One man practicing sportsmanship is far better than 50 preaching it.
Knute Rockne
My Dedication to Governor Jerry Brown
Facing a $25B deficit, Governor Brown (D) is aiming an "austerity budget", slicing half of the difference in terms of employee pay, health benefits, welfare, and education. In his first executive order, he's ordering half of the state's 96,000 cellphones returned by June, estimated a cost savings of $20M (which may be attenuated by any relevant termination fees).
I've noted some of the responses on various websites; besides the predictable responses that Brown is a Luddite, a $20M savings is a drop in the bucket, but every little bit helps. As of this post, I haven't looked at the statistics for how many businesses pay for cellphones or usage, but in terms of my experience only two clients or employers (in 1999-2000) supplied cellphones (with various policies to recoup personal calls). Literally the only times I used them was when a technical problem occurred during my commute to the office (well, in one place, I sometimes got called when I was working in the server room). I got my first personal cellphone after experiencing car problems on an isolated stretch of I-5 on the way to a project near LAX. Over the past decade, I can recall two former employers whom reimbursed a prorated amount of my call-itemized phone bill receipt. For instance, I was scheduled into a conference call after leaving the client and before my outgoing flight. Other than for mobile personnel (e.g., patrolling law officers), I find it hard to believe there is a business case for states to be providing cellphones. I'm sure there are a number of ways to wring out some savings (e.g., measured/prepaid plans, a competitive bidding process for pots of state minutes, resource sharing, and reimbursed business usage to a certain cap, etc.)
Of course, there's an 800-lb. gorilla in the room: pensions. Everyone knows what must be done, and that really is non-negotiable from my perspective: new and existing state employees (say, up to 30 years of tenure) must be converted to defined contribution plans (i.e., 403-B), and existing pensions must be capped at a private sector baseline and/or deferred to social security eligibility criteria. The state should agree to a vested contribution, say, of 3% of annual salary for each year public employment (plus interest) up to 30 years of employment.
But let's face the fact that it is fundamentally wrong for current taxpayers to pay for checks previous Democratic politicians wrote to pay down their political obligations to public union interests. Currently some former state employees in their early 50's are able to draw most of their final salary--over median California household income--for the rest of their lives (never mind premium benefits). While social security has a cap of under $30,000, California state recipients can receive multiples of that cap. Let's just say a retired state employee receives $6,000 a month. If the average state employee cellphone saved $35 a month, you have to get rid of 172 cellphones just to make up for the cost of one pensioner.
However, I expect Governor Moonbeam to wipe his sweaty brow and say it took everything he had to make up half the difference, and now the state residents and businesses must pony up the remaining $12.5B in new individual and business taxes. Let me make my position clear: no federal bailout for spendthrift California state and municipalities; they must learn to live within their means, and asking taxpayers, California or American, to bail the Democratic-controlled governor and legislature out of fiscally reckless promises to unions is enabling irresponsible spending, setting a bad precedent, and doing little more than delaying the day of reckoning. Working for the state government is a privilege, not a right; it is absolutely unconscionable to say "a deal is a deal" and let already suffering businesses and individual taxpayers, without gold-plated benefits, take on additional job-killing costs.
And so I dedicate this next song to the three-time, three-time, three-time governor of the People's Republic of California, Jerry Brown. (My God, how I love red hot pants on the right woman; I still remember the first time I saw my first college girlfriend, a beautiful young woman with amazing legs, wear them.... There's an aspect to quality, a criterion of perception, e.g., something Japanese manufacturers focus on and excel at delivering: a subjective sense of getting unexpected premium value for the transaction: something you've always wanted, even if you didn't realize it.)
My Advice to Speaker Boehner, Minority Leader McConnell:
Demand Bipartisan Entitlement Reform for the Debt Limit Change
I am really beginning to appreciate Speaker Boehner. He has the courage to say Emperor Obama is wearing no clothes:
President Obama and Congressional Democrats have been on a job-destroying spending spree that has left us with nothing but historic unemployment and the most debt in U.S. history...If they want us to help pay their bills, they are going to have to start cutting up their credit cards.I personally am so sick and tired of Democratic political spin and voodoo economics (the only magic trick they know is how to make $5T disappear with nothing to show for it during Speaker Pelosi's reign.) I caught a brief interview with Fox Business News' Neil Cavuto, clearly counting to a silent 10, as some clueless progressive lady was attempting to argue that social security administration actuaries insist social security is quite healthy and doesn't need more realistic cost of living adjustments, raised eligibility criteria.
