The Seattle Times editorial board likes Gov. Gregoire’s initial all-cuts budget so much, they wish many of the cuts would go even further.
THOUGH Gov. Chris Gregoire does not like her no-new-taxes state budget, and would buy back some of the cuts with taxes, the budget has a good deal of merit in it. Perhaps we like it more than she does. […] There are other cuts we would buy back, but many will have to be accepted. State government as constituted today is more than the people can afford.
Of course, I’m guessing, if subjected to a popular vote of the people, the Times’ editors couldn’t even win election to their own editorial board, let alone the Legislature, so it’s hard to imagine why anybody would take their relentlessly anti-tax opinions seriously.
(Oh, and a style tip to the Times editorial writers… unselfconscious use of the royal ‘we’ makes us sound like an asshole. And we wonder why young people don’t read newspapers anymore?)
Huh…the State of Washington has received highest marks for managing its money in the Pew 50 state government performance report two times in a row.
The Seattle Times winning recognition for fiscal management? Yeah…not so much.
Why would ANYONE give a fuck about what the editorial board of the Seattle Times has to say about fiscal policy????
Close the tax loop hole for newspapers.
@1 Why would ANYONE give a fuck about what the editorial board of the Seattle Times has to say about fiscal policy????
Apparently Goldy gives a fuck, or he wouldn’t have written this posting. Why don’t you ask him?
But @ 3,
Thank you for attempting to answer my question. However your answer is nonsense.
If you read through Goldy’s post, he is, essentially, asking why anyone would give a fuck about the Seattle Times editorial board’s opinion. But Goldy invokes a different reason.
You have made an elementary error of logic in assuming that because one writes about someone’s opinion, one must feel that opinion merits consideration.
You know I’m kind of surprised ol’ Frank didn’t just advocate cutting off children, the sick, the elderly and the poor entirely. I mean we really need to give them the “opportunity” to have their very own cardboard box under an overpass.
Besides don’t those bums know the country is in the middle of an economic crisis? Tax revenues need to be saved for important things like newspaper bailouts!
How about cutting tax subsidies to failing newspapers? We have too many newspapers in this state. Nobody would miss the Times or Columbian.
Republicans Vote To Raise Your Taxes
The House voted 241-181 yesterday to extend existing deductions for property and sales taxes, with only 2 Republicans voting in favor of keeping these middle-class tax breaks. The bill offsets the revenue losses by taxing the income of investment managers as ordinary income instead of capital gains and cracking down on offshore tax evasion schemes.
Source: Associated Press
Roger Rabbit Commentary: Republicans want to make you pay higher taxes so billion-a-year hedge fund managers can keep their 15% maximum tax rate and millionaire tax dodgers can keep paying nothing. Why would anyone vote for these people?
“There are other cuts we would buy back, but many will have to be accepted.”
Boy, talk about disingenuous assholes — “we’re against putting sick elderly people in nursing homes on the curb, but due to cosmic forces beyond our control or understanding,* this will have to be accepted.”
* Read as: “Blind, unthinking, knee-jerk, hell-no, no-way, no-how opposition to taxes”
A dumb little rodent living in a hole in a public park seems to comprehend the big picture better than the entire Seattle Times editorial board.
The billions of dollars that disappeared from state coffers resulting from reduced sales tax revenues due to lower consumer spending is a TAX CUT.
Sure, incomes have fallen because of unemployment, hours reductions, and wage cuts; but consumer spending has fallen even more. In other words, consumers are holding back, resulting in consumer spending declining more than incomes. This translates into a NET TAX CUT even after adjusting for lower aggregate income.
But education, transportation, courts and jails, and all the other public services we get from the state still cost money. Raising tax RATES to recapture a fraction of the lost revenue isn’t a tax increase; Washingtonians will still have gotten a tax cut, just a bit smaller one.
If a feral rabbit has no problem comprehending this, why don’t the Times editorial writers grasp it? If they can’t do any better than this, they should get out of the business of commenting on public policy and look for jobs they can handle, like working in a carwash.
Of course, any rate increases should be temporary — enacted for this biennium only — and tax rates should return to previous levels after consumer spending returns to normal levels. This is so the rate increases don’t turn into tax increases later on. I’m not opposed to permanently rescinding some of the plethora of tax subsidies and loopholes that litter our state revenue code, though. And when that money is no longer need to plug the budget hole created by depressed consumer spending, I’d like to see it used to permanently reduce the combined state-local sales tax rate, which has gotten too damned high.
