Spending
Civic Federation: Funding Continues To Decline For Chicago-Area Public Employee Pension Funds
The Chicago-based Civic Federation is out with a new report about the health of Chicago-area public employee pension funds. The independent, non-partisan government research organization that provides analysis and recommendations on government finance issues for the Chicago region and State of Illinois put out the following news release this morning:
Aggregate Unfunded Liability for Chicago-area Public Pension Funds Increased by $4.6 Billion in FY2011
(CHICAGO) A Civic Federation report released today examines the continued funding decline of Chicago-area public employee pension funds. Unfunded liabilities for the ten funds analyzed in the report increased to $32.0 billion in fiscal year 2011 from $27.4 billion in fiscal year 2010, an increase of 16.7% according to the most recent audited data available. For all pension funds supported by the taxes of Chicago residents, including statewide funds, the total unfunded liabilities reached $16,914 per Chicago resident in FY2011.
“Without comprehensive reforms, this staggering level of pension obligations will soon mean dramatic tax increases, significant service cuts or both for Chicago residents,” said Civic Federation President Laurence Msall. “Illinois and local lawmakers owe it to taxpayers and public employees to agree on reforms that will significantly reduce pension costs for our state and local governments and ensure that the funds remain solvent for current and future public employees.” In the report, the Federation urges local governments to develop pension reform frameworks suited to their own employee population, statutory provisions and funding levels. The report cites Cook County Commissioner Bridget Gainer’s OpenPensions.org site as an example of transparently advocating for changes tailored to the needs of the County’s pension fund.
Each of the ten funds analyzed in the report experienced sharp funding declines in the last decade. On average, the ten funds had an actuarial funding level of 50.8% in FY2011, down from 80.3% in FY2002. All ten funds are now funded below 65%, ranging from a low of 28.3% for the Fire Fund to a high of 64.9% for the Laborers’ Fund.
The declining health of Chicago-area public pension funds is due in large part to inadequate employer contributions over a sustained period and recent investment losses. All of the local funds analyzed received their statutorily required employer contributions in FY2011. However, the employer contribution level set by State statute was approximately $1.6 billion short of the $2.5 billion level necessary to cover current costs for the funds and reduce their unfunded liabilities over a 30-year timeframe.
Adequate funding levels are likely to be even more difficult to attain in the future because the funds have fewer employees to support a rising number of beneficiaries. In FY2011 the ten funds had 1.16 active employees for every beneficiary, down from 1.65 actives per beneficiary in FY2002. Six of the ten funds – the Police, Laborers’, MWRD, Forest Preserve, CTA and Park District Funds – had more beneficiaries than active employees in FY2011.
The Federation’s analysis reviews the FY2011 actuarial valuation reports and financial statements for the City of Chicago’s Police, Fire, Municipal and Laborers’ Funds, the Chicago Teachers’ Pension Fund and the pension funds of Cook County, Forest Preserve District of Cook County, Chicago Park District, Metropolitan Water Reclamation District and the Chicago Transit Authority. FY2011 data is the most recent audited data available for all ten funds.
The full 79-page report, available at www.civicfed.org, is intended to provide policymakers, pension trustees, pension fund members and taxpayers with the resources to make informed decisions regarding public employee retirement benefits.
(Editor’s note: Italics added for emphasis)
Even though I’ll be moving out of Chicago very soon, I’ll still be living in Cook County. As such, I won’t be surprised to get hit with more fees and taxes, in conjunction with less government services, as financial challenges grow at the county and state level.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
CBO: ObamaCare’s Gross Costs Over 10 Years May Be Nearly Twice White House’s Original Projections
Universal healthcare. A noble idea- if a nation can afford it.
As for “ObamaCare,” the more time that passes since the Affordable Care Act was enacted on March 23, 2010, the more expensive the projected numbers are getting.
Howard Sheppard reported on the website of Central Pennsylvania FOX affiliate WPMT FOX 43 yesterday:
The gross costs of the national healthcare law rammed through Congress by President Barack Obama will reach an estimated $1.76 trillion over 10 years – nearly twice the amount originally projected. The figure, which the Congressional Budget Office (CBO) revealed on Wednesday, is bound to cause embarrassment to the administration as it comes just as debate on “Obamacare” is starting to heat up again, two weeks before the Supreme Court is set to hear arguments on whether the Affordable Care Act is unconstitutional…
Original White House estimates said the gross cost of the healthcare act would be $940 billion over a decade, but the CBO’s new figures raise that figure to a shade under $1.5 trillion. For the 10 years from 2013-2022 that increases even further to $1.76 trillion.
