Debasing Entitlement Reform Debate

The problem with two guys debating issues they have little practical grasp of in a structured format with moderators intent on looking good is that they have no fear of being asked the logical follow-up question to most of their ill-considered points:

What are you – an idiot?

because either the moderators do not know enough to be confident in posing it or the rapid-fire nature of these entertainments leaves no time for reflection.

Such was the case with Chris Christie debating Mike Huckabee on entitlement reform where each made several cringe-worthy remarks obvious only to those who like do a little thinking while listening:

37 responses to this post.

  1. Posted by Porgie on August 7, 2015 at 12:25 pm

    In his first sentence when asked about credit downgrades and financial deficits he blamed his predecessors. There was a great story in the movie Traffic where one politician leaves his successor two envelopes. The first one says- in your first term blame everything on me. The second one says- in your second term.. Make out two envelopes. The blame game is over. Time to make the envelopes. It’s over.

    Reply

    • It’s a good scene:
      .

      .
      But with Christie it’s a case of people not yet openly laughing when he keeps blaming Corzine for credit downgrades during Christie’s time. How twisted in your thinking do you need to be to take his chameleon diversions seriously?

      Reply

      • Posted by Anonymous on August 7, 2015 at 3:45 pm

        I believe it is a question of desperation. And many many people are just that desperate.

        Reply

        • I assume those people you refer to are his handlers and supporters hoping for some DC money since everyone else seems to have already caught on judging by the lukewarm to hostile reception he gets from anyone not invested in him.

          Reply

  2. Posted by Anonymous on August 7, 2015 at 1:59 pm

    Guess politicians are exempt from consumer laws when it comes to truth in advertizing?

    Reply

  3. Posted by Jim on August 7, 2015 at 5:13 pm

    I gave up long ago listening to all the drivel in political debats.

    Reply

    • Posted by Tough Love on August 7, 2015 at 5:53 pm

      I tuned in only because of Trump ….. haven’t been to a circus in quite some time.

      Reply

      • Posted by Charles on August 7, 2015 at 8:16 pm

        So who said public pensions should be equal to private pensions? You?! I made a choice 46 years ago. You made yours. Mine was made looking at the long run at the age of 18. It paid off.

        And who said life is fair? What is your idea of fair? Every one is equal? People who make intelligent choices should be punished and those who made unfortunate ones should be rewarded? Oh, I forgot, that is Social Security.

        Why not go whole hog and just have communism?

        You get what you pay for. Cut pensions for future work if you can, but don’t expect dedicated professionals to remain in civil service for long. At least as far as engineers go California will become a revolving door for engineering students who will work for two or three years and go for half again more $$ in the private sector.

        Reply

        • Posted by Tough Love on August 7, 2015 at 10:16 pm

          What you conveniently ignore, is that unlike Private Sector contracts/negotiations …. when it come to PUBLIC Sector pensions & benefits:

          (1) The negotiations are hardly arms-length, with those supposedly negotiating on the taxpayer’s behalf, trading their favorable votes on Public Sector pay, pensions, and benefits for Public Sector Union Campaign contributions and election support

          (2) When Private Sector CEO’s are excessively compensated, it is paid for by the company’s shareholders and/or customers (not Taxpayers), BOTH of whom can choose to invest or shop ELSEWHERE if they feel they are being abused. The Taxpayers who pay for excessive PUBLIC Sector pensions & benefits (via threat of incarceration or property seizure for non-payment) have no such choices. We CANNOT shop elsewhere for more cost effective Police, Fire, DPW, or Engineering services.

          Quoting … “You get what you pay for.?

          No, Taxpayer pay a great deal MORE than a fair cost for the services provided.

          Reply

          • Posted by S Moderation Douglas Is Wrong Again on August 9, 2015 at 1:23 pm

            I’ve read Charles’ posts before. He might be an engineer. If so, he might be one of those who has been underpaid for years.”…He also might be a GED cop or firewiner and overpaid by 10,000% all his life…

          • Posted by Tough Love on August 9, 2015 at 7:27 pm

            Charles & I go back a long time …. used too post under Charles St. Claire. He is an Engineer (Civil, I believe). Seem to recall that he started at 18 in Gov’t employment and retired at 59 in 2010.