In your opinion, legal or personal, when someone works and earns money, who does that money belong to?
“only 2 Republicans voting in favor of keeping these middle-class tax breaks. ”
NO…liar! ONLY Democrats “take MY money”. I KNOW this because the talking voice on my radio keeps telling me this every day! When we elect Republicans we don’t pay taxes, or they’re cut in half at least. I fully Remember when Ronald Reagan was president, we didn’t pay the IRS…no “govment” came and “took my money”. It’s just Democrats that do it.
Oh wait, that was a dream. Reality is the complete opposite. You pay virtually the same taxes (within a single percentage or two) regardless of who’s in power. I forgot, there’s reality and then there’s conservatives. LONG LONG ago they used to live together, but now in the Palin/Beck/Limbaugh age they never see each other anymore. Sad.
@10 In my opinion, when humans decide by majority vote to tax themselves to form a government to create the basis for civilization so they don’t have to live in trees like apes, you owe the same obligations to society and the collective good that the rest of us do.
From a legal standpoint, if you don’t pay the taxes that our laws require you to pay, you go to jail buddy.
*run on sentence
*use of a comma folled by an and rather than a period.
*Governor’s name is Christine. If one uses a formal title one should use a full name.
*reference of “it” is no clear .. does this refer to the nearest noun?
*who is “we”? … the Times? thr Blethens?
*what does “it” refer to?
*again, commas followed by conjunctions are bad form.
*many what? many cuts but many of the “we?”
*modifying phrase, “as constituted today” needs commas.
*what does “constituted” mean in this context? Do they mean we should revert to territory status? Suspend the constitution? Appoint a dictator? Decrease services? Separate Eastern and Western Washington? Use loans to finance the government? Print money? Nationalize Microsoft?
@11 In your opinion, if you work and produce something, and your employer keeps 60% of what you produce and gives you 40%, who does the 60% really belong to? This goes to the question what is fair compensation for labor and a fair return on capital. Workers used to get 60% of GDP and capital got the other 40%; but under 30 years of Republican rule, those percentages have flipped, and workers now get 40% and capital gets 60%. That sounds like socialism for the rich to me.
Strange how the economy has gotten richer in the last 40 years but inflation-adjusted wages are less than they were in 1970. I don’t think government taking money from workers is the problem here. I think capitalists taking money from workers is the problem here.
I’m not complicit in this, even though I’m now a member of the capitalist class. Although I’m a greedy fuck like the rest of them, when I flip stocks I’m ripping off other capitalists, not workers.
Marvie @10
Q: What is the difference between government services and health insurance?
A: When your health goes bad you’re denied insurance coverage for preexisting conditions.
Marvie @10
Q: What is the difference between government services run by Democrats and run by Republicans?
A: Republicans will watch you drown during a natural disaster and tell the world it is your fault.
Have you ever wondered what hedge-fund managers do to “earn” their billion-dollar paychecks (on which they pay a maximum tax rate of 15%, compared to the 32.65% marginal tax rate paid by a worker earning $50,000 a year)?
They don’t buy and hold stocks, riding sales and earnings to higher levels. That’s too slow and doesn’t make enough profit.
They’re flippers like me. They buy and sell companies, real estate, and other assets. The basic model is to buy low and sell high. The outsized gains this strategy produces come from three places — shareholders, consumers, and workers.
Shareholders, because they use shareholder equity to finance their acquisition of — you guessed it — the shareholders’ equity … often leveraging these acquisitions 30-to-1 by borrowing the company’s assets in order to buy the company. That can’t possibly be a good deal for the buy-and-hold shareholders who bought the stock to ride it up with sales and earnings — and it isn’t.
Consumers, because a buyout is almost always followed by higher prices. If there isn’t room to raise prices, flippers don’t buy the company because it isn’t undervalued. A key element of any flip is the potential for what the financial trade calls “repricing.” And because a quick flip is desired — hedge funds usually don’t want to hold a company more than a few months or a couple years at most — this doesn’t involve adding value, it only involves expanding the profit margin.
Workers, because the most important and fruitful way to “unlock hidden value” is to cut labor costs by trimming headcount and making those who stay worker harder for less money.
