Detroit Pension Woes A Drop In The Entitlement Bucket Compared To The USA

Confounded Interest ^ | 08/05/2013 | Anthony B. Sanders

[whitedog57]

Detroit’s fiscal woes have been front and center in the news recently. Now this is a new claim that Detroit’s pension woes are not as bad as Kevyn Orr, the city’s emergency manager, estimated. Orr stated that the underfunding of the city’s two pension funds at $3.5 billion.

Orr arrived at that figure in part by estimating the funds’ expected annual return on assets at 7%. The city’s actuary, meanwhile, says the size of the gap is actually $977 million, based in part on an expected annual return of 8%. So, not as bad as Orr’s calculated. But can Detroit actually earn an expected annual return on assets of 8%?

Detroit’s obligations, according to The Heritage Institute, are $26,655 per capita. But that figure is no where close to the Federal figure of $218,169 per capital.

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If we use usbebtclock.org, we get a figure of $1.1 million in liabilities per taxpayer.

usdebtclock080513

And when you consider that almost 50% of Americans pay no income taxes, we have a serious entitlement problem.

Now you can the problem with American pensions and entitlements. I hope that Detroit isn’t investing in agency mortgage-backed securities (MBS) with their declining returns with falling MBS prices.

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To paraphrase the Apollo 13 astronaut James Lovell, “USA, we have a problem.”

[whitedog57]

Can we stop promising massive gov't pensions? Please???

[Opinionated Blowhard]

Despite all the problems, I have to wonder whether Americans are ever going to connect the dots and understand that they can’t vote for the candidate who shows that “he cares for us” by promising to open the spending spigot full blast. In theory, it sounds great to give people a full pension and pay all their costs in their “vulnerable, retirement years.” Anyone who points out that we can’t afford that is portrayed as some heartless scold of a bookkeeper, and a lot of people believe it. Yet the facts are the facts. We can’t afford this. Its destroying the country. But way too many voters figure they’ll be dead when the s-—t hits the fan so they don’t do anything about it. Its “gimme gimme gimme and make future generations pay for it.”

[DarkSavant]

Orr arrived at that figure in part by estimating the funds’ expected annual return on assets at 7%. The city’s actuary, meanwhile, says the size of the gap is actually $977 million, based in part on an expected annual return of 8%. So, not as bad as Orr’s calculated. But can Detroit actually earn an expected annual return on assets of 8%?

No.

[PGR88]

Can we stop promising massive gov't pensions? Please???

Progressive government is built on group and identity politics, ever-growing government debt, and more confiscation of people's wealth and productivity through taxes and inflation.

This is all enabled by the Federal Reserve and our fiat money system.

[babble-on]

Detroit cannot print money. Washington can. It’s a big difference.

Not that I don’t want to see SS reform, but the problems of the US federal pension system are fundamentally unlike the problems of Detroit’s.

[kiryandil]

The city’s actuary, meanwhile, says the size of the gap is actually $977 million, based in part on an expected annual return of 8%

Yes, 8% interest - in the land of ZIRP. ROFLMAO!

Can we stop promising massive gov't pensions? Please???

When the children figure out that they're working for $15 an hour, part-time, with no health care so that the Greedy .Gov Geezers can get paid 20-45 bucks an hour to walk out to the mailbox twice a month, along with GOLDEN forever health care, there will be a little bit of an adjustment.