            Little has changed. He thinks he is entitled to a 90% of pay pension and heavily subsidized retiree healthcare …. I don’t ,UNLESS he indeed IS a superstar who WOULD HAVE earned perhaps 50% more in “wages” over his career if employed in the Private Sector.

            Of course, we don’t know the answer to that, and HIS OWN opinion on the subject is hardly unbiased.

        • Posted by Tough Love on August 7, 2015 at 10:25 pm

          What you conveniently ignore, is that unlike Private Sector contracts/negotiations …. when it come to PUBLIC Sector pensions & benefits:

          (1) The negotiations are hardly arms-length, with those supposedly negotiating on the taxpayer’s behalf, trading their favorable votes on Public Sector pay, pensions, and benefits for Public Sector Union Campaign contributions and election support

          (2) When Private Sector CEO’s are excessively compensated, it is paid for by the company’s shareholders and/or customers (not Taxpayers), BOTH of whom can choose to invest or shop ELSEWHERE if they feel they are being abused. The Taxpayers who pay for excessive PUBLIC Sector pensions & benefits (via threat of incarceration or property seizure for non-payment) have no such choices. We CANNOT shop elsewhere for more cost effective Police, Fire, DPW, or Engineering services.

          Quoting … “You get what you pay for.?

          No, Taxpayer pay a great deal MORE than a fair cost for the services provided.

          Reply

        • Charles, I am sure the folks who worked for Studebaker Packard in 1950 thought life was fair too, until the company went broke and its pensioners were left high and dry. When you made your career choice 46 years ago I am sure public sector pensions were fully funded and looked like a good scheme forever. But things and economies change. In the public sector, the taxpayer never had a say in the makeup or “fairness” of PS pensions and benefits. As such, over the past 40 years corrupt politicians kept upping the bennies to attract and reward their “supporters” (and themselves). Without any competition to act as brake on the insanity we are now collectively up the creek without a paddle. If you and the rest of the PS think all that is going to happen is taxes are going to go up and up and up to fund these shortfalls they are sadly mistaken. But don’t feel too bad, the same thing will happen to SS, Medicare and other “entitlements”. When the money is gone, it is gone.

          Reply

          • Posted by S Moderation Douglas on August 8, 2015 at 6:58 pm

            Odd how, after “40 years corrupt politicians kept upping the bennies”, three major economic studies in the past six years have determined that, even with pensions and benefits, public workers on average earn total compensation “roughly equal” to the private sector, or worse.

            The fourth study says that at the lower levels, public workers earn more, but those who are higher skilled and/or educated (like Charles) still earn less than the private sector. If this is the Charles I suspect, he doesn’t live in New Jersey or Illinois, and he has no worry about his employer going Studebaker on him. If there is another major economic disaster large enough to hit Charles pension, I guarantee he will not be alone in his misery.

            Katie, Bar The Door

          • Posted by Tough Love on August 8, 2015 at 9:08 pm

            Quoting S Moderation Douglas … “three major economic studies in the past six years have determined that, even with pensions and benefits, public workers on average earn total compensation “roughly equal” to the private sector, or worse. The fourth study says that at the lower levels, public workers earn more, but those who are higher skilled and/or educated (like Charles) still earn less than the private sector. ”

            I do not believe it ……. as stated.

            Please provide “LINKS” to the 3 unnamed studies.

            I’m guessing your 4-th is the AEI Study. If not, please provide a link to that as well.

            Thanks in advance.

          • Posted by S Moderation Douglas on August 8, 2015 at 11:58 pm

            Heywood and Bender 2010

            “There are several implications of our exercise. 
            First, the compensation of state and local workers is 
            not excessive. Second, this remains true when includ- 
            ing benefits. Third, the pattern of results over the last 
            20 years has generally been one of declining relative 
            earnings of state and local workers compared to similar 
            private sector workers.,

            https://www.google.com/url?sa=t&source=web&rct=j&url=http://www.mnpera.org/vertical/Sites/%257BCB6D4845-437C-4F52-969E-51305385F40B%257D/uploads/%257BDBA0E14A-9DD0-49C3-8B6B-B1C3F756F1A2%257D.PDF&ved=0CC0QFjADahUKEwiQm-Xd7prHAhVTnYgKHfD2Dv4&usg=AFQjCNHycsZdgJ4r_NWi0ezbL_SpfdWSIw&sig2=ezFrjmyvLDFrdrCWFaCp8g

            ………………………………………………
            Keefe 2010

            “On average, full-time state and local employees are undercompensated by 3.7%, in comparison with otherwise similar private-sector workers. The public employee compensation penalty is smaller for local government employees (1.8%) than for state government workers (7.6%).”

            http://www.epi.org/publication/debunking_the_myth_of_the_overcompensated_public_employee/

            …………………………………..