This obviously doesn’t benefit consumers, shareholders, or workers. It doesn’t benefit anyone except hedge-fund investors. Mostly it benefits hedge-fund managers, who take most of the profits for themselves, which makes you wonder why anyone invests in hedge funds in the first place. In any case, why the hell are we giving hedge-fund managers, some of whom “earn” billions of dollars a year for adding no value and producing nothing, preferential tax treatment? Why shouldn’t they pay the same tax rates as a middle-class worker making $50,000 a year?
Yet, that’s what all but 2 of the House Republicans voted against yesterday. They would take away your property and sales tax deductions so billion-a-year hedge-fund managers can keep paying capital gains taxes on their commission income. (Note: Every other commission salesman in the country has his commission income taxed as ordinary income.)
Why would you vote for these people? I don’t, and you shouldn’t, either.
My quick google search came up with these numbers:
Budget
2003-2005 $25.2M
2005-2007 $29.0M
2007-2009 $33.7M
CPI Index
2003 195.3
2009 215.3
Population
2003 6.11M
2009 6.67M
In 6 years, the population increased 9%, inflation was 17%, and the budget increased 34%. And the sky is falling now that the 2009-2011 budget is about even with the previous biennium.
Cue RR trotting out his standard personal income argument.
Hedge-fund managers typically have none of their money at risk in deals. They use extreme leverage to get above-market returns for their investors. When it works, they take 25% (or more) off the top as a “fee” for their investing acumen (if that’s what you want to call it). Of course, with extreme leverage comes extreme risk, and when it doesn’t work the investors get the losses (which is a fancy way of saying the investors get wiped out). Needless to say, an important ingredient of 30-to-1 leverage ratios is bank lending — so, when it doesn’t work, the taxpayers get wiped out too, because they have to bail out the banks. When you get down to it, what these hedge-fund managers excel at is transferring risks and keeping profits –and we reward this with preferential tax treatment. Why? Of course, not all congressmen are stupid enough to do that; it’s mostly Republican congressmen who do that. Why would you vote for those people? Why would anyone?
U.S. Economic History 1970 – 2010 In One Sentence
Over the last 40 years, America’s ledaing economic activity has shifted from manufacturing to financial manipulation, which is why we’re getting poorer instead of richer.
Factoid: Financial services got 40% of all U.S. corporate profits in 2007.
re: .22
How much of that is due to union demands that have made offshoring manufacturing so attractive, or the only thing that allows a company to remain competitive?
@20
A chunk of that 37% was for highway spending that had already been planned. A chunk more of that spending was for programs and infrastructure that have been chronically underfunded. Then there are teachers raises, which the people of the great state of Washington voted for.
The Who said it best “The simple things you see are all complicated.”
I’m not trying to defend any thing or any one, just pointing out that you need to do more than a quick Google search to understand things.
@24
Off shoring was made possible by changes in tax and trade law, the unions (not trying to defend them) didn’t have much to do with it.
@20 Those should be “Bs” not “Ms”. Your comment is misleading because what you’re leaving out is the 2003-2005 budget that you use as a baseline was coming off the 2001-2002 lows. Much of that 34% budget increase was catchup from depressed recession-level spending. And, as Goldy pointed out in the recent debate over I-1033, government spending tends to rise faster than population + inflation. That’s because we expect better government services when general affluence increases.
Under the P + I model, revenues would grow only enough to stay even with the inflationary costs of operating one-room schools, plus building more one-room schools to keep up with population growth. In the 19th century, when we had one-room schools, most kids went to school for only 6 grades. If we still had a 19-century educational system in our state, with all 6 grades taught by a single teacher in a single room, do you think we would have Boeing, Microsoft, Intel, or any of the other underpinnings of our state’s economy? No, we’d still be a state consisting mostly of small family farms. Today, agriculture is about 3% of Washington’s economic output. Meaning, if we adopted Eyman’s philosophy of taxing and spending, we’d be 97% poorer than we are.
[Deleted — see HA Comment Policy]
@20 (continued) The 2005 – 2007 budget enacted in 2005 (Gregoire’s first budget as governor) included raises for state workers. Without those raises, state workers would have gone 6 years without a COLA, which is a pay cut when you factor in inflation.
Slashing the pay of state workers has been a constant Republican theme, just as cutting private sector workers’ pay is a relentless goal of Republican politicians and their business supporters.
The truth is, no employer pays workers from the goodness of his heart or because he wants to. Employers pay what they must pay to get the workers they need. The state, like every other employer, competes for workers in a competitive labor market.
