- A pension is the delayed payment for services already performed, not a welfare check
- The delayed payments are only one component of total compensation
- The the delayed payments are supposed to be paid at time the service is perform
- Employers have been derelict in their fiduciary responsibilities to the pension plan
- They failed to pay the agreed to amounts into the pension plan
- They increased pension benefits in lieu of pay raises, but did not deposit any money
- They assumed the employee's contributions in lieu of pay raises, but kept the money
- Employers used GASB for cover and justification for raiding the pension plan
- Now that the bill has come due, employers want to default
- Employers have engaged in a propaganda campaign of lies blaming employees
- Employer's gave their IOUs instead of cash and now they want off the hook
- Today, employers are giving the Gomer Pyle routine - “Golly shucks, sergeant Carter”
- Employers claim they were duped by clever cops who had more savvy
- Who has the MBAs and business degrees? It is not the cops
- A typical police pension is about 16% to 20% of total compensation – not 50%
- The high pension costs today are the result of the employer raiding the pension
- This mastermind of this thievery is the Tea Party crowd
- The country is not going to hell. The federal government spends 20% of GDP
- The long-term growth rate of the economy is 6%
- Cruz, Cantor, and Ryan are macroeconomic morons
- Since 2009, the federal deficit has been cut in half
- The largest federal budget deficit was the last Bush budget
- The last balanced budget was during the Clinton administration
- Wise up and see the Tea Party for what it is – a bunch of zealots
- The Tea Party would decimate government if they could gain enough support
- The Tea Party is tyranny by a minority. Don't have the votes, but still want their wayCruz control is out-of-control. It now appears that the prophet of the Tea Party has turned into a disaster for them. You are probably too young to remember Senator Joseph McCarthy. He was another right wing nut like Ted Cruz. Oh, McCarthy was right on his general premise. There were Communist within the federal government and liberal Hollywood. Just everybody was not a Communist. He went from being a rational investigator to become a paranoid, fanatical lunatic. If you think Cruz, Cantor, and Ryan are the mainstream of conservative thought and the champions of law enforcement, you are a fool. They would rob you and gut your department to the point you could never image. You know who has about the same opinion? A real conservative with honest political ideas - Speaker of the House, John Boehner, a man I have a lot respect for, but often disagree with. He would like to see those three sent on a space mission to the next galaxy.
Tuesday, October 15, 2013
Monday, September 30, 2013
Employees pay 100%. Find that hard to believe? I am sure you do, considering the information being disseminated by city leaders and the media. Police and fire wages are determined by the inter-action of supply and demand as shown, just as all products and services. The price is determined by the intersection of supply and demand, which is called the equilibrium price. Supply is illustrated by the blue line. The higher the price, the more units (employees) are provided by the market. Demand is illustrated by the red line. The higher the price, the less units (employees) demanded by the market. What is the “price?” It is the total amount of economic value conveyed to each employee. If the equilibrium price is $100,000, the employer must pay a total wage package of $100,000 to be competitive. It does matter how it is paid – directly through a paycheck or a payment on behalf of the employee, as with medical insurance and pension contributions. The price is the total economic value given up by the employer and the total economic value received by the employee.
As illustrated above, the total wage package can be any mix of paycheck and employer paid insurance and pension contributions. What difference does it make if the employer pays for insurance and pension contributions directly, rather than paying the money to the employee and letting him pay for insurance and pension contributions? It doesn't. The employer has to pony $100,000 to compete. The employer could pay less and get lesser grade employees or not be able to fill all positions.
The more an employer contributes to an employee's pension and insurance, the less the employer will pay with a paycheck. Based on the actions and misinformation coming from employers today, there is only one conclusion that can be logically made – get all of your money up front, because you cannot trust you employer. Today, employers are trying to cheat employees by not keeping up their end of the deal.
Pensions and retiree insurance are not Gratuities, Bonuses, Rewards, Welfare, or Gifts of Public Funds. They are earnings that were not paid to employees during the working years. It is money already earned and due to employees. That is why in economics and accounting it is generically called “deferred compensation.” Translation: pay that will be received later.