            Munnell 2011

            “Our re-estimation of the much-used wage equation plus adjustments for proper valuation of pensions and retiree health insurance indicates that the two roughly balance out.  The estimated difference nationwide is about 4 percent in favor of private sector workers.”

            https://www.google.com/url?sa=t&source=web&rct=j&url=http://crr.bc.edu/wp-content/uploads/2011/09/slp_20-508.pdf&ved=0CB8QFjAAahUKEwilytHD_JrHAhXROYgKHcDVDtc&usg=AFQjCNFzRRCyttEMXyJMBEL7jSh7WPaqiA&sig2=ulbIHqWJOrUeRnSI_8fubA

          • Posted by S Moderation Douglas Is Wrong Again on August 9, 2015 at 1:28 pm

            “Odd how, after “40 years corrupt politicians kept upping the bennies”, three major economic studies in the past six years have determined that, even with pensions and benefits, public workers on average earn total compensation “roughly equal” to the private sector, or worse.”…What is even ODDER is how you consider public union front groups “major economic studies”. All reputable economists today state that ALL public sector employees, except the most highly advanced professions like doctor and lawyer, receive far higher compensation than the private sector.

          • Posted by Tough Love on August 9, 2015 at 11:29 pm

            S. Moderation Douglas,

            I asked for the 3 links because I strongly disagree with the conclusions you mentioned above.

            RE YOUR 1-ST LINK …………..

            (1) it is published by the extremely liberal National Institute on Retirement Security. If you Google them, you will find the following:

            “In 2011, the National Conference of Public Employee Retirement Systems (NCPERS) joined the ranks of CII, NASRA, and NCTR as a leadership member of NIRS.”

            The full names of these organizations are:

            National Conference of Public Employee Retirement Systems (NCPERS)
            Council of Institutional Investors (CII)
            National Association of State Retirement Administrators (NASRA)
            National Council on Teacher Retirement (NCTR)

            While I am unfamiliar with the CII, the other 3 groups are directly and intimately involved in promoting and maintaining DB Plans for Public Sector workers …. hardly an unbiased source.

            I did read most of the linked report. I came away with the impression that they were only LOOKING for evidence to support a predetermined conclusion and ignoring other evidence to the contrary. For example, in the executive summary they said:

            “Wages and salaries of state and local employees are lower than those for private sector workers with comparable earnings determinants (e.g., education). ”

            It has been pointed out in other studies that “education level” is a poor determinant for salary setting in the Public/private Sector. MANY in the Public Sector have Masters degrees in “Education” rather than in the Subject material … math, chemistry, etc. I believe most would not disagree that getting a Masters in the Subject itself is MORE DIFFICULT than getting it in Education, so why should the compensation be the same? Perhaps those with the Subject matter Masters (and by extension, those with a Bachelors in a Subject rather than Education) DESERVE higher pay.

            I also looked for how this study determined the “COST” of Public Sector pension and benefits, especially when I noted (in Table 4 on Study page 15) very small differences between in “Benefits as a share of compensation (%)” between the Public Sector and Large Private Sector Firms. Specifically, were they including what a Gov’t entity CONTRIBUTES in the year (which is irrelevant), or a proper (in methodology and assumptions) estimate of the VALUE of the pension and benefits ACCRUED in each year.

            The Study identified (on the upper left on page14) the National Compensation Survey as their source of the “value of benefits” and noted footnote # 35. Unfortunately, this Study is quite old (being published in April 2010) with data through 2008) and the link in footnote #35 no longer works….. so I could not make the determination of whether they were CORRECTLY accounting for the “cost” of annual pension accruals.
            ——————————————

            RE YOUR 2-nd LINK ………..

