Tuesday, October 19, 2010

Why California is About to Fall Off Into an Ocean of Unpayable Debt

Perry Wong, Director of Regional Economics at the Milken Institute is co-author of a new report, Addressing California’s Pension Shortfalls: The Role of Demographics in Designing Solutions. His conclusion:
We’re talking about a perfect storm: more state services needed for an aging population, a workforce that will spend more years in retirement than they did contributing to the funds, and a smaller ratio of working-age taxpayers and contributing state workers to pay for it all.
Some of the key findings in the report include:

• By around 2012 or 2013, the three major state pensions’ obligations will be more than five times as large as total state tax revenue.

• Not only will California’s growing senior population depend on Medi-Cal and other state services, but public school enrollment is likely to rise in the coming years. The state can ill afford to fund pensions by cutting back on these services.

• In 2009, the pension liability came out to $3,000 per working-age adult in the state. By 2014, it will triple to over $10,000 per working-age Californian.

• Raising employee contributions alone will be less effective over time as the ratio of actively contributing members to benefit recipients continues to decrease.

• Currently, the average state employee contributes to the system for 25 years, but will receive benefits for 26 years — and the number of benefit-receiving years is increasing as longevity improves.

70 comments:

  1. The county already is so why wouldn't the largest state follow suit?

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  2. 1. Let all non-violent drug prisoners free
    2. Stop arresting people for drug possession
    3. Tax and regulate marijuana sales
    4. Downsize the police and prison guards
    5. Use the funds in pension plans etc. as capital to create a state-owned bank like North Dakota has: Borrow from this bank to fund infrastructure projects, instead of at high-interest rates from private parties

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  3. I just hope the Milken Institute Mr. Wong works for isn't named after Michael Milken, Mr Junk Bond

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  4. California MUST charter its own state bank.

    This is the only solution we have.

    Whitman and Brown do NOT know how to address our economic problems if they haven't even glanced at the HUGE benefit a state-chartered bank would do to our economy. Dependence on private or federal money will KILL California.

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  5. Dont forget about the devaluation of the USD, if they keep printing money like Bernanke wants the value of those pension funds is going to plummet. I havnt quite figured out how they figure that printing more money and causing inflation is good, so far their "quantitative easing", hoax is being bought by the public, until that changes, nothing else will. Malo periculosam libertatem quam quietum servitium.

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  6. All California has to do is threaten bankruptcy. This would destroy the muni bond market nationwide. All the wealthy will leave CA for FL. The solution is to confiscate all property owned by any individual in CA, except state workers, union members and those on state aid, then sell the property to raise the salaries and pensions of state workers and make the Feds pay the debt down entirely. DO not allow anyone to be a resident of CA who is not a state worker, union member or recipient of state aid. Change the official language away from English. Next, apply to become part of China, thus repudiating all US federal debt. CHina will go for it. No problem at all.

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  7. How about we force all of the illegal/'undocumented' aliens in the state to put in 5 years of public service for free. Each and every man and woman over the age of 16 must put in 40 hours of work per week to the state, in addition to any job they might have.

    Any alien found not paying his or her share is automatically penalized with confiscation of the entire extended families property, including any property in their native country, and forced to be mine sweepers in Iraq/Afganastan/Iran for 5 years.

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  8. Excellent 5 point plan posted by "Anonymous"! Unfortunately, I believe that our state legislators will be sure to continue to ignore such good common sense. I would also add one more item:

    6. Enforce current immigration law and bring our military home to guard the border.

    There are thousands if not millions of illegal aliens benefitting from free education and healthcare at taxpayer expense. And oh yes, let us not forget that fully one third of our prisons and jails are filled with illegal aliens. Why not send them home as well?

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  9. Stop spending so much money. Fire half the state employees and quit paying illegals welfare.

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  10. California is toast because the citizens are morons. There is no saving the state now, it is to late. Get the hell out while you can. I got out 10 years ago and never looked back.

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  11. Secede from the union, then apply for foreign aid

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  12. Guys like this retard...

    "How about we force all of the illegal/'undocumented' aliens in the state to put in 5 years of public service for free. Each and every man and woman over the age of 16 must put in 40 hours of work per week to the state, in addition to any job they might have.

    Any alien found not paying his or her share is automatically penalized with confiscation of the entire extended families property, including any property in their native country, and forced to be mine sweepers in Iraq/Afganastan/Iran for 5 years"

    ...would have fit in quite well with the Nazi SS. Or the Zionist scumbags of today. No difference. It's little wonder your country is so F'd up.

