Free Republic

Scranton could be headed towards another fiscal crisis like the one that resulted in city workers having their pay cut to minimum wage in 2012... Moody’s warned investors that Scranton could be facing the threat of default or bankruptcy thanks to a $20 million budget gap for the fiscal year that begins Jan. 1. The city is supposed to approve a new budget by Nov. 15, which would have to close that deficit to balance the budget. ... A similar crisis hit the city in July 2012, which lead to Mayor Chris Doherty cutting all city workers’ pay to minimum...

America’s public pension funds are in trouble because sketchy Mr. Wall Street sold some slack-jawed pension fund managers on risky investments with promises of high returns that may never materialize. Or so Matt Taibbi seems to believe. In a recent piece in Rolling Stone, Taibbi blames public pensions’ current woes on “Gordon Gekko wanna-be’s” (sic), “scorched-earth takeover artists like Bain Capital,” and “Wall Street,” who used the financial crisis to lure weakened pension funds into investing in “alternatives.” Alternatives are investment vehicles that are different from stocks, bonds, and commodities in that they are typically traded by individuals without the...

Even before she retired last week, scandalized IRS official Lois Lerner's compensation was already attracting attention. While on administrative leave, federal rules allowed her to keep collecting a salary, one that reportedly totaled $177,000. So it was no surprise when speculation arose over how much Lerner could collect in federal pension benefits. Unfortunately, that speculation, which initially projected a benefit of over $50,000, might be off by about half ... and in the wrong direction. National Taxpayers Union calculations show that Lerner could qualify for a starting pension at the annual equivalent of as much as $102,600, and up to...

Even before she retired last week, scandalized IRS official Lois Lerner´s compensation was already attracting attention. While on administrative leave, federal rules allowed her to keep collecting a salary, one that reportedly totaled $177,000. So it was no surprise when speculation arose over how much Lerner could collect in federal pension benefits. Unfortunately, that speculation, which initially projected a benefit of over $50,000, might be off by about half ... and in the wrong direction. National Taxpayers Union calculations show that Lerner could qualify for a starting pension at the annual equivalent of as much as $102,600, and up to

Pensions: In Chile, a major study shows the nation's private retirement accounts provide workers pensions worth 87% of their salaries, 73% of that from profits on savings. So much for the canard about the perils of markets. The story was front-page news in Chile's largest newspapers, El Mercurio and La Tercera, on Sept. 3, a powerful affirmation of what former Republican presidential candidates Newt Gingrich and Herman Cain called "The Chilean Model" of private retirement accounts. The study of 28,000 households by Dictuc, a consultancy affiliated with the Catholic University of Chile, showed that male workers who contributed just 10%...

A corruption conviction doesn’t necessarily stop elected officials from profiting at the taxpayers’ expense. But a new effort led by U.S. Attorney Preet Bharara aims to go after politicians’ public pensions when the courts find them guilty. “Our primary mission is to address and to undo injustice, and, in the public-corruption context, a galling injustice that sticks in the craw of every thinking New Yorker is the almost inviolable right of even the most corrupt elected official — even after being convicted by a jury and jailed by a judge — to draw a publicly funded pension until his dying...

Quietly, as the looming possibility of a U.S. military attack on Syria dominated news internationally, the government of Poland announced a decision to confiscate half of the nation’s pension funds in an attempt to delay an impending government debt crisis. While details remain hazy, Reuters reported Sept. 4 that Polish Prime Minister Donald Tusk announced a government decision to transfer to ZUS, the government pension system, all bond investments in privately owned pension funds within the state-guaranteed system. For now, private pensions in Poland will be allowed to keep equity investments that in the Polish state-guaranteed pension system tend to...

The American Legislative Exchange Council Center For State Fiscal Reform’s latest publication, Keeping the Promise: State Solutions for Government Pension Reform, offers a solution-based perspective that should be valuable even for high-tax and higher-debt Illinois in its search for Illinois pension reform. Illinois pensions face a liability of at least $97 billion, with some estimates much higher. Gov. Pat Quinn has gone so far as to deny paychecks to the state legislature in attempt to put a more immediate cost on inaction. The governor’s office projected the defined-benefit liability will grow by $5 million per day, an improvement over last...

The School District of Philadelphia's financial woes became a national story last week when the New York Times featured a piece on the district's efforts to borrow $50 million to make up a significant funding shortfall that actually threatened the start of the school year. In that piece the reporters attributed the district's problems to a range of issues, including rising pension costs and cuts to state education aid, but the piece also noted that it was unclear exactly what the system owed on pensions. However, a research piece earlier this year (mentioned in this June PSI blog item)...

Having a pension plan has been part of the American Dream for millions of workers. Put in thirty or thirty-five years with a company, retire, and then the company will send you a check every month for the rest of your life—an attractive prospect. The amount of the check is pre-determined. It is a “defined benefit” promised to the worker. Unfortunately, this simple vision has proved difficult to implement. The basic problem has been that pensions are a promise for the future, but nobody can guarantee the future. In our dynamic economy, the Schumpeterian process of “creative destruction” relentlessly weeds...