            Ah, the Jeffrey Keefe Study, that we have discussed before.

            In short, his work is of such poor quality as to be worthless. But not to just leave it at that, below are 2 of my PREVIOUS responses to you (as the WHY they are worthless) on his studies:

            (1) “You couldn’t possible have found a more liberal leaning Organization (the EPI) and the author of this …VERY BIASED Study … (Rutgers professor JEFFREY H. KEEFE) if you searched for years.

            In fact, his faulty positions and poor quality work was thoroughly trashed by PHD’s here:

            http://www.heritage.org/research/reports/2011/03/public-sector-compensation-correcting-the-economic-policy-institute-again

            (2) “There you go again with “diversion” and “misstatements”………

            It’s NOT simply … “Biggs says the value of a DB pension is much higher than the ARC. ”

            It’s that Keefe says the pensions “cost” is determined by what in PAID-IN in a given year. There isn’t a trained economist in the world that would agree with that statement …. instead, defining the pension annual “cost” as the “value” of a year’s pension benefit “accruals”… While there may be some disagreement as to the “value” of those “accruals” …. a pension’s “cost” is NEVER determined by what is “contributed” in a given year …… and THAT is what Keefe does.”

            ——————————————————-

            Re YOUR 3-RD LINK ……….

            I read through most of this Study as well. Since her (nationwide) est of the Private Sector “wage” advantage is in line with other studies, I focused more on her discussion of pensions and benefits. I believe there are some flaws:

            (1) One page 4 she says …..

            “Several researchers who conclude that benefits do not cancel out the wage penalty base their case on the Bureau of Labor Statistics Employer Costs for Employee
            Compensation (ECEC) survey 9. This survey shows that while benefits are much higher relative to wages for state-local workers than for those in the private sector, they are not high enough to offset the wage penalty 10. Therefore, they conclude that public sector workers receive less total compensation – wages and benefits combined – than their private sector counterparts. ” …. with “9” and “10” being footnote references.

            The Footnote #9 is NOT a reference to the BLS Studies, but to a study by two authors, one of whole is Prof. Jeffrey Keefe, the SAME author noted in your 2-nd link above who ERRONEOUSLY believes that the “cost” of a year’s Public Sector pension accruals is what the gov’t entity CONTRIBUTES in the year as opposed to a true measure of the VALUE of the year’s pension ACCRUALS. Patently absurd …. example: in years when NJ contributed NOTHING, was the value of the year’s accruals NOTHING ?

            In fairness, Ms Munnell does say …”The response by one set of critics is that the ECEC
            survey understates state and local employee compensation in three ways:
            11″ …… then going into some detail on ECEC Study shortcomings on it’s treatment of retiree healthcare costs, the proper way to account for the “investment guarantees” of DB pensions vs the lack of such guarantees in 401K Plans, and the value of job security.

            With respect to retiree healthcare she does 2 questionable things:

            (1) From Appendix B, estimates that Retiree healthcare is worth 7.6% of pay. I note here that OTHER studies come up with 10-12% of pay.
            (2) she then HALVES the 7.6% (in coming up with her final study conclusions) because there is a growing likelihood that such promises will be lowered. Interesting, but aren’t we comparing the actual PROMISES MADE. Couldn’t the same be said with respect to pensions. At the least if the 50% cut to the VALUE is used in the Public/Private comparison then such study conclusions should at least acknowledge that we EXPECT to halve retirement benefits…. and are THEREFORE ignoring them in the comparison.

            With respect to pensions, she indeed tries to adjust for the incremental value of Public Sector DB Plan (assumed 8% return) guarantees, by assuming that instead of discounting Plan Liabilities at 8% (what Public Plans were using) it should be discounted by the risk-free rate + a 1.23% adjustment. Fair enough, but because THAT was 2011 when she assumed a risk free rate of 5%. Perhaps correct THEN, but today 2% is what the Risk-Free would be today. That ALONE is likely worth a level annual 10-20% of pay.

