Posted on 05/20/2011 8:01:18 AM PDT by Poundstone
About 550,000 full-time career federal government and U.S. Postal Service could hang it up and move on at anytime because they are eligible to retire, according to government statistics. The eligible workers represent about a quarter of the 2.4 million permanent full-time employees collecting government or postal paychecks.
(Excerpt) Read more at washingtonpost.com ...
“Without massive realignment of government spending (including pensions), individuals will hold other currency or barter.”
Well, I don’t think we’re going to sink to a Germany 1923 type of situation. And at any rate, federal pensions are such a tiny part of the federal budget that I don’t see the federal government altering the COLA formula for current retirees. For future retirees, possibly including many current employees — maybe.
“Well, I don’t think we’re going to sink to a Germany 1923 type of situation. And at any rate, federal pensions are such a tiny part of the federal budget that I don’t see the federal government altering the COLA formula for current retirees. For future retirees, possibly including many current employees — maybe.”
We are headed for dire economic times if substantial changes to government spending are not made. Contrary to your uninformed assertion that pensions are not a substantial unfunded liabilty, a USA Today article indicates that the unfunded liability of federal civilian and military pensions is $5.3 trillion in today’s dollars. This liability grows at $300 billion per year. A substantial increase in inflation will balloon the unfunded liabilities much higher with the COLA.
http://www.usatoday.com/money/economy/2009-05-28-debt_N.htm#uslPageReturn
Your optimism is based on wishful thinking. Government spending including federal pensions will be substantially reduced directly or indirectly. The levels of current government spending and future spending are unimaginable. The world will not sit by idly as our printing presses generate trillions of new dollars.
I've computed out all of my deposits over the years, allocated interest to them using the current T-bill rates at the time, and gone ahead and retired.
Based on my current "draw" (to use a non-government term), I would need to live to 200 years of age to actually recover my deposits with interest.
What you "schmart guys" forget is that federal retirement is not inheritable. The payments end when the beneficiary dies. That tends to gobble up all that "unfunded pension liability". Actually, it doesn't just "tend" it actually does gobble it up.
Only in the private sector can you compute out a personal retirement program that assumes heirs will get a piece of the action. Rockefeller had such a program. Old Joe Kennedy had one. I'm sure most rich folks do. Salaried personnel usually don't except for their 401(k) plans or IRAs.
That's a bunch of leftist claptrap ~ they want you to cave in to higher taxes ~ that's the purpose of the article.
“Government spending including federal pensions will be substantially reduced directly or indirectly.”
By “indirectly,” I presume you mean through inflation. That may well happen. But I’m quite confident that existing federal pension formulas for current retirees will not be affected. For future retirees — possibly, as I noted.
I suggest that you look up my research on pension compensation (Michael Mannino published in the Journal of Pension Economics and Finance). I have computed pension compensation for a plan (Florida Retirement System) with lower benefits than the FERS plan. The average level of surplus deferred compensation was $250,000+ in the FRS plan with much higher levels for higher paid professionals and administrators. My calculations took into account non inheritable features of defined benefit plans. The private sector sells annuity plans that provide lifetime income without an inheritable feature.
In summary, you are wildly misinformed about government defined plans. I do not know the specifics of your situation. Unless you retired at normal retirement age (or later), you received substantial surplus deferred compensation.
“That’s a bunch of leftist claptrap ~ they want you to cave in to higher taxes ~ that’s the purpose of the article.”
The article unfortunately did not provide methodology background. However, I have confidence that the basic levels of unfunded liability are reasonable. More than likely, the levels of unfunded liability are understated. I agree that USA Today is left biased. The article did not advocate tax increases, however. I would not dismiss the levels of unfunded liabilities as a leftist trap. The mathematics are compelling and unfortunately irresitible.
Did you notice the other day that Treasury tapped into what can only be Postal employee retirement deposits so they could keep under the federal debt limit.
Your argument that the federales subsidies USPS is BS.
With respect to employee retirements they actually refer to ".......to pay benefits that won't be covered by future taxes....."
My retirement has been paid for in agency matching funds deposited with OPM (in US treasury bonds) which were paid by USERS OF THE MAILS, not TAXPAYERS. The actuaries say it works out.
What you do when you don't back USPS out of the action is you are dealing with the high priced spread in the US government. Your average postal employee simply doesn't earn the high incomes found commonly in, for example, Justice Department!
There are some exceptional postal workers ~ in management and technical positions ~ who earn essentially the same as their counterparts in other agencies, but their retirements are also paid out of user fees (postage) by private sector mailers in a process separate and distinct from TAXES.
That's why postal retirement funds can constitute a body of credit Geithner can use to avoid borrowing elsewhere. That's the subsidization of the federal government by USPS that's presently taking place.
I only see 5 occurrences of the word “tax” with 3 of those occurrences part of “taxpayers”. The article does not promote any particular solution to the budget problem.
The USPS has $80+ billion in unfunded pension liabilities. The unfunded liabilities are not covered by postal fees. The USPS has claim that it is not part of the government in an attempt to claim that these liabilities are part of general taxpayer obligations. The USPS is part of the government as Congress exerts considerable influence on its budgets and operations.