(Editor’s note: Italics added for emphasis)
Back on March 1, I noted that according to a Government Accountability Office (GAO) report released February 26, ObamaCare will increase the long-term federal deficit by $6.2 trillion.
$6.2 trillion.
Considering the growing instability of the U.S. financial house of cards, one might wonder if the costs associated with universal health coverage won’t be the straw that eventually breaks the camel’s back.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Source:
Sheppard, Howard. “CBO: Obamacare estimated cost nearly double to $1.7 trillion.” FOX Central Pennsylvania. 16 May 2013. (http://fox43.com/2013/05/16/cbo-obamacare-estimated-cost-nearly-double-to-1-7-trillion/#axzz2TYdCQnzp). 16 May 2013.
Glenn Beck: ‘We Are The First Responders’
Glenn Beck, the conservative radio/television host, political commentator, and author, gave the keynote address at the National Rifle Association’s 2013 national convention that just wrapped up in Houston. Beck, who I actually met and spoke to briefly when I was in Dallas at the end of March for the FoodInsurance™ “Ready, Set, Prep” Summit, pointed out the following concerning the term “first responders” as he spoke about different firearms that “tell the story and teach the story of the 2nd Amendment.” From his speech:
9/11- Walter Reaver’s Revolver
September 11th, 2001. A moment in history that will define this generation. While victims were running away, men, were running into those buildings. Amazing men like young Walter Weaver, a member of the NYPD and an NRA life member. He was last seen in the World Trade Center trying to rescue people. He was in the lobby trying to free people trapped in an elevator. A servant fighting for the individual’s freedom until the very end.
After the towers fell and the nation mourned, we sifted through the rubble, this is all that was left as a reminder of Walter Weaver. A silent token of liberty.
Walter Weaver, I’m sure wouldn’t want to be called a hero.
He was simply an American.
He was an example of what we all should be—men, who just do the right thing when time calls our name.
When there is an emergency or trouble we are the ones that should run to help. We must be the action on the other end of the 911 call.
I don’t know, but I believe Walter Weaver would tell you that he wasn’t trained to be hero by the police academy.
But he was raised in a culture that taught him about self-sacrifice and to always do the right thing, even when no one else is watching. He had those things long before he wore a uniform.
How many of us can say that.
Good cops, bad cop, it doesn’t mean you take all the badges. It’s the people, not the badge.
As good as the policemen in our country are. When you are in trouble the average police response rate is 8 minutes; most crimes take less than one.
If a responsible citizen with a gun had been in that movie theater in Colorado, or if members in the audience in that theater were allowed to bring their gun into the theater and not leave them locked in their cars, how many lives would have been saved?
How many of the mourning, children would instead have been able to spend time over breakfast with their mom or dad this morning if someone good was allowed to have a gun?
While our politicians from the local to the federal level have spent us into oblivion, and our public services are being obliterated and our police force is being cut.
I will no longer accept the media falsehood nor reinforce it by calling our brave men and women in blue on our cities and streets first responders. It’s time for America to recognize WE are the first responders.
They are the 2nd responders, we are the first responders.
When there is trouble let us be the first on the scene to help.
Let us be the first responder when someone is sick or hungry or frightened.
Let us be the first to share our bread with the hungry; Let us be the first to open our hearts to the homeless poor; Let us be the first to remove the yoke of injustice.
I don’t know what America will choose. But for me and my family, I choose to stand with courage. I choose to stand with selflessness. I chose to stand with God with Malice toward none and charity to all.
That’s who we are.
Forget what the media says, I know that’s who we are.
You can read Glenn Beck’s entire speech here on GlennBeck.com.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Peter Schiff On GDP Calculation ‘Makeover,’ Delaying Our ‘Day Of Reckoning,’ And Gold Speculators
Lots of catching up going on around here today. I just got finished watching Peter Schiff’s latest entry on The Schiff Report YouTube video blog. The CEO/Chief Global Strategist of Euro Pacific Capital zeroed-in on the “makeover” in calculating U.S. gross domestic product, delaying our “financial reckoning day,” and the situation small speculators may find themselves in after helping fuel gold’s price drop the other week. Regarding GDP, Schiff pointed out the following in yesterday’s video blog post:
When the government gets around to delivering the news for the second quarter, the U.S. economy is going to be quite a bit larger than it was during the fourth quarter. Now, it’s not going to be because we’re actually more productive, it’s because the government is going to launch a brand new methodology for computing the GDP. They’re going to change the way they’ve been doing it all these years. And they’re going to start to include a bunch of things that in the past, they never included. They’re going to include things that no other country includes when they calculate their GDP. And as a result of this makeover, these brand new additions, I think instantaneously the U.S. economy is going to be 3 percent larger. That’s a big number. It’s like 4 or 500 billion dollars of GDP is going to be conjured out of thin air just based on the change in the methodology for computating GDP.