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  13. I don't care, I live in Canada

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  14. I moved out of California a few years back, it is one of the best things I've done in the past few years. The bubble was just bursting and I knew the property taxes were about to tank as a result and cause all sorts of problems. At the time, I knew it would be bad, but I didn't realize how bad the pension problem would be. The pension problem is much worse than the loss of all the bubble sized property tax. That corner of the world is going to have problems for awhile.

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  15. It would be nice if our treasonous government of the state at all government levels would address the BANKSTER and ILLEGAL ALIEN issues.

    1. Fully prosecute the Banksters.

    2. Demand employers use E-VERIFY to weed out the Illegal Aliens.

    3. Cut off the Illegal Aliens from ALL services that they receive.

    4. Revise the 14th Amendment. It was meant for freed slaves, NOT "automatic citizenship" of those born to Illegal Aliens.

    The Illegal Aliens (NOT the "Undocumented") will self deport if all these measures were taken.

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  16. Might be almost impossible to deport all illegal aliens so the next best thing is to require them to serve the govt. for at least 5 years, then they can apply for citizenship. Welfare, food stamps, wic and all govt aid will not be given to any illegal alien, no more free schooling, no loans or grants for illegals of college age. Children born of illegal parents do not get automatic citizenship, then when they reach 18, they can apply for citizenship. Hugh penalties for employers who hire illegals. When all govt. aid is denied, I believe there wil not be many illegals crossing our boarders.

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  17. I don't worry about the pensions at all. These (and other) obligations will eventually be foisted upon the federal government. California has absolutely nothing to worry about. It truly is as simple as that.

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  18. The government pensions must stop. Government workers need to be on social security and 401k and medicare like the rest of us common folk. The current system is insolvent.

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  19. Stop illegal immigration, Privatize Cal-Trans, DMV,
    Franchise Tax Board & Cap salaries & retirement benefits
    that would stop excessive pensions like Lundgrens 229,000 pension & those parasites in Bell Ca.

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  20. "California is toast because the citizens are morons. There is no saving the state now, it is to late. Get the hell out while you can. I got out 10 years ago and never looked back. "

    I got out 2 1/2 years ago but I do look back. I am use to watching multi-car pileups on the freeway so now I get to rubberneck and watch the multi-car pileup known as California.

    There are left wing politicians in Washington scheming to bail out state and local pension funds. But unless they manage to maliciously pass such legislation in the lame duck session, the bailouts are very unlikely to happen with a new sheriff in town in Washington DC.

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  21. If anyone with any type of inquisitive intelligence would investigate law enforcement/Firefighter pension issues, they would find that the life span of these brave souls is on the average of 5 years or less after retirement. How does that fact translate into the state losing billions/trillions. Most of our guys die shortly after retirement. The politicians are trying to trick you into stealing from the very guys that are trying to help you. Also, we pay into our retirement...not like city, state, and fed employees who sit behind a desk...WAKE UP AND EDUCATE YOURSELVES...

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  22. Nancy Pelosi has about 100 million and a government paid for Jet to fly her around in and she and the rest of the criminals in government are laughing at all of you.

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  23. California needs to declare bankruptsy and then cancel all the union and pension contracts.
    This is why I voted for Brown. He will sink us quickly so we can rebuild. Meg will kick the can down the road for worse future pain. Best we deal now.
    My goal is it gets so bad here even the poor decide to leave. I hope for about 10~15 million to just leave. Then I can have my beautiful state back. Don't let the door hit you in the a s s on the way out! Hasta la vista, Baby!

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  24. Good Lord!! What starts in California spreads to the other 49 states. France & England are now having major protests happening.

    Time Magazine now conceding that the prospect of a civil war in the States “doesn’t seem that far fetched”.

    Need to read that new book out about a small town in America that finally takes a stand. It's about each of us & history may be calling on us soon to fulfill our real destiny. I recommend it.
    www.booksbyoliver.com

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  25. How can this be true? We have Conan the Republican running the show.

    Maybe the baby boomers should pull their collective heads out of their arses and ask what happened to America? Of course they don't care b/c their generation had it easier than any other generation ever in this country.

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  26. If billions of dollars were destroyed in a fire - they would be replaced. but billions of dollars can vanish due to scams like Enron and complicity of firms like Citi - and I guess it's just tough. All the people left holding the bag are just screwed. Well sorry - that's not good enough! And to make matters worse - these corporate rat b@st@rds who get fined millions of dollars pay it to the gubermint - not back to the people who were harmed. Then the gubermint turns around and makes all nicey nicey with the corporate rat b@st@rds again and again - it's corporate/government economical incest. Then the state government goes after the state employees - wants to cut wages and benefits - doesn't even consider class action suits against the corporate bandits who caused the problem. What a crock of sh!t!