USPS employees are well compensated with almost iron clad job security (at least until now). The positions have the same bloated pay grades as other federal employees. The USPS has never ending battles between management and the labor cartels. As with any other labor cartel dominated organization, I am sure that the USPS has lots of lazy bums along with mind numbing and efficiency crashing work rules. I am sure there are talented and hard working individuals also.
Congress has given the USPS a politically charged mission with idiotic requirements for uniform postal rates and policital pressures to keep post offices open. Congress has also provided the USPS a monopoly on first class mail to offset the onerous constraints.
The Geittner manuevering involves phony government accounting. The USPS does not have any pension fund that I can find. Please give me a link to the CAFR for the USPS pension fund so I can see its investments. The federal government of which USPS is part of, has $80 billion of unfunded liabilities for postal workers. There are no assets to pay these benefits. The federal government has taxing ability and the USPS can raise postal rates.
With USPS overpaid into the retirement system to the tune of $78 billion................. give me a real source ~ on unfunded.
BTW, USPS cannot, by itself, raise rates. That matter is regulated by the Postal Regulatory Commission.
Here is a source about unfunded liabilities. Most likely, the liabilities are understated as government pension agencies use phony discount rates to understate liabilities.
http://www.gao.gov/products/GAO-10-455
The USPS is part of the federal government. The federal government does not have a pension portfolio to fund retirement benefits. The argument about overpayment is simply an issue of phony government accounting. Economically, the federal government has unfunded liabilities of $90+ billion for postal workers. These liabilities can only be met by reducing benefits, increasing taxes, or increasing postal rates.
“These liabilities can only be met by reducing benefits, increasing taxes, or increasing postal rates.”
You keep forgetting the other option: printing more money!
And it’s worth noting that the $90 billion figure, even if accurate, isn’t payable all at once — it’s spread out over many, many years.
"Comments: House Subcommittee Chairman Lynch introduced H.R. 5746 on July 15, 2010, which would require the Office of Personnel Management to recalculate the Postal Service's CSRS obligation using a methodology approved by the Postal Regulatory Commission and if it finds USPS has overfunded its obligation, then OPM would have 90 days to transfer this money to the Postal Service's Retiree Health Benefits Fund. The subcommittee passed the bill, but it was not enacted in the 111th Congress. On the Senate side, both Senators Carper and Collins introduced bills, S. 3831 and S.4000, in 2010 that would 1) modify OPM's methodology for calculating the Postal Service's CSRS and FERS pension liabilities and USPS's funding requirements for its retiree health benefits, 2)enhance efficiency and reduce costs, including leeway to close post offices and reduce workforce-related costs, 3) require an arbitrator to consider the Postal Service's financial condition in rendering decisions about collective bargaining agreements, and 4)allow the Postal Service to offer nonpostal products and services that are in the public interest. These bills were not enacted by the end of the 111th Congress. "
I thought something was funny with your GAO stuff ~ and there it is ~ the rest of the story.
GAO itself was the first to notice that the formula used to levy Postal Revenues into the retirement system was different than that used in the rest of the government.
The Postal Inspector General's office also found some serious multibillion dollar overpayments to OPM.
It's a very serious problem.
Frankly, for my purposes they can take the surplus and recalculate my retirement so I recover the full benefit of my earlier contributions.
The formula does not matter. The USPS is part of the federal government. There are no assets to pay for federal retiree benefits for postal retirees or any other federal retirees. The only options to pay for retirement benefits are taxes, fees, and printed money. Without substantial reductions in government spending including federal pensions, the dollar will collapse at some point. The world will not be able to absorb $100 trillion of new dollars. Essentially, this country is consuming far more than it is producing. The dollar’s collapse will bring widespread economic devastion wiping out savings and purchasing power. If governments (state and federal) still do not reduce spending, no one will accept dollars for transactions.
Sure there are assets. I have a couple of thousand acres on the Grand Canyon checked out and they’ll do just fine. BTW, the Constitution itself guarantees MY PENSION but it doesn’t protect national monuments, national parks, Obamakkkare or any of these other extraconstitutional gimcracks and geegaws.
You are certainly correct that the US government has many assets that could be sold. Many assets should be sold although I do not see that national parks will ever be sold. I do not know of any part of the Constitution or case law that guarantees federal pensions. New York state has a state constitution clause that supposedly guarantees pensions. Many other states have strong legal protections for government pensions.
These legal protections are essentially worthless if the dollar collapses. The collapse of the dollar will be facilitated by ridicuolous pension demands among other demands. Insistence by many groups including government employees for protection of their benefits will be a leading cause of the dollar collapse. This positive feedback loop (inflation will be the strong generator of positive feedback) will ensure the destruction of your pension (and large parts of the economy).
It's interesting.
The statement about public debt is in Section 4 of the 14th Amendment. As far as i know, there is no case law on government pensions in regard to the 14th Amendment. The SC has not ruled favorably on government debt in past cases. According to your argument, the debt ceiling is a violation of the 14th Amendment. It is doubtful that anyone could successfully bring a debt ceiling case to the SC because the SC would not grant standing.
It does not matter if the SC would rule that government pensions are protected by the 14th Amemdment. The Constitution cannot ensure a viable level of economic activity to maintain prosperity. Governemnt spending policies threaten the economic viability of the country. You are deluded into thinking that government employees will be spared the devastion of economic ruin. You represent just another interest group trying to maintain its government spending bounty. You are part of the majority in line for government transfer payments.
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