Think of it as buying a car. You and a car dealer make a deal for a new car at $40,000 as follows:
Cash payment $5,000
Your current car $15,000
Car Loan $20,000 (60 payments at $400 – includes interest)
Total Price $40,000
The $20,000 car loan is simply deferred payment. Let's say that you make 30 payments and then decide that, because you need the money to re-roof the house, you can no longer afford the car payment. You call the dealer and tell them that do not intend to make anymore payments, but you intend to keep the car. As soon as you miss the next payment, a beat up, old pickup with a small wench on the back shows up at your house. The next day, you receive a check from the car dealer in the amount of $5,000, with the following accounting:
Current value of your car $16,000
Balance on car loan ($11,000)
Amount we owe you $5,000
You're left with $5,000 and no car. Luckily, you have $2,000. You then go buy a $7,000 used car. The lesson? If you want to drive a late model car, you have to make the payments. If not, you have to settle for driving junkers.
If you do not understand the analogy, read carefully. If you want to hire and keep the better applicants, you have to pay the market dictated wage. If not, you have to settle for something less from the applicant pool.
Sunday, September 15, 2013
By Ron York
Incumbent Houston Mayor, Annise Parker and her opponent Ben Hall are running scared as election day draws near. A dark horse has came out of nowhere as a write in candidate and appears to be leading the race. Both are desperately trying to knock this "Johnny Come Lately" out of the contest. Surprisingly, this usurping new comer is not even a person, but an abstract consortium of the City of Houston's pension plans.
How do I know this? The leader in a political race is the one all the other candidates are attacking. Just look at the facts. Parker lobed the first salvo with a promise to convert the pensions into 401(k) plans. Not to be out done, Hall calls for the total elimination of the pension plans - tough love baby, tough love. Now, tell me that the pension plans are not running for mayor. Only teasing - sorry.
We are now in the era of the Bachmannization of political elections. Named for its founder, Michelle Bachmann and her failed presidential bid, Bachmannization has become the strategy for "enlightened" candidates. Instead of attacking the other candidates and defending her record, candidate Bachmann went on the attack against Obamacare, even promising to repeal it, which the president cannot do. Bachmann did not realize that you cannot steal home without getting on base first. Even then, it is virtually impossible to steal home from first base. That does not matter, the pensions are just straw men.
Parker and Hall are following the Bachmann playbook verbatim, but instead of Obamacare, they are attacking the pensions plans. Just as with Bachmann's attack on Obamacare, the guaranteed loser is the object of the attacks. Regardless of the outcome of the Houston mayoral race, the pension plans are going to take some serious lead.
This could have been avoided, if there had been an effort by employees to knock down the issue. Even now the damage can be mitigated, but it will require decisive and immediate action by employee unions. It cannot be a tepid effort. Hello San Antonio, Austin, Dallas and Ft. Worth.
Saturday, September 14, 2013
|My Friend, Nelson Cuba|
By Ron York
This week prosecutors decided they could not win the case against the defendants in the "Allied Scandal." The prosecutors made deals with the 15 most important "perps" - no jail, no record. Nelson (aka Al Capone) and Robbie (aka Frank Nitti) are just two small fishes. The prosecutors will eventually get around to them. It made me want to puke when I heard the sanctimonious sheriff (aka Eliot Ness) talk about Nelson and Robbie after their arrest. He made them look like mobsters. This all came at a time when Nelson was busting the Mayor and Sheriff in the chops over the Jacksonville pension plan.
Listen up you guys in the Jacksonville department. Nelson was busting his butt to save your pension. All that nonsense about the city having to negotiate with the pension plan was just a bunch of crap. I even told Nelson that. He was buying time - time for you.
As for the rest of you, how quickly you turned on Nelson and Robbie. When they come for me, I hope you have more balls. Don't worry, I am not calling you. I am calling Nelson Cuba. Nelson and Robbie are welcome at my house anytime. Nelson, bring those cigars with you. I will provide the brandy.
Thursday, September 12, 2013
October 21 and 22, 2013
October 21 and 22, 2013
Renaissance Denver Hotel
3801 Quebec St, Denver, CO 80207
- Both Live Session and Live Streaming Audio - You Do Not Have To Be In Denver
- If You Are Not In Denver, You Can Still Participate, By Email and By Blog - No Phone Calls
- You Must Register. There Is No Fee, But You Have To Pay Your Expenses
- Free Streaming Audio Available To All Police and Fire Unions, If You Register
- Everyone Who Registers Gets All The Handouts - Free, In PDF Format
- This Meeting Is Not Affiliated With Any Union or Organization - Not An Infomercial
- Every Police and Fire Union Is Welcome, Without Regard For Affiliation
- However, We Prefer That Only The Larger Unions Attend The Live Meeting
Why Denver, Not Dallas?