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  27. CRASH IT and crash it fast!! The sooner the better. The s__t's going to hit the fan, so might as well clean it up now then to keep on smelling and living with it!! Ask your self, WHY?? all the illegals??? I believe they will come out of the wood work when it takes a s__t. Good reason to send in some troops and take your freedoms. Anybody remember the LA riots? Who was doing all the looting?? The Gov's been spending, for years, like theres no tomorrow, cause they know theres not going to be one, at least like we know! They will drag this out forever if we go along with there BS!! Do like the Russains did and do a crappy job and dont give a s__t!! It will all come down on there heads. Do the elite think they will ever be able to eat out without somebody spitting in there food?? After what theyve done?? Id like to see what happens when the San Andres moves again. Nice if it would scare about 25mil out of the state.

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  28. Cut all pensions for future retires to 40% after thirty years. reduce all present pensions to 60 %. Require everybody to pay 50% of medical. Present this to all involved parties. If they do not see that this is still more than anybody on Social Security, and then agree, declare bandruptsy and do it anyway.

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  29. WHAT HAPPENED TO MY COMMENT THAT YOU WERE GOING TO REVIEW ?

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  30. Very sad to see. As an Aussie who detests US foreign policy I have been to Ca enough to know it isn't like washington, and the hard worker has been hijacked by govt policies, inept public servants and about 50 MILLION illegals bleeding you dry and keeping wages down and services exhausted.
    Yup, Greece, France- they aren't nuthin on what your gun toting jacked up FallingDown/ DFence/ Postal/ gang banger will do with a match one day in the cities.
    When that happens-
    Run Forest...............RUN!!!!!!!!
    (Australia will have you)
    Washington had it coming, Wall St has it, but not the people like will happen

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  31. Look. Our govt. has been highjacked by "New World Orderists" long ago. 1913 the Federal Reserve Act was ushered in the dead of nite. We and all the rest of the countries of the world are COMPLETELY owned by private interests. The situation happening right before our very eyes in our country and around the world right now is a CONTRIVED, PLANNED EVENT.
    Keep your head on a swivel; if you don't believe in God, now is not too late;make a plan of how you are going to survive this planned darkness - we haven't seen anything yet; have a back-up plan;don't do anything illegal;increase your network of those you really know and can trust; don't panic - that is what they want so we rush to their "solution"; keep a clear head through all this and good luck and God Bless.
    - A concerned military oficer

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  32. i used to think that the world needed a robin hood to steal from the rich and give to the poor. But robin hood is like philanthropy, it keeps the masses content even as they are raped. The world needs people willing to stand and kill. If your not one of these people i hope you can be content perishing and being used as a tool for someone elses mad desires. If all men were willing to die justice than no men would have too,therefore killing may be less immoral than letting your nieghboor stand alone.

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  33. We have national leaders who are concerned only with the pursuit of power. They have doomed California and the rest of the country as well. There will never be a recovery. It's the beginning of the end.

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  34. Conan is NOT a Republican. Look at his wife. He does. Poon-tang pie makes the world go round. Do as you're told Arnie, if you know what's good!

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  35. Keep electing the same old politicians and see how much deeper California will sink.
    Do you really think public servants deserve the wages they get?
    How much of your tax dollars are wasted?
    Business taxes too high?
    How many billions are spent on illegal aliens each year?
    Was it a fair trade to save a fish but destroy a multi-billion dollar Agricultural business and put thousands of people out of work?
    Cut the government in half.
    Elected public officials work for you, you don't work for them. You don't deserve to have your hard earned money stripped away from you so the government can continue to serve special interests and continue wasteful, needless, spending. Hit a gut election day.

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  36. I don't get it - they keep telling us we don't have enough taxpayers/people to pay for the retirement pensions - and yet California's population is GROWING exponentially. Millions of people keep coming from all over the world to live and supposedly work in California. So there should be PLENTY of pension funds. Unless there is something they are NOT telling us. They way they have it set up now, California and the rest of the States will have to accept millions of people anually just to keep our debt heads above water, (like we already are).

    But based on the results so far, strangely no matter how many immigrants we take in - THERE WILL NEVER BE ENOUGH IMMIGRATION to replace all those `aging taxpayers'.

    Sorry, I just don't get it. Can someone pls explain this line of logic?

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  37. Get rid of the illegals (not just in California but across the nation) that would be a good first step. They are ruining this country and couldn't care less about America. Most are criminals...