You know, this is what the government does. They change the way they compute statistics. Unemployment’s too high? Okay, we’ll calculate it another way. Now it’s not as high. Inflation’s too high? Wait a minute, let’s find another way to calculate the inflation rate. Oh look, we’ve solved the inflation problem- there’s not that much inflation.
Now, the government wants the economy to appear bigger. Why? Well, because it makes the debt-to-GDP look smaller. A lot of people are talking about debt-to-GDP now. Well, if they can make the GDP larger by figuring out another way to calculate it, well now they can make that ratio appear better.
Also, people are talking about government spending as a share of GDP. Okay, let’s make the GDP larger, and that means that government spending has now come down as a share of this larger number.
Schiff, who correctly predicted the U.S. housing bust and “Panic of ’08,” had this to say about the coming U.S. financial crash:
The fact of the matter is, governments are borrowing too much, they’re printing too much, they’re spending too much, and it’s all in a vain attempt to try to artificially stimulate an economy that’s been overstimulated, and to delay the “day of reckoning.” And the problem is, the longer they delay it, the more we have to reckon with. And, ultimately, we’ve going to have to pay a huge price for the fact that we didn’t deal with these problems sooner, rather than later.
“Slow ‘growth’,GDP makeover, Keynesians demand more debt and inflation”
YouTube Video
Finally, Schiff, who’s also the CEO of Euro Pacific Precious Metals, talked about gold’s recent price drop, who he thought was behind it, and what may be in store for them. From the video post:
I think the major selling in the metals market has come from the small speculator that trades on the futures market, that trades on the ETF. That’s where all the selling has been. The small speculators. I don’t think the larger investors have cashed in. They’re probably holding on. And the real buyers, the buyers in the physical market- who are not just trying to jump on a moving train to try and catch a small move because they want to get in on something that’s going up- the physical demand has been ongoing and consistent for years. But you have had some of the “Johnny Come Lately” hot money among smaller speculators. They’ve jumped on, they’re the ones that have sold, they cashed out. In fact, I think you have a lot of small speculators that are now short gold, that sold into the lows, and that are holding onto these positions with losses. And we’ll see how long they can hold those losses as the price moves higher and we turn up the heat. I think a lot of those people that were quick to short the market are going to end up covering at much higher prices.
Good insights as usual from this “crash prophet.”
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)
Quote For The Week
Elections should be held on April 16th- the day after we pay our income taxes. That is one of the few things that might discourage politicians from being big spenders.
-Thomas Sowell (American economist, social theorist, political philosopher and author. 1930- )
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Lake County Paper Ridicules Cook County Gun ‘Control’
Going forward, I’ve got to remember to read the Lake County News-Sun’s “Talk of the County” section more often. From the website of the Waukegan, Illinois-based paper last Friday:
Cook County
Cook County has added another tax to penalize legal gun buyers while the criminals continue to break any and all gun control laws.
Yep. Our neighbors to the north pretty much nailed it on the head.
And how about this gem:
Haw, haw
This has to be the grandest April fool joke that the world has ever heard of, or someone is going nuts beyond remedy. President Obama has declared April as National Financial Capability month. Unbelievable! Haw, haw. How incredulous coming from someone who cannot even prepare a budget and who spends borrowed money as if he were leaving the planet!
Funny but sad at the same time.
Especially since, if I recall correctly, President Bush the Second had the same problem when it came to spending.
Haven’t you heard? The nation does have a spending problem.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Source:
“Talk of the County.” Lake County News-Sun. 5 Apr. 2013. (http://newssun.suntimes.com/news/19270481-418/talk-of-the-county.html). 10 Apr. 2013.
Illinois Governor Pat Quinn Goes After Corporate Tax ‘Loopholes’ To Pay Bills
“Thirteen area companies say they may cut more than 1,100 jobs in the near future, according to the state’s Worker Adjustment and Retraining Notification (WARN) Act report for February.”