Washington auditors have determined that pre-retirement salary increases led to more than $30,000 in excess pension payments for three former firefighters, and the state projects it will save the system more than $140,000 by permanently reducing their combined pension values. ... Dave Nelsen, the legal and legislative services manager at the state Department of Retirement Systems, said Lakewood officials who approved the raises believed what they were doing was OK. “I got no indication whatsoever that there was any desire to put one over on anybody,” Nelsen said. ... Even with the reductions, Hull, Bronoske and McGovern will still have...

Ex-congressman Jackson is eligible to receive $8,700 dollars per month in disability pay due to his bipolar condition and could receive a partial federal pension of $45,000 per year once he reaches 65. While on the city council, Sandi Jackson had automatic pension contributions of more than $50,000 withdrawn from her pay, even though she chose not to be a member of the city pension fund.

Although disgraced Illinois Congressman Jesse Jackson Jr. suddenly developed a “mood disorder” as the feds were about to indict him, he qualifies for generous government disability payments because it’s considered a debilitating mental illness. Of interesting note is that Jackson Jr., sentenced this week to 2 ½ years in prison for corruption, never showed any symptoms of a “mood disorder” during his 17 years as a federal lawmaker. The mental illness surfaced abruptly last summer as the congressman, a member of Judicial Watch’s Ten Most Wanted Corrupt Politicians list, was about to get criminally charged. The feds had been breathing...

"We exaggerate misfortune and happiness alike." Honore de Balzac wrote. "We are never as bad off or as happy as we say we are."How true, and how relevant to today's hyper-sensational media. Here are three economic stories I find overblown.Overblown story No. 1: Student loans now exceed credit card loansNearly every article on student loans these days carries the same statistic: Student debt now exceeds credit card debt.Is this supposed to be shocking? Am I supposed to be upset that more people are financing bachelor's degrees at 4% interest than plastic garden gnomes at 25% interest?Student debt has put...

After Detroit filed bankruptcy two weeks ago, the attention turned to America's other financially distraught cities. Think Motown is the only major U.S. city in a boatload of financial trouble? Think again. Detroit's bankruptcy filing sent shivers down the spine of municipal bondholders, government employees, and big-city urban residents all over the country. That's because many of the 61 largest U.S. cities are plagued with the same kinds of retirement legacy costs that sent Detroit into Chapter 9 bankruptcy this summer. These cities have amassed $118 billion in unfunded healthcare liabilities. These are legal promises to pay healthcare benefits...

Detroit, you're not alone. Across the nation, cities and states are watching Detroit's largest-ever municipal bankruptcy filing with great trepidation. Years of underfunded retirement promises to public sector workers, which helped lay Detroit low, could plunge them into a similar and terrifying financial hole. A CNBC.com analysis of more than 120 of the nation's largest state and local pension plans finds they face a wide range of burdens as their aging workforces near retirement. Thanks to a patchwork of accounting practices and rosy investment assumptions, it's not even clear just how big a financial hole many states and cities have...

Michigan's Attorney General Bill Schuette, a Republican, said on Saturday he would defend retirees who risk losing public pensions because of Detroit's bankruptcy, putting him at odds with the city's emergency manager appointed by fellow Republican Governor Rick Snyder. Schuette, an elected official, said the Michigan state constitution is "crystal clear" in stating that pension plans are a contractual obligation that may not be diminished or impaired. "Retirees may face a potential financial crisis not of their own making, possibly a result of pension fund mismanagement," Schuette said in a statement. The attorney general said he would file in federal...

The City of Detroit tried to file for bankruptcy last week. A state judge initially blocked the filing, but a federal judge ruled Wednesday this week that the bankruptcy case can move forward. More legal maneuvering is ahead and Detroit may well succeed in the end. After all, Detroit owes somewhere in the neighborhood of $18 to $20 billion to over 100,000 creditors. One group of creditors particularly wary of a municipal bankruptcy is Detroit’s public sector labor unions. They fear a bankruptcy judge might allow the city to cancel or reduce their pension or retiree health benefits. The unions...

The pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the coming retirement crisis that will shake America to the core. Right now, more than 10,000 Baby Boomers are hitting the age of 65 every single day, and this will continue to happen every single day until the year 2030. As a society, we have made trillions of dollars of financial promises to these Baby Boomers, and there is no way that we are going to be able to keep those promises. The money simply is not...

Dear Dave, My grandfather died about a month ago, and I recently learned that in his will he distributed his money unevenly between his children and grandchildren. I received significantly more than other members of the family, but I make $140,000 a year. I’d like to give them some of my inheritance to even things out. How would you approach this? Kate Dear Kate, You’re obviously unselfish and have a really good heart. But honestly, it was your grandfather’s decision and his money to do with as he pleased. It wouldn’t be wrong or greedy to simply keep what you...