In doing so, the state has built-in advantages that allow it to pay below market for comparable work. First, some people are willing to accept lower pay to public service work they feel benefits society. Second, state jobs historically were more stable and secure (although this is rapidly becoming less and less true), which was worth giving up some cash compensation for. Third, lower state pay was partly offset by better benefits than typically found in the private sector (although this also is becoming less true as public employers move toward benefit parity with private employers).
But despite these advantages, the state has always had trouble recruiting and retaining the best qualified workers, mostly because state jobs pay so far below market that even people willing to do public service work for less money have difficulty doing so because they can’t support their families on their state jobs.
When you underpay workers, your labor costs actually go up, because you have to spend more on recruiting and training replacements, and also because efficiency is lower and costly errors occur more frequently. At some point, constantly replacing workers costs you more than keeping experienced workers by paying them competitively.
Thus, the wingnut mantra of constantly attacking worker pay is a false pursuit that leads to a dead end — it produces no savings and leads to higher costs for lower quality public services.
It makes a catchy sound bite, which is why they keep doing it, but a certain talent for coming up with pithy slogans whose appeal depends on falsehoods is not a governing philosophy nor a basis for successfully running an actual government.
Remember that before you vote for these people.
I’d be happy to pay state employees at a level comparable to the private sector, but delay the generous retirement age and eliminate pensions. Give ’em a 401(k) like the rest of us have. I don’t even care if the whole thing is cost-neutral in the long run. As it stands, the unfunded pension liability is a fiscal time-bomb. KING 5 had a piece a while back that mentioned the widow of a fireman getting a $155,000/year pension, when her late husband made about a third of that in a year. How does that happen?
@26 Why not defend unions? Unions built the middle class in this country. Before unions, work was dangerous, hours were long, pay was low, and there were no health benefits, injured worker benefits, or retirement benefits. Why should our country, supposedly a democracy operating under the principle of majority rule, be run for the sole benefit of a tiny elite with most of our population occupying the status of economic slaves? The plutocracy amassed their incredible wealth as a result of unequal bargaining power in an economic system that stacked the deck in their favor, and unions simply helped level the playing field by enabling workers to bargain as equals for a fair share of the economic pie. Unions have shrunk dramatically in recent decades, so conservatives can hardly blame our economic woes on unions. Not honestly, anyway. America needs more, not fewer, unionized workers. We need stronger, not weaker, labor laws. No one likes strikes — strikers least of all — but most strikes can be avoided if employers bargain in good faith and treat their workers fairly. And why not treat workers fairly? Employers owe all of their prosperity, every bit of hit, to the hard work of their employees. I’ll defend unions in the blink of an eye. Unions are the best thing that ever happened to the American working class.
@31
Yes to defending the unions! But, that wasn’t the point of that comment. I didn’t want someone to hijack or sidetrack it ranting about the unions.
MOR,
Huh. All these problems and still the State of Washington has received highest marks for managing its money AND people in the Pew 50 state government performance report…two times in a row (2005 and 2008).
Here is an excerpt from the 2008 Washington report card:
Perhaps you should listen to less Wingding radio???
The CEO of Blackstone was quoted by Reuters today as saying, “When every fool can get rich, it doesn’t work well for firms like ourselves.”
In other words, the American-dream “ownership society” hype is a load of bull. The only way for someone to accumulate wealth is to take it away from someobody else.
An acquaintance of mine posted a rant on Facebook last night. She’s one of the 180 employees being laid off by St. Vincent’s Hospital in New York City, after having worked there for 22 years. This is a Catholic hospital, formerly run and partially staffed by nuns (the last of whom is also being laid off), which since fell into, shall we say, a more secular way of doing things, with highly-paid administrators putting everyone through “effectiveness training” that among other things referred to patients as “customers”. Now they’re saying the reduction in force is necessary because of the bad state of the economy and the reduction of subsidies from the State of New York.
My acquaintance is apparently of the teabagger persuasion, and the thrust of her initial comment was that the whole thing is Obama’s fault, and the direct result of “what he’s done to health care”.
The last figures I could find show that the state has an unfunded pension liability of over $6 billion. I’m not sure I take a lot of comfort in the fact that other states fare worse.
And, I didn’t know KING5 TV was “wingding radio”, whatever that is. If you mean Rush Limbaugh and his ilk, I don’t even know what station he’s on. And I’ve never watched a minute of FOX News. Don’t lump me in with with the cultural conservatives. I’m someone who takes a hard look at costs and benefits. I don’t think the answer to every problem is throwing piles of money at it.