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  38. Endless benefits for useless stare workers, yet another violation of our rights. Add it to the list of gov’t violations of our right:
    They violate the 1st Amendment by fencing-in demonstrators at G-20, banning books like “America Deceived II” and trying to take-over the internet.
    They violate the 2nd Amendment by confiscating guns.
    They violate the 4th and 5th Amendment by wireless wiretapping.
    They violate the entire Constitution by starting undeclared wars.
    Impeach Obama (and sweep out the Congress, except Ron Paul).
    [Link of Banned Book]:
    www.iuniverse.com/Bookstore/BookDetail.aspx?BookId=SKU-000190526

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  39. California must create its own bank to finance its own redevelopment--interest free. Integral to this is the necessity to go after the Federal Reserve for engineering the financial/economic downfall of the US.

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  40. What about all the welfare and illegals sucking the system dry ? They have not paid in generation after generation and are sucking the state dry ! Wake up America all the freebees you pay out WILL destroy you !

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  41. I moved out of California 5 years ago. I would love nothing more than to move back to my beautiful mountain home. I miss the Sierra Nevadas, I miss the Mojave desert, I miss my beautiful ocean and my medical marijuana stores. I miss my friends and my family who all still live there. But I own a little contracting business -- I can't compete with illegal laborers on price, I can't afford state business taxes, or the ridiculously high rent...heck, I couldn't even afford to register my car. Where I live now, my rent is a quarter of the cost of an equal place in Cali, my car insurance is half, my car registration is 80 bucks a year, down from 400/yr in Cali. I hate what's been done to my beautiful state.

    I don't hate Mexican people, but they have really screwed up the southwest. I can't live in any border state and compete with them on price.

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  42. The powers that be will create another 9-11 before they let California "fall into the sea". They will whip the population into another fury, take out huge loans from the private federal reserve and embark on another war for "prosperity".

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  43. The Milken Institute is
    indeed the brainchild of Mike "fraudster" Milken.
    And, no pun intended, it's called Independent!

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  44. We could save a lot of money if we outlawed politicians, lawyers, and judges.

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  45. a public central bank issuing debt free money free from the wall street satanists, would end any problem listed in any of these comments...

    "WHOEVER CONTROLS THE MONEY SUPPLY, CONTROLS ANYTHING ELSE THAT MATTERS." ,,, ITS REALLY THAT SIMPLE....PRIVATE BANKS WILL REFUSE TO FINANCE (AND WAGE WAR AGAINST) WORKABLE SOLUTIONS THAT FREE THE PEOPLE FROM THEIR PARASITIC VAMPIRE CLUTCHES.

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  46. Yep, it's felon Michael Milken who's behind that "institute". He's used some of the money he shystered from people's retirement funds to make himself look dignified. He should have been received the death penalty, but it's not in the rule book to gas such criminals as he. Perhaps the law can one day be changed, and we can round up the Adler's, Friemans, Waksals, Madoffs, Milkens, Boeskys, Levines, Siegels, etc.

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  47. I keep wondering if any of the people in our California government will ever use the CAFR monies (that means the Collective Financial Financial Report monies), to pay the bills and remove all taxes to help the people of this state. Last time I looked, there was over 14 trillion dollars in this accounting, owned by the State of California. How come the people of this state have not forced the government to use this money. They work for us, not for themselves. Select some people who will use this money and work for the people of this state. I hope the new government will use this money to pay all the bills and help all the people of this state.

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  48. These government "workers" are nothing but parasites who have been sponging off the public for decades, taking our money, wasting it, and treating us productive folk with snobbery. Just cancel all their pensions and send them a bill for all they have stolen in their predatory lives. if they can't pay, auction off their organs to sick rich people.

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  49. Cali has been a haven for illegals and basically rolls the red carpet out for them .. The illegals collect benefits galore, but the average citizen is lucky to get anything. Sorry but Cali should have enforced immigration laws a long time ago and kicked them out. Now Cali is going to drown it debt. Who would have thunk it?

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  50. I am one of those rare creatures, born in California, in 1954. I have left and come back many times. I have seen many changes - to the neighborhood I grew up in, to the freeways, to the water and air quality, to the people. California epitomizes everything that MOST AMERICANS bought into - you know, that old American Dream of a house, filled with goodies, two cars in the garage, with that piece of property, as it increases in value, financing a bunch of extra stuff. Now that the whole thing, built on matchsticks and ponzi schemes, is crumbling, people are confused and angry. This WAS the plan all along folks. The Global Power Elite is really, really good at allowing things to be built up, just so they can tear them down. They love destruction and death. We are beyond answers anymore. Even though we pawns hold all the power, it is not something we will ever wield. Stop working, stop buying, stop paying taxes, and you bring them to their knees. Won't happen though. People will keep electing "leaders", will still buy into false solutions for problems which are created in order to achieve chaos. Welcome to the nightmare.