-Chicago Tribune, March 5, 2013
Yesterday, Illinois Governor Pat Quinn proposed a $62.4 billion budget for the State of Illinois in 2014. Ray Long reported on the Chicago Tribune website Wednesday:
Quinn also proposed whittling down the state’s $10 billion backlog of unpaid bills by closing what he calls corporate tax loopholes, a move that business groups say amounts to tax hikes on them. Quinn suggested suspending three so-called loopholes that bring in $445 million a year: the federal production activities break, the non-combination rule and the foreign divided allowance.
(Editor’s note: Italics added for emphasis)
From a transcript of the governor’s budget address to the Illinois General Assembly:
Over the next 12 weeks, we should work together to enact legislation that suspends unnecessary corporate tax loopholes and dedicates the resulting revenue to a new Bill Payment Trust Fund.
For example, we should suspend the Foreign Dividend corporate loophole. We should also join other states that have decoupled from the Federal Production Activities loophole. And we should suspend the Non-Combination Rule that allows big corporations to shift their income to locations outside Illinois. Together, these three loopholes alone cost our treasury about $445 million per year.
Suspending corporate loopholes like these until the bills are paid will be good for our vendors and good for our economy.
You know what’s “good for our vendors and good for our economy?” Legislators in Springfield not spending taxpayers’ hard-earned money like drunken sailors. Illinois, like Uncle Sam, has a debilitating spending problem. If the state didn’t spend so much, it might be able to afford to pay its vendors.
Governor Quinn added in his budget address:
Why should we give costly, ineffective loopholes to some of the biggest and most profitable corporations on earth, when we have bills to pay?
Maybe because the jobs these corporations provide are desperately-needed by your constituents? The state’s “official” unemployment rate was 8.6 percent at the end of last year, significantly above the national rate. These days, the “Land of Lincoln” is fast-acquiring a reputation for being bad for business (raising corporate income taxes 46 percent at the beginning of 2011 can have that effect), with our neighbors only too happy to poach companies looking to move to this part of the Midwest or in the start-up phase. And with the businesses go the jobs.
Does it really make sense to pursue “a move that business groups say amounts to tax hikes on them” in light of all this?
After all, if these loopholes are really so evil and detrimental to the State’s bottom line, why would the Governor propose to suspend them only “until the bills are paid?”
Rather than becoming even more business-unfriendly, the State of Illinois, its vendors, and its constituents are better served by a reinvigorated program that attracts, grows, and retains business here. Financial incentives will almost certainly play a role in this initiative. And with the businesses now come the jobs. Along with the tax revenue to pay off our “tab” from all that drunken spending over the years.
Keep on antagonizing the private sector, and the state will continue on its present course of becoming one giant ghetto smack dab in the middle of the Midwest.
You can read Governor Quinn’s entire 2014 budget address here.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Source:
Long, Ray. “Quinn blames lawmakers for inaction on pension reform.” Chicago Tribune. 6 Mar. 2013. (http://www.chicagotribune.com/news/politics/clout/chi-quinn-blames-lawmakers-for-inaction-on-pension-reform-20130306,0,971611.story). 6 Mar. 2013.
Wall Street Legend Stanley Druckenmiller Warns Stock Market Rally Coming To End, Financial Storm Coming
Well-known investor Stanley Druckenmiller is warning these days that not only is the stock market rally coming to an end, but that a financial crash is fast-approaching. For those of you not familiar with Druckenmiller, from the Forbes magazine website:
• Started Duquesne Capital Management in 1980 with $1 million. Closed down $12 billion hedge fund in 2010 “and returned investors’ money, citing frustration with his inability to deliver high returns.”
• Hired by legendary investor George Soros in 1988 and together the two reportedly made $1 billion in a day by shorting the British pound in 1992
• Went back to running Duquesne in 2000, which reportedly made money for its clients during the 2008 global economic crisis
• His estimated net worth in March 2013: $2.8 billon
Yesterday morning, Druckenmiller appeared on CNBC’s Squawk Box. Discussing the recent performance of equities, he told viewers:
You’ve got a great supply-and-demand situation for stocks right now. But, I’d analogize it to the hamster on the wheel. It was easy to know when QE1 and QE2 were going to end. This thing will probably end, even though I think QE is going to go on forever just because all the lobster are about to get in the pot. And maybe we’re in the 7th or 8th inning. But, they’re going to get boiled at some point. But right now, supply-and-demand looks great.