@30 “I’d be happy to pay state employees at a level comparable to the private sector, but delay the generous retirement age and eliminate pensions.”
The salary surveys I saw in the last several years before I retired put most state workers anywhere from 25% to 40% below the private sector — and these surveys were biased in favor of the state. The state contribution to retirement, by contrast, is about 3% of the worker’s pay — when the state pays it. In recent years, the legislature has skipped the state’s employer contributions altogether. (The purported rationale for this was the retirement fund’s investments were doing well so the state money wasn’t needed.) State pensions always have been, and still are, funded primarily with deductions from employee pay. In the private sector, employers typically match employee 401(k) contributions, so switching from the existing pension system to a 401(k) system would likely cost the state more, not less.
I don’t know what you mean by “generous retirement age.” Most of today’s state employees won’t be able to retire before age 62. Under pre-1977 pension rules, you could retire at age 55 if you had 25 years of service, although you had to work 30 years to get a full pension, but very few of the state employees in the old system under these rules are still working today.
You shouldn’t depend on popular news outlets like KING 5 for an understanding of how the pension system works. You seem to have misconceptions about two things regarding state pensions.
First of all, what that firefighter’s widow gets isn’t just a pension. That figure includes a death benefit. When a private sector worker is killed on the job, his family also gets a death benefit from the L & I system or by suing the employer (if gross negligence was involved), which might be equally substantial. Second, firefighters get exceptional pension and retirement benefits because it’s exceptional work. It’s physically arduous, it’s dirty and dangerous, and it has a high injury and death rate. Given what they do, and what it contributes to society, they’re worth it.
I saw the KING 5 story on the state pension system, too. As a state retiree, I get an annual report from the Department of Retirement Systems every year. Ever since I retired, every one of these reports has shown the system’s income exceeds pension payouts, so the pension systems (until now, at least) have had a positive cash flow. Projections of future benefit payouts are somewhat tricky because they depend to some extent on what actuarial assumptions you make, and on economic projections of investment returns and
other factors that by their nature are speculation. Actual fund earnings and benefit payouts could be higher or lower.
KING 5’s headline suggested the state pension system is going broke. In reality, at this time it’s far from broke; it has tens of billions of dollars of reserves and is meeting current benefit payments from current income. On paper, it’s underfunded in relation to its legal obligation to make projected future benefit payments. But then, so is almost every corporate pension plan (for companies that have them), and private sector pensions generally are more far severely underfunded than the state pension system is.
There are two reasons for the theoretical underfunding of Washington’s pension system. One is investment losses. Everyone has suffered those, and the state is no worse off than any private pension fund or individual retirement saver in that respect. The other is the legislature’s failure in recent years to pay the employer contributions the state is required by law to pay.
This latter item is what the KING 5 story is really about. Basically, KING 5 said the state has, in effect, been borrowing and spending the money it’s supposed to pay into the pension fund and taxpayers will have to pay that money back. Well, that’s true of anyone who borrows someone else’s money and spends it. So what’s the issue here? If, as KING 5 darkly hinted, anyone gets hurt by pension fund insolvency it’ll be the pensioners who don’t get their promised benefits. Do you think I can sue the state if they don’t pay my pension?
The answer is no, I can’t. Oh sure, I could spend tens of thousands of dollars that I don’t have to get an unenforceable legal judgment. A court probably would decide that I’m entitled to the unpaid pension benefits, but no court will order the legislature to raise taxes or appropriate funds to make up the shortfall. That’s a basic constitutional principle emanating from the separation of powers doctrine — courts simply don’t see themselves as having the authority to boss the legislature around in taxing and spending matters, which is why all the school funding lawsuits have failed, and will continue to fail, to produce more money for the schools. Also, courts have no way to enforce such an order; if the legislature doesn’t comply, what can the courts do? Courts won’t issue orders they can’t enforce. So, no, there’s no legal remedy for a pension default and, given that the legislature caused the underfunding in the first place, the odds are very high that such a default, if it occurs, will fall on the pensioners instead of the taxpayers.
So, basically, you’ve made a somewhat persuasive argument that state employees shouldn’t trust the state to pay the pensions they were promised. Which is a good reason for not working for the state, and serves only to make the state even less competitive in the labor market than it already is.