    California was such a beautiful place years ago. I recently visited Sequoia National Park and the number of dead and dying trees was astounding. We are poisoning ourselves to death, or really "they" are poisoning us to death, and we don't even know it, or most of us don't. Good luck to you all, you may need it!

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  51. This was a Management created crisis, but you have not heard one word from management about taking pay & benefit cuts for themselves.

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  52. people have a right to starve to dead..

    this is what socialism is all about...

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  53. If banks were forced to pay taxes which they don't, maybe more states could keep their heads above water. WHY DON'T THE BANKS PAY TAXES????

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  54. When I was a kid growing up in Canada California was IT! Now it's just s--t. How do these things happen? Sloth, greed and indifference.

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  55. Thank you one and all for your generally excellent comments.

    You should know that the "solution" is already in place :

    "Quantitative Easing" . . . to Infinity . . . and Beyond !!!

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  56. The power of the printing press will also fix this minor problem. Nothing to see here, hey looks whats on TV!

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  57. California is only the first state, many others are facing similar situation.

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  58. I don't think you realize how prophetic your words are.

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  59. Yes this is the solution but unfortunately not too many people understand this or chose to ignore it for obvious reasons.

    California MUST charter its own state bank.

    This is the only solution we have.

    Whitman and Brown do NOT know how to address our economic problems if they haven't even glanced at the HUGE benefit a state-chartered bank would do to our economy. Dependence on private or federal money will KILL California.
    October 19, 2010 4:01 PM

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  60. $15,000 per year is what each working Californian pays for the federal war effort. Stop warring and you will have enough money to pay the pensions and have some left over.

    Ed

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  61. Seceded from the union? Sure. Apply for foreign aid? No need once we've seceded. Right now California gets back 79 cents for every dollar it pays to the federal government. Even with all the inefficiency and stupidity in Sacramento, the state would have a surplus if we secede--and we could afford a tax cut, too.

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  62. Break this country apart already. As a a country we are not going to legalize pot, and release those low-level offenders. It is not happening. We can't even agree an medical mj. Therefore we must start over. Even the conservative free-market advocates won't allow marijuana to exist in a free market. Hypocrisy, stagnation, and gridlock (ie more of the same) is what we have legislated. Stop it. Start over.

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  63. Blame the UNIONS and the POLOTICIANS.. no particular order.

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  64. A worst-case turnout for the election would be to have a yenta-trio running California. Right now we've got Feinstein who greases the skids for her hubby's China investments, and Boxer, the politition with the shortest arms (ever notice how her hands only go done to her waist?) The next yenta would be New York born Meg Whitman, the women who made enough shyster-money while at Goldman Sachs to enable her to buy e-bay. Don't believe she's a yenta? Look it up.

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  65. The only thing that is saving California citizens is the fact that State Government is not allowed by law to go bankrupt.
    Orange County did it and screwed everybody. It's like having a blank check. They cancelled all county contracts. Siezed the employees deferred compensation accounts and had a field day.
    All the rules go out the window. All the State lawmakers have to do is go back and eliminate all of the programs that were created during the last 15 years. Instead of saving some of the excess money the state had they continued spending like a sailer on payday. If they had 200 million they would spend 300 million. Tav and spend. Where have I heard that before.
    Squido

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  66. My guess is that all public pensions (taxpayer funded) will be nationalized soon.

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  67. Your pension fund is toast. If by 2012 or 2013 the payments are going to be more than revenue, how on earth are they going to pay?

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  68. Public school enrolments, unemployment benefits, food stamps, legal aid, drivers licences, social security numbers, bank accounts access to free medical care and employment in the civil service hould be reserved for US citizens only. Everything else is user pays - you can't pay you can't have, can't do. No valid US documentation, you can't stay either. You can't pay your way and pay your dues to become one of us, you are of no use to the USA. You are a burden and unwelcome.

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  69. The solution is simple: Mexico wants California back (and has largely reclaimed the southern half already), so just give it back to them, and let the leftist diversity religionists see what they have wrought once they are the minority.

    Call me a rat leaving a sinking ship, but I got out of California 20 years ago. Life is infinitely better here in southern Utah, not far from Zion Canyon, but far from the polluted, crime-ridden ant hills of California.

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