            With respect to the incremental value of Public Sector job security, she said …”we …reject the notion that job security is higher in the state-local sector once educational attainment is taken into account. ”

            Well, having worked in the Private Sector for quite some time, her follow-up explanation is implausible and doesn’t resonate as what ACTUALLY HAPPENS because education is positively correlated with age and pay and when PRIVATE Sector Corporations look to downsize (while being careful not to expose themselves to age-discrimination lawsuits) they CLEARLY target the older & higher-paid, and THEREFORE, the more highly educated workers. At least for those ALREADY employed in white collar jobs comparable to those in the Public Sector, Private Sector job security likely does NOT increase with as education increases …. and in periods of downsizing, job security may actually DECREASE as education level increases. Ms. Munnell contributed no value whatsoever to greater Public Sector job Security … when other Study authors consider it to be worth approximately 10% of pay.

          • Posted by S Moderation Douglas on August 10, 2015 at 1:21 am

            Irony?

            TL: “You couldn’t possible have found a more liberal leaning Organization (the EPI)……….”

            TL: “………poor quality work was thoroughly trashed by PHD’s here:”

            Moderation: (The most conservative leaning organization.) ??
            ………………………..

            I believe I have agreed before that the liberal studies are biased, as is the AEI study. It’s why I cautioned about putting too much faith in the “23% advantage”. Also why I stressed, many times, that one should read the entire study carefully. Biggs and Richwine go into more detail on the methodology than any of the other reports I have read. That’s a good thing.

            But their methodology, I think, shows there are numerous assumptions and decisions that can change the final result. That goes for both the liberal and conservative economists. I don’t have the expertise or access to their calculations to determine how accurate they are, but I think it is reasonable to assume the correct value is somewhere between the extremes.
            …………
            And I’m well aware that the biggest difference in the studies is the discount rate. I’m well aware of your opinion, and the various arguments on both sides. I tend to agree with Girard Miller:

            ” Yet, we still hear from researchers who insist that Treasury bond rates would tell the “true story.” That just doesn’t reflect how the world works. Pension funds are not going to invest their entire portfolio in 3 percent Treasury bonds right now — or ever — so the risk-free model is not even descriptive of reality and has little normative value.”

          • Posted by Tough Love on August 10, 2015 at 2:23 am

            S Moderation Douglas,

            While there are a few pure-est economists that suport the interest free approach, most actually WORKING in the financial Service industry (not simply professors who teach or think-tank scholars who write about it) believe that a reasonable compromise is would be methodology & assumptions that PRIVATE Sector Plans are REQUIRED to use in their Plan valuations. Moody seems to agree, with a somewhat different approach, but one that gets to a similar result …. BOTH being less conservative than the “risk-free” approach, but FAR MORE conservative than the approach now used by PUBLIC Sector Plans.

            And don’t read more into Mr. Miller’s quote than is actually there. While he pans the risk-free approach, he is certainly NOT endorsing the extraordinarily liberal methodology & assumption now ROUTINELY used in PUBLIC Sector Plan valuations.

            And if you like Gerard Miller’s thinking, perhaps you’d like to comment on his article here:

            http://www.governing.com/columns/public-money/col-Pension-Puffery.html#ht8

            Title …” Pension Puffery
            Here are 12 half-truths that deserve to be debunked in 2012. “

          • Posted by S Moderation Douglas on August 10, 2015 at 3:27 am

            Where do you think I got that quote?
            Along with this one:

            “As I’ve testified to the GASB during their public hearings, a risk-free discount rate would ultimately result in excessive burdens on today’s generation of taxpayers and invite mischief in the future as this approach is a sure-fire way to produce over-funded pension plans in the long run. (I know this sounds laughable in today’s funding environment, but that is the logical multi-generational result of the risk-free model.)”

            And:

            ” To avoid extremism, I step aside from the camp that advocates severely lower actuarial discount rates like 6 percent for funding purposes. But, I do support the GASB’s general concept of a lower blended rate for calculating pension liabilities and pension expenses in the financial statements when liabilities exceed portfolio assets. (You can’t buy stocks with an unfunded liability.) For funding policy, it seems to me that the most realistic path for the assumed rate of investment returns is a nationwide average closer to 7 percent until the global economy clears its debt hangover in this “New Normal” market environment.”