@34 Don’t worry, they’re making sure the rest of us won’t get rich.
@36 “The last figures I could find show that the state has an unfunded pension liability of over $6 billion. I’m not sure I take a lot of comfort in the fact that other states fare worse.”
I think it’s more than that now. But a raw figure like that isn’t meaningful without context. I’m not sure, off the top of my head, what the pension assets are. They used to be north of $50 billion, so a $6 billion shortfall would mean the state pension system was almost 90% fully funded with current assets. That’s well within the range of what pension experts consider manageable, taking into account normal fluctuations in portfolio values. The most recent figures I’ve seen, if I recall correctly, is that it’s somewhere in the mid-80% range now — not as high as we’d like, but not a looming disaster either.
I think the bigger problem — and a more likely source of pressure on legislators — is that in recent years the state pension system routinely earned investment returns in the high teens to mid-twenties percentile range, and returns like that aren’t available anymore. In today’s low-yield environment, the pension system has to rely much less on investment earnings, and much more on contributions by employees and employers. (The state consists of multiple “employers.”) This means the legislature will have to ante up the employer contributions in coming budget cycles, at a time when revenues are likely to still be somewhat depressed. My guess is they’ll sweep the problem under the carpet and leave it for a future generation of legislators to deal with. I can’t imagine them doing otherwise, because legislators are not a responsible or courageous breed to begin with, and they won’t get any political benefit from raising taxes or cutting spending to pay the state’s pension dues.
Which is one more reason why I wouldn’t encourage my kids to choose a state career if they were just now entering the workforce. I don’t have any regrets about having dedicated my life and career to public service instead of pursuit of material gain, but conditions have changed over the last 35 years and there’s little left now to attract anyone to state employment except those who absolutely need any paycheck they can get. It’s not much of a career for serious professionals anymore.
Thanks for the info, Roger. That paints the state’s obligations in a far different light than the KING report did.
My “generous” comment regarding retirement age is based on a sample size of one – a woman with whom I waited for the bus. She recently retired after 30 years with a pension of 60% of her former pay. As someone who’s probably going to work until around 70, I think retiring at around 52 is very generous, since she told me that her husband and others then go on to work elsewhere for many more years. Now, I don’t know what she sacrifices in earnings over the years to “earn” her early retirement. But, I have sense that the state would be better off paying market salaries, but offering market benefits to offset it. I just don’t like the idea of unfunded liabilities which, public or private, are the first things to get neglected when times are tough.
@40 Never trust mainstream journalism to explain anything technical, like pension fund economics. They’ll go for the viewer-grabbing sensational headline every time, and the journalists don’t understand what they’re writing about 98% of the time.
@40 “She recently retired after 30 years with a pension of 60% of her former pay.”
She also worked for half of what she could have made at a corporation, so that’s 60% of 50% which is really 30% of comparable pay.
@40 A typical state retiree in his late 50s with a 60% pension benefit gets a little over $2,000 a month before taxes and pays about $1,050 a month for health insurance for himself and his wife. Obviously, there has to be additional income, or they’re not going to make even bare essentials. But his chances of getting another job, at his age, and with no corporate experience and few transferable skills, aren’t very good.
The state pensions that get into the news are the politically-connected appointees and agency heads who hold $120,000-a-year jobs, draw a $72,000 pension, and double-dip by going back to work for the state in the same job after they “retire.” Yes, Mr. Code Reviser, I’m talking about you. This one individual’s cushy deal, which got into the papers, caused the legislator to pass legislation that made things tougher for the 100,000 ordinary state employees who don’t remotely have a deal like that. You can count on your fingers the number of “public servants” who get lavish pensions and juicy second jobs, and all of them are big-time power people with big-time pull, like Mic Dinsmore at Port of Seattle and a handful former state legislators who made their way into agency head jobs at big state agencies. In fact, the legislators design these setups specifically for themselves, with the expectation that the governor is going to give them these nice “retirement” appointments as a reward for their support of the governor’s legislative requests.
Those of us who spent our lives working in the trenches for small ball look at this shit — and the bad publicity it generates for state employees in general — and shake our heads.
As in any field of endeavor, public or private, the bosses always take very good care of themselves while screwing the workers.
Oh, and by the way, while state employees get 2% of average final compensation per year of service, legislators give themselves 3% per year. They claim that’s needed in order to attract people to legislative service.
