Sunday, April 15, 2018

April, 2018, Part 2, Political Class Insanity: State Pensions Going Bankrupt and Secession Efforts in California

It is another month which means it is again time to review the latest political class insanity from Washington and around the world. Political class insanity takes many forms including the wasting of taxpayer wealth, criminal fraud within government programs, inane and stupid political quotes and actions, the inability to create and implement effective and efficient government programs, stupid and ill performing economic policies and strategies, and other forms of insanity that continue to evolve and surprise and shock us.

Let's get started:

1) We have often reported on how the Federal government’s spending habits have been out of control for decades, a reality that now presents the country with over $20 TRILLION in national debt and a burden that will likely crash both our economy and our democracy, taking our freedoms with it. 

Nowhere was this lunacy more present than during the Obama administration. His Presidency oversaw the near doubling of the national debt from about $10 TRILLION to almost $20 TRILLION in short eight years. And unfortunately, despite outspending the government’s tax revenue by almost $10 TRILLION, we have nothing to show for it. Our roads, dams, and bridges are crumbling, our public schools continue to under educate our kids, Social Security, Medicare, and Medicaid are still hurtling towards fiscal insolvency, etc.

But it appears that Washington politicians are not the only ones who cannot manage a budget process, according to a recent Reuters article that appeared on the Newsmax website:
  • State government pension systems are now showing a funding deficit of $1.4 trillion, an all time record deficit.
  • This financial hole was highlighted in an analysis recently completed by Pew Charitable Trusts.
  • This deficit has kept rising despite us being in an economic growth mode for about nine years.
  • The states now have only $2.6 trillion in assets but are facing pension liabilities for government workers of about $4 trillion.
  • According to Pew: "Many state retirement systems are on an unsustainable course, coming up short on their investment targets and having failed to set aside enough money to fund the pension promises made to public employees." 
  • Which means that either local and state taxpayers are going to have to pay a lot more to cover the promises their politicians made to government employees and unions or pensioners from government work are going to see a sizable reduction in their benefits, or both, two very unpleasant outcomes, courtesy of your American political class.
  • While some states are not in too bad shape, having funding levels at least 90% or more of their liabilities, some states are in horrid shape.
  • At least 22 states had less than two thirds of what they need to fund pensions with Kentucky and New Jersey at an amazing 31% level, i.e. they need more than three times in assets than they have to cover pension liabilities.
Now you know that this problem did not crop up overnight. You cannot not know that you are 69% short of the liabilities you have from a pension perspective in New Jersey for example. Either through neglect or lack of courage, politicians in most states have run away from this problem, which just makes it worse and worse over time. Which means the ordinary citizen is going to get hit very, very hard because of the incompetence and cowardness of their state politicians.

2) Let’s stay at the state political class levels for this next topic. We have previously reported how there was a movement afoot in California to split the state into two separate states. Apparently, a lot of the suburban and rural residents in California are sick and tired of paying high taxes to support liberal and Democratic Party programs in urban areas that have no possible positive impact on them. Thus, the movement to create a new state, “New California.”

Well, apparently this movement is growing as more and more people in California get more and more fed up with the ineptness of the state’s political class. In fact, according to a recent article by Mac Slavo on the Freedom Outpost website:
  • Some Californians do not want to stop at two states, they want the state to break up into three separate states.
  • An effort to such an effect has garnered enough signatures to qualify for a place on the ballot in California in November.
  • The leader of this three state solution, Tim Draper, says that his backers have enough signatures, over 600,000, to submit the petition for three states to election officials.
  • Only 365,880 signatures were required so his effort far exceeded the minimum number of people needed to sign on for the ballot access process.
  • According to Draper: “This is an unprecedented show of support on behalf of every corner of California to create three state governments that emphasize representation, responsiveness, reliability, and regional identity.”
  • One new state would consist of Los Angeles, Ventura, Santa Barbara, San Luis Obispo, Monterey and San Benito counties, a second state would consist of Orange, Riverside, San Bernardino, San Diego, Imperial, Kern, Kings, Fresno, Tulare, Inyo, Madera and Mono counties, and the third state would include the the remaining 40 counties in northern California.
Unfortunately, even though this effort at freedom will be on the ballot, it is unlikely to pass since the areas that many rural and suburban Californians want to get away from, the urban centers of LA and San Francisco, have more voters than the suburban and rural areas that will likely defeat this effort at freedom. Which is a shame when a small geographic area can dictate freedom restrictions and confiscate large amounts of taxes for no benefit to the rural and suburban taxpayers in return. 

The effort, however, illustrates quite clearly how out of touch our politicians are with many/most of Americans today. So out of touch that Americans are willing to break up centuries old political boundaries to get the freedom they want...and deserve.

That will do it for today’s insanity. Only two pieces of insanity today but important ones: Americans going to extra lengths to stay free and remove themselves from political tyranny and state politicians leading their states down the fiscal hole of bankruptcy. More insanity to follow.

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