Denver had more low cost flights available and Southwest flies to the Denver Airport. Also, the room rates were much better. It appears that there is more interest in the West than the East, so we moved it West.
Tuesday, September 10, 2013
By Ron York
Harley Earl, Harley Earl come back to Detroit and save me from my despair. Dazzle me as you once did with your chariots of chrome and fins. Let me smell that aroma of newness one more time. Oh, I long for those October days when you teased me with anticipation and then surprised me with your futuristic creations. With them came an abundance of hope and the certainty of tomorrow. Tell me that there is one brand new 1958 Pontiac Bonneville convertible just waiting for me. But, alas, it will never be.
Reality bites and today the jaws of reality are squeezing the life out of the Detroit police and fire departments. The promises made when Harley Earl was King of Detroit are being renounced. Just today, the bankruptcy judge laid the groundwork for a pre-text to justification for overturning those promises. Soon those promises will be severed in the name of equity, a long established concept in our system of justice, but what can we say. Just as with beauty, equity is all in the eye of the beholder.
It does not matter that employees chose a lower salary to get their pensions. Even being right is not enough. The presenter of factual data is seen as an obstructionist, who is blocking advancement. Today, a cold and rain laden wind is blowing in our faces. Tomorrow, a warm breeze will be to our backs.
Detroit's death of a promise is more than just a violation of trust, it is the end of an era of innocence. Wally and Beaver are gone. Expediency is today's rally call.
The lesson? Trust no one. Get all of your money up front.
See 2009? The largest deficit ever. That was George W. Bush's last budget. 2009 means October 1, 2008 through September 30, 2009. President Bush did the correct things that caused that - fighting terrorism and keeping our financial markets from collapsing. Since then, the deficit has declined each year. Under the circumstances, Clinton, Bush II, and Obama have managed the economy very well. On foreign policy, Obama could be called Bush III. He hasn't cut and run. Dole, Gore, Kerry, McCain and Romney would have done a good job too. In economics we are number one and have had dedicated leaders and presidential contenders, but still there is a large crowd of bitchers. - left and right.
The annual growth rate in inflation adjusted total spending over the past twenty years is 2.5%. You cannot use simple arithmetic to calculate this. The long-term annual growth rate for inflation adjusted GDP is 3%. As the economy continues to grow the deficit will come down. To the Tea Party and Occupy - you're nuts. The Tea Party needs to live in Chile for a few years. Occupy needs to live in Cuba for a few years.
By Ron York
Who were the last two presidents to balance the federal budget? Clinton and Johnson. Reagan Bush I and Bush II never did.
When did the United States last go into the tank? Six months before Obama was sworn in.
What caused this chart to go up after Clinton's term? War - justifiable, but expensive.
Why is the above chart worthless? Borrowing of money does not increase GDP, but it does increase the deficit and the total debt. Borrowings are not counted as income, but the spending of the borrowings is counted as an expense. Capital expenditures are 100% expensed - just like toilet paper. To have a valid chart, debt would have to be compared to equity. The federal government has no idea what its equity is. It uses cash basis accounting. Just the federal government's real estate holding alone makes it a gazillionaire in net worth.
Scratching your head about the Vietnam years? Let me help you. Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford and Carter used inflation to raise money. Reagan, Bush I, Clinton, Bush II, and Obama used borrowing to raise money. Either way, they took the money and spent it.
Don't believe the propaganda being spread by both the left and the right. The American economy is not on the eve of destruction. It may be on the verge of political insanity, but it is not broke.
Sunday, September 08, 2013
By Ron York
A 2% arbitration award cap enacted by Republican Governor Chris Christie and the Democratic Legislature has made most public safety negotiations an exercise in futility. Embolden by the "victory in Camden", the Governor and the Legislature are going after other New Jersey police departments. Don't think it can happen to you? You are doomed.