Let me quote this investment blogger:
Income tax receipts are roughly $900 billion a year. Corporate taxes are roughly $200 billion annually. That's $1.1 trillion in tax revenue. Our current government expenditure is $3.5 trillion...Doesn't the mainstream media report that our deficit is only around $1 trillion per year right now?" Yes, that's what they report. But that's because the government counts all $850 billion of payroll taxes (Medicare and Social Security) as current income. It's not. Those taxes are supposed to be funding the future liabilities of those programs, but we're spending all that money now. If a private corporation did the same thing, its executives would all go to jail.Let me be very clear about what he means here. Suppose you planned to live in retirement on, say, $20,000 in dividend income (in addition to social security). Assume the dividend yield is 5%. You would need $400,000 in assets to support that income. Then after one recipient passes away, a new recipient receives the dividend income. Now guess what happens if you don't have that $400,000, recipients are living longer than expected and the largest group of recipients paying into the system is now starting to retire, and barely 2 or 3 workers (versus an original 16) are needed, with 12% of their income, split between individual and business, to support just 1 recipient. During the recession, as I've pointed out in this blog, right now social security is currently running at a deficit: 15 million unemployed people are not paying into social security. Essentially this is cutting into our reserves, i.e., the $400,000. In fact, what people may not realize is that the net contribution after paying off current beneficiaries is "invested" in current Democratic operational superspending. Sooner or later the reserve demands that the government redeem their bonds (like they're doing right now) to meet beneficiary payments. So we are not only having to raise more money outside of the government in order to pay out operational deficits but we also have to raise money to pay back the social security reserve.
The Democrats are putting lipstick on a pig. It seems like we have another 20-30 years before the reserves melt away like Al Gore's icebergs. But when the reserves start melting away, we have to start paying that money back. If we don't work now to sustain the reserve by having beneficiaries accept some of the cost of making the problem more self-sustaining, it's going to be a nightmare--not only are we probably going to have to finance huge interest payments to China and others holding our massive debt, at the expense of operational activities, but we are going to have to make up the difference in paying out to beneficiaries. Where is that money going to come from, with a shrinking work force?
And Medicare is a far, far worse house of cards. I don't want to talk about the detailed picture but the overall picture and what has to happen: we are going to have to treat insurance as insurance, which is designed to cover the big bills (the "free stuff" or out-of-pocket co-pays is one of the contributing factors to health care inflation and capacity load). We need for Medicare enrollees to be vested in efficient health care spending--meaning no free stuff, using of health care resources strictly on an as-needed basis. Insurance becomes in essence high-deductible.
We have to stop consuming so much and start investing more towards our senior years, not relying on the government to sustain us; this means, for instance, implementing reforms which provide incentives for savings and investments and against borrowing (e.g., mortgage interest deductions)--we need a consumption tax, e.g., a 7% national sales tax on goods and services, in addition to, NOT IN LIEU OF, significant cuts--benefit ceilings, attenuated benefit increases, more limited coverages, incentives to continue working, greater barriers to entry (i.e., higher retirement ages), etc.
We need more flexible approaches. For example, for social security, we might look at a flat payout with supplemental payouts for people whom are unable to work or don't have external income. But any supplemental payout must be structured in a way that provides an incentive for people to work and/or save towards their retirement. For example, if seniors work part-time, they should be better off than by not working.
I definitely applaud Speaker Boehner for insisting on fiscal discipline, but what I really want to see is for Obama to sign a pledge that binds the President into ceilings on entitlement expenditures and for any tax increases to be matched by REAL (not nominal) cuts in spending--in other words, no budget games where instead of getting a 2% increase you settle for a 1.5% increase. When I mean a cut, I'm talking more about a 2% decrease off last year's budget.
Political Humor
"An escaped prisoner in Alaska was on the run for six hours before he was found in the woods near Sarah Palin's town of Wasilla. Sure, when I think of safe places to run, I think "the woods near Sarah Palin's house." - Jimmy Fallon
[It was the season one cliffhanger of "Sarah Palin's Alaska!": "Who shot the fugitive?" My money is on Piper.]
"Former U.S. House Majority Leader, Tom DeLay, has been sentenced to three years in prison. One year for money laundering and two more for his performance on 'Dancing with the Stars.'" –Jay Leno
[He has already been assigned a job--in the prison laundry. No confusion over laundry requirements: the uniforms are black and white.]
Musical Interlude: One-Hit Wonders/Instrumentals
The Knack, "My Sharona"
