Sunday, July 29, 2012

When Will This End?

A couple months ago I posted about a teacher at my school who, after hearing about forthcoming furlough days and dire budget cuts, cried out in exasperation, "When will this end?"  This teacher is a flaming lib, and in my mind I replied to her that it will end when she stops voting for Democrats for every single statewide office and for the legislature.  One-party rule never works, even when it's your party that rules.

The dominoes are falling in California.  First Vallejo filed for bankruptcy.  Then Stockton, Mammoth Lakes, San Bernardino, and coming soon, potentially Compton and Fresno.

These cities, like the state itself, spent lavishly when times were good, making no provisions whatsoever for the "back side of the hill", which inevitably comes.  Who, in Democratically-controlled California, could possibly say no to a public employee union, especially when the coffers are flush?

So when will this end?  When we elect adults to office, people who have at least vestiges of a backbone and can exercise at least a modicum of fiscal reason. 


mmazenko said...

The adults who increase your class size, cut your pay, increase your medical premium, scale back benefits, cut your pension, and increase your retirement age?

If you're OK with those reforms, I am, too.

Darren said...

That's what's being done now, because there's no alternative now that we've reached the cliff.

No, I'm talking about the adults that will resist spending more than we have, who will properly fund the pension I've been promised, and who don't cower before public employee unions.

mmazenko said...

Resist spending, properly fund the pension, and now cower before the unions?

You've just take three opposing positions in one sentence.

Darren said...

If you truly believe that, your reading comprehension skills are in need of some work.

Anonymous said...

Some data on California state spending:

1998: $ 70B debt: $ 50B
1999: $ 75B debt: $ 54B
2000: $ 84B debt: $ 57B
2001: $101B debt: $ 62B
2002: $110B debt: $ 71B
2003: $120B debt: $ 95B
2004: $123B debt: $106B
2005: $129B debt: $107B
2006: $137B debt: $109B
2007: $139B debt: $114B
2008: $152B debt: $122B
2009: $159B debt: $134B
2010: $167B debt: $148B

California has increased state spending by about 150% in the last twelve years or so. The population has grown from about 32M to about 38M in that time (so, about 16%) and the CPI has increased from about 163 to about 214 in that time (so about a 31% increase in the consumer price index). Putting population grown (1.16) and CPI growth together (1.31), we'd have an increase in the state budget of about 51% from 1998 to 2010.

*Instead*, we have an increase of ~150% *and* an increase in the state debt of 200%.

There are some good reasons for a state budget to increase faster than the CPI, but even *that* only gets you an additional 3% per year ... so 1.16*1.31*1.39 = 2.11 ... we might expect an increase in the state budget of 111% from 1998 to 2010. So, $70B grows to $147B ... or $20B less than 2010. $20B was a bit less than the deficit for that year, but it is pretty close.

California as a state doesn't actually need to cut back on spending ... it just needs to stop increasing spending faster than "population growth + inflation" for 5 to 10 years.

But we won't do that.

*OR* we could vote to increase our (or, better yet, someone elses) taxes enough to cover the difference.

But we won't do that, either.

The voters had a chance in 2005 to vote for fiscal restraint (proposition 76), and voted it down by almost two-to-one.

Note that this was only a short time after we had recalled Gray Davis because of serious budget shortfalls. We had just been through a rather bad budget crunch and voted against spending restraints to avoid another.

And now we have another.

I'll repeat: If the state could/would just limit spending increases to "population growth plus inflation" for a while, the problem would go away. But we won't.

It doesn't require huge cuts to do this. We just need to stop increasing spending for a while.

-Mark Roulo

Steve USMA '85 said...

Actually, Darren, I comprehended it the same way as Mazenko. You want to “properly fund the pension” with money the state and local governments do not have but you want them to “resist spending more than we have.” Then, you do not want the politicians not to “cower before public employee unions,” one of which (CTA) mission is to fight to properly fund the pension you have been promised.

It has been a long time since I took Plebe English and my comprehension skills may have faded. Could you please explain how these are not opposing positions?

Darren said...

There are legitimate state expenditures, and there are illegitimate ones. Funding a promised retirement, instead of making promises and *not* funding it, makes sense to me. Building a $90B mid-speed train from nowhere to nowhere seems like an illegitimate one.

Are those examples too nuanced? Do you really think California doesn't waste tons of money? We have plenty of money to spend on "good" government if we didn't blow so much of it on "bad" government. There's a reason this state, with 10% of the country's population, has 33% of the country's welfare cases.

If the CTA were spending its time worrying about Darren's pay, benefits, and working conditions, I'd probably be a member. Since they're not, and they're just another far-left special interest with tentacles reaching into topics nowhere near related to Darren's pay, benefits, and working conditions, I would want the legislature to stop throwing money at the "bad govt" ideas of the CTA and restore some fiscal sanity.

It's not insanity to think that I could have the retirement I've been promised *and* that California could be making some serious spending cuts. Heck, if that's too reactionary, just see Mark's analysis above.

Anonymous said...

Darren: "It's not insanity to think that I could have the retirement I've been promised *and* that California could be making some serious spending cuts. Heck, if that's too reactionary, just see Mark's analysis above."

Sadly, it very well may be insanity to think this.

The big problem is that the spending above does *NOT* include enough money contributed to the pension funds to make good on the promised retirements.

*California* can (in theory ... in practice it won't) get spending lined up with tax revenue (what I was trying to show above), but one part of this will almost certainly be to end pensions and convert to a defined-contribution retirement scheme for government workers (teacher, fire fighters, police, etc.).

The currently retired workers (and those who are really close to retirement) probably would do okay with this scheme (much like corporate types who had already retired did okay when companies ended their pensions). But those who are still 10+ years away will lose.

Teachers with some years of pension contribution won't lose them, but because pension returns are *so* heavily weighted towards the end (pension returns tend to be a square function of years worked), the resulting pensions will be small compared to the expected pensions.

However, I fully expect that this won't happen. Too many unions will object and will spend money defeating any such proposals.

Instead, California will simply run out of money. And, like Greece, we can't print ...

-Mark Roulo

Anonymous said...

Which teacher is the lib? As a former student at Rio I'm quite curious. My guess would be maybe DV (Apush)?