            Sounds like he’s in the Munnell range of 6.2% We can agree to disagree, but there are too many variables in each of the studies to definitively say which one is more accurate. Even if one were deemed “accurate” when written, they are hopelessly dated today. All these studies were done before major pension reforms were passed.

          • Posted by Tough Love on August 10, 2015 at 10:45 am

            S Moderation Douglas,

            Mr. Miller continued your above quote, suggesting a rate of 7% for funding calculations. But, he wrote that in January of 2012. If he were re-writing it today, with interest rate seemingly stuck at historically low levels, I’d bet that he might feel that even 6% is too high.

            Quoting ….. “All these studies were done before major pension reforms were passed.”

            Almost none materially impacting anyone but NEW employees. For the financial impact to be anything but far-medium to long-term, MATERIAL pension reductions must include the future service of all CURRENT workers. ….. not withstanding all the legal barriers that the Public Sector Union/workers have concocted (with great assistance from Elected Officials BOUGHT-OFF with Campaign contributions and election support) to stop such changes, and the reluctance of Judges (whose OWN pensions would be impacted) to allow them.

  4. Posted by Eric on August 7, 2015 at 11:23 pm

    If the US were to end its perpetual wars throughout the world, we could easily fund both social security and medicare. Rather than tax and punish savings and investment, remove the wage “cap” on social security income.
    Unfortunately, corruption and profitable wars for the arms manufacturers, trump common sense and logic.
    We could easily have “medicare for all” and avoid NJ’s insolvency if our politicians were not bought and paid for by the war mongering elite, and shamelessly and relentlessly make speeches acceptable to only the most severely mentally challenged members of society.
    Eric

    Reply

    • Posted by Tough Love on August 7, 2015 at 11:33 pm

      Not bad, but you need to add after the words “war mongering elite”, the words …. “and Public Sector Unions”.

      Reply

  5. Posted by Eric on August 8, 2015 at 12:30 am

    No Tough Love. The war mongering criminal elite are the cowards who begin wars for profit that others fight on their behalf. If they, meaning the so called elite, had to actually fight, they would first crap in their pants, yet we are all supposed to pay them homage. They are brilliant in finance, yet Main Street taxpayers had to bail them out for their greedy mistakes. We had to bail them out since they were conveniently labeled “Too Big To Fail.” Wow. They are not allowed to lose their own money, only taxpayers’. They own Washington, so bankruptcy is not an option for them,but for other people. The public sector unions are only poor saps compared to the billionaire Wall Street criminals. The pensions that you detest are merely “pocket change” compared to the corrupt “one percenters” who control our government in Washington. They “rig” markets, which cost me lots of money. They salivate when you attack the unions, as they hide behind the curtain. I do believe that the pensions will be modified, however, my focus is upon the “puppet masters”, and not the public servants.
    I am old. I have made a little bit of money. I have supported conservatives such as Ronald Reagan. I have met and spoken to Ronald Reagan. We need a leader, like a Reagan, which we do not have. He was honest. He had integrity. He was a man of his word. He would never misrepresent or lie. Look at the clowns who are running today. How sad is this for the young people. The presidential contenders belong in the land of misfit toys or broken ones at that. What a crew to lead the “free” world!
    Unfortunately, I have no hope for the future in this country. Of this, I am certain.
    Eric

    Reply

    • Posted by Tough Love on August 8, 2015 at 1:03 am

      Quoting Eric ……. “The public sector unions are only poor saps compared to the billionaire Wall Street criminals. ”

      Perhaps true, but compared to PRIVATE Sector Middle Class Taxpayers, the PUBLIC Sector workers are the new ROYALTY and ripping off the Taxpayers BIGTIME.

      Focus wherever you want ……. I’ve got a full plate strongly advocating for a FREEZE to ALL of NJ’s grossly excess DB pensions, BOTH State and LOCAL (catch that BH ?).

      —————————————–

      P.S. Scott Walker for President !

      Reply

    • Posted by S Moderation Douglas Is Wrong Again on August 9, 2015 at 2:16 pm

      Nice strawman argument Eric! Exactly what I expect out of a trough feeder….

      Reply

  6. Posted by Javagold on August 8, 2015 at 12:32 am

    All roads lead to Israelhell……until that stops, bread and circus is all we got.

    END THE FED.

    Reply

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