond accordingly. They present workers with an easy choice: When dues don’t buy you anything and they compete with the cable bill, why pay them? So it’s no surprise that the unions now appear to be losing members — and, of course, money. According to the Wall Street Journal, membership in the Wisconsin branch of the American Federation of State, County and Municipal Employees fell from 62,818 last March to 28,745 this February

That’s a good thing. This isn’t a war on workers, but a liberation of them.  This isn’t the fall of Wisconsin, but the resurrection of it.  I’m confident Gov. Scott Walker will remain the state’s chief executive and thereby vindicating his agenda.  In the process, hopefully, giving unionized labor the knock out punch that leads to the day where the American taxpayer can celebrate in their final destruction.  This is a test run madame chairwoman and I expect it will be the harbinger that lifts our nominee to the White House and initiate a Wisconsinite reform of Washington D.C come January 2013.

(h/t Tony Katz)

Funded Status of U.S. Pensions Falls to 78.0 Percent in August

BOSTON, Sept. 7, 2011 /PRNewswire/ — The funded status of the typical U.S. corporate pension plan in August fell 5.6 percentage points to 78.0 percent as pension plans were affected by both falling assets and increasing liabilities for the second month in a row, according to monthly statistics published by BNY Mellon Asset Management.

The typical plan is now at its lowest funding level since September 2010, according to the BNY Mellon Pension Summary Report for August.

Assets for the typical plan fell 3.3 percent, reflecting declines in U.S. and global equities, according to BNY Mellon.   Liabilities rose 3.6 percent, as the Aa corporate discount rate decreased 23 basis points to 4.94 percent, the report said.  Plan liabilities are calculated using the yields of long-term investment grade corporate bonds.  Lower yields on these bonds result in higher liabilities.

“Growing concerns over the government’s ability to stimulate the economy and deal with the deficit in the U.S. and the sovereign debt issues in Europe have both contributed to a tough situation for sponsors of U.S. corporate pension plans,” said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management.  “Growing pessimism about the ability to surmount these challenges in August led investors from equities to Treasuries and other asset classes believed to be less risky. Fortunately, spreads between corporate bonds and Treasuries widened by 35 basis points, saving plan sponsors from an even worse decline.”

However, Austin noted that the extreme pessimism appears to have abated somewhat during the second half of August, as equities mounted a tepid recovery.  He said, “It remains to be seen whether concerns about the global economic malaise and the effectiveness of government policy will diminish sufficiently to allow the funded status of U.S. corporate pension plans to recover. Given the prospect of lower interest rates, recovery likely will need to come from asset returns.”

Funded Status of U.S. Pensions Falls to 83.6 Percent in June

BOSTON, Aug. 3, 2011 /PRNewswire/ — The funded status of the typical U.S. corporate pension plan in July fell 4.9 percentage points to 83.6 percent, the worst level since the beginning of the year and the lowest funded status since November 2010, according to monthly statistics published by BNY Mellon Asset Management.

Pension plans were hit by both increasing liabilities and falling assets, with the most significant impact coming from a rally in long corporate bonds. Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management, attributed the rally to increased demand for U.S. Treasuries, reflecting the instability of the U.S. and European economies and investors’ flight to quality.

Liabilities increased 5.2 percent as the Aa corporate discount rate decreased 36 basis points to 5.17 percent, according to the BNY Mellon Pension Summary Report for July.   Plan liabilities are calculated using the yields of long-term investment grade corporate bonds.  Lower yields on these bonds result in higher liabilities.

Assets for the typical plan fell 0.7 percent, reflecting declines in U.S. and global equities, the report notes.

“Falling interest rates had a severe impact on the funded status of the typical corporate plan,” said Austin. “As a result of the rate decline, corporate plans gave up all of the gains they had achieved in 2011 and finished July 1.5 percentage points lower than they were at the beginning of the year.”

Austin added the debt ceiling issue and the growing focus on the U.S. budget are making it more difficult for plan sponsors to manage the volatility of funding levels.  He said, “Plans that hedged against falling rates through liability driven investment strategies were most successful in preserving their funded status during July.”

Tax Expert’s Advice: Don’t Count on Social Security

BRENTWOOD, Tenn., July 1, 2011 — According to a poll taken earlier this year, 77 percent of voters think Social Security is in danger. Fewer Americans, however, approve of increasing the retirement age. Voters were split on permitting people to invest their Social Security taxes into personal retirement accounts.

Tax expert Dr. Friday, aka “The Tax Doctor,” falls into the camp of doubters. “I don’t look to the government to be there for me; I don’t think anyone our age (30s-40s) should,” says Dr. Friday.

The good news, she says, is that “it’s never too late to start saving. The key is to find retirement plans with immediate tax benefits.” She recommends a disciplined savings plan, and her site, DrFriday.com, has an online guide to determine how much one should put away each month.

Dr. Friday outlines steps for retirement savings:

  • Get out of debt so you can live on less than you make and actually save.
  • Start saving once you have no high-interest credit cards/loans to pay off.
  • Open a money market account and keep three to six months of living expenses in it for emergencies.
  • Max out one or in some cases two of the following – IRA, Roth IRA, Simplified Employee Pension Plan (SEP), 401(k) or 403(b).

Dr. Friday’s advice is sound, considering proposals to cut Social Security benefits. The American Association of Retired Persons (AARP), the lobby for older Americans, has been considered one of the leading opponents of cuts. However, the group recently indicated it was open to modest reductions in benefits for future recipients.

Darrell Payne, a public affairs specialist with the Social Security Administration, recently was interviewed by Dr. Friday and co-host Hank Parrott on the “Retirement Report” on Nashville’s Channel 5+. When asked about the solvency of Social Security, he said, “We’ll have enough money to last until 2037.”

“Social Security was designed after the Great Depression when people didn’t have any money,” says Dr. Friday. “It wasn’t designed to be your sole support for retirement.”

For more information on Social Security, visit http://www.ssa.gov. For more information on Dr. Friday’s financial services – including tax returns, retirement planning and business accounting – visit http://www.drfriday.com.