“Druckenmiller: Don’t Know When, But It Will End”
CNBC Video
Last Friday, Druckenmiller sat down with Stephanie Ruhle on Bloomberg Television’s Market Makers. He warned viewers of an approaching financial “storm,” stating:
Currently, Stephanie, I see a storm coming. Maybe bigger than the storm we had in 2008 to 2010… The basic story is, the demographic bubble I was looking at way back in ‘94 that started in 2011. We are right at the first ramp-up of this thing…
Something remarkable has occurred since 1994 until now, which is entitlement spending. Or let me say transfer payments, to be a little more correct. Transfer payments which were 28 percent in ‘60. And were 50 percent when we were in the budget mess in ’94. Lo and behold, they’ve gone up to 67 percent of government outlays. But, they haven’t gone up because of demographics. They’ve gone up because the seniors have a very, very powerful lobby. They keep getting more and more transfer payments from the youth. But the demographic storm is just starting now…
So, what’s going to happen, we now have a working popular of- this is how entitlements work- where the current workforce is paying for the benefits of the seniors. Since 2000, we’ve have about 4.5 to 4.8 workers for every retiree. By 2050, that number will drop to 2.4 workers per retiree. Another catchy way of saying it is that by 2030, the average population of the United States is going to be older than the average Floridian right now.
Druckenmiller later said that he’s not out to bash senior citizens, but instead:
What I’m against is current seniors stealing from future seniors.
“Druckenmiller: I See Storm Coming, Bigger Than 2008”
Bloomberg TV Video
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)
GAO: ObamaCare Could Add $6.2 Trillion To Long-Term Federal Deficit
Here’s another headline-worthy story you may not hear/ready about in the mainstream media. Andrew Stiles reported on the National Review blog The Corner earlier this week:
Obamacare will increase the long-term federal deficit by $6.2 trillion, according to a Government Accountability Office (GAO) report released today.
Senator Jeff Sessions (R., Ala.), who requested the report, revealed the findings this morning at a Senate Budget Committee hearing. The report, he said, “confirms everything critics and Republicans were saying about the faults of this bill,” and “dramatically proves that the promises made assuring the nation that the largest new entitlement program in history would not add one dime to the deficit were false.”
President Obama and other Democrats attempted to win support for the health-care bill by touting it as a fiscally responsible enterprise. “I will not sign a plan that adds one dime to our deficits — either now or in the future,” Obama told a joint-session of Congress in September 2009. “I will not sign it if it adds one dime to the deficit, now or in the future, period.”
You can read Stiles’s entire February 26 post on his blog here.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
VP Biden Says Chicago-Area Democratic Primary Result Sends ‘Clear Unequivocal Signal’ To NRA And Politicians
Before I move away from the topic of firearms and gun rights, U.S. Vice President Joe Biden decided to weigh-in on the victory of pro-gun “control” candidate Robin Kelly in the U.S. Congressional 2nd District (Chicago south suburbs plus more) Democratic primary this past Tuesday. According to Reuters’ Roberta Rampton yesterday, Biden told a group of state attorney generals:
For the first time since Newtown, voters sent a clear unequivocal signal… The voters sent a message last night, not just to the NRA, but to the politicians all around the country. There will be a moral price as well as a political price to be paid for inaction.
I’m going to disagree with the VP here. I’d guess that many observers familiar with “The Chicago Way” interpreted the primary as once again demonstrating that race, gobs of money, and having the blessing of “The Machine” wins elections here in the Chicagoland area. And local politicians screaming about the need for more gun “control” is just one more attempt to distract the masses from the crappy economy and huge financial mess these guys have gotten us into ($9 billion in unpaid bills and a $96 billion pension funding gap in Illinois from what I read yesterday).
By the way, going back to that post I published last week about the Vice President answering gun “control” questions at a Parents magazine event and telling one Facebook user they didn’t need an AR-15 for self-defense, get a shotgun instead…
“Buy A Shotgun Joe Biden Lying AR-15”
YouTube Video
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Source:
Rampton, Roberta. “Biden says Chicago vote a sign that voters want action on guns.” Reuters. 27 Feb. 2013. (http://www.reuters.com/article/2013/02/27/us-usa-guns-biden-idUSBRE91Q11N20130227). 27 Feb. 2013.
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