So here’s how the system works in real life for them. They serve 16 years in the legislature, a part-time job paying about $35,000 a year, then the governor appoints them to a full-time state job (usually as an agency head or policymaker) paying $100,000 a year, and they work 6 years, then retire at age 65 with a pension calculated as follows: 16 X 3% = 48% + 6 X 2% = 12% = 60% X $100,000 = $60,000 annual pension for spending most of their career in a part-time job paying $35,000 a year (while they made $150,000 a year in their business or full-time occupation). Needless to say, those of us who do the actual work don’t get deals like that. Plus, they get free tickets with preferred seating for Husky home games. Oh, and if you think I feel contempt toward the state legislators who didn’t make the state’s payments to the pension fund, you’re absolutely right. If the money runs out, I’m for cutting their pensions first.
Notice how the Seattle Times despises any and all tax increases, especially when it can come out the family fortune via the inheritance tax, but when it comes to privatizing liquor sales, they blithely say that the lost revenue can be made up in taxes.
I guess when it comes to taxing the poor and middle class, the Times doesn’t give a damn. Just don’t touch the millions of dollars in their trust fund babies account! What hypocrites.
And notice how they aren’t talking about all the millions of dollars in state taxes that Microsoft skipped out of by basically having a front business in Nevada. This is a corporation rolling in money. Instead the state and the Times focuses on underpaid state workers.
Guess where a lot of the profit goes if they privatize liquor sales? It flys right out of the state, to people like Cindy McCain who was handed a fortune made out of alcohol distribution system.
“Chiseling government employees” is a construct of the right wing propaganda machine, similar to the mythical “welfare mother”.
Hmmm…I can think of one cheating state employee: Sarah Palin, who spent a large portion of 2008 running for vice president while drawing a salary as Governor of Alaska, and then quit this year rather than actually doing her job.
@40 (Continued) “She recently retired after 30 years with a pension of 60% of her former pay.”
An important point I forgot to mention is that much of her pension came out of her paychecks. If she’s in the PERS I system, her withholding during her working years included a 6% PERS contribution in addition to the 7.65% FICA tax, so her take-home pay (depending on individual tax circumstances) might have been as low as 65% of her gross pay; and the marginal withholding rate on any COLAs or pay raises would have been 41.65% (in those days, 28% + 7.65% + 6%) plus whatever her employee deduction for health insurance was.
So, the pension wasn’t a freebie. In fact, in my early years of state employment, I even had to pay federal income taxes on the 6% of my gross pay the state held back for my pension, although Congress eventually fixed that. (For this reason, a small portion of my monthly pension check isn’t taxable, because it’s already been taxed.)
Taxes Bad!!!! No Tax Gooooood!!!!!!
As far as making the state employee’s pension system comparable with private-market 401(k)’s, that’s quickly turning into a “race to the bottom”.
I spoke last night with a Boeing worker (mid-level management), who is expecting to retire within the next five years. He was rather upset to see that Boeing was changing the 401(k) rules for non-union employees (other than executives). According to him, all future 401(k) matching contributions by Boeing will be in the form of Boeing stock, which can’t be sold for a specified period of time (perhaps 4 or 5 years – he can’t remember the details).
Of course, as Enron so aptly demonstrated, the LAST thing you want in your stock portfolio is your employer’s stock. If your company goes south due to decisions made in the executive boardrooms, not only will you lose your stock, but your retirment savings might well evaporate, as well.
This seems a rather curious cost-cutting move by Boeing. Presumably Boeing will have to issue more shares in order to pay the matching shares into the fund (thereby dilluting shareholder value), or buy back shares at market prices (raising the stock value, but not saving any money in the process). The WORST possibility is that Boeing will not actually put any stock into the portfolios, and instead only promise to do so when the employee sells the stock – either four, five, or twenty years in the future. If that is the case, then Boeing executives would be gambling that either the stock will be worth less in the future (saving the company money at the expense of their employees), or that they (the executives) will be long gone by then, and it will be somebody else’s problem. Talk about unfunded pension liabilities!
Of course, if Boeing does get away with such a strategy (and remember, I’ve only heard this from one person, without being able to check it out myself), expect that every other large company will soon try it too, claiming that they have to do so to remain “competative”.
Funny, isn’t it, that when talking about executive salaries and benefits, management always says it has to pay more to be “competative”, but when talking about everybody else’s wages and salaries, they always say they have to reduce them to be competative?