Category: Economy

… would have worked out better:

CalPERS earned less than 1% in fiscal year

CalPERS is the defined benefit retirement system for California’s public sector employees. The problem: any shortfalls in the retirement fund is paid by – you guessed it – the citizens (remaining) in California. Doesn’t exactly help that the unions hold a substantial sway over investments. The $300B CalPERS system is currently only 68% funded (that’s an almost $100B shortfall already).

The big problem with these defined benefit systems, particularly when they are heavily union-controlled, is two-fold: 1) there is no incentive to control costs associated with pensions, such as “pension spiking“, and 2) there is substantial potential for undue influence over investments.

It is time for legislation that eliminates these public-sector defined benefit systems altogether. They should be changed into defined contribution systems where retirement funds are paid into individual retirement accounts. Or, if the union still wants to influence investments, defined contributions can be made into a union-controlled fund managed for the benefit of their members. At least then there will be incentive to invest wisely and limit pension costs…

$900 per refugee is paid for someone to meet them at the airport and assist them in getting settled. The administration is requesting $2.2B for 213k refugees over the coming years, amounting to more than $10K each. Total costs for a refugee family, including housing and stipends, are estimated at almost $250,000 per household over the first five years – and that’s not counting ongoing federal welfare benefits to which the refugees are entitled.

Critics leery as aid groups clamor for federal refugee funds

Is this really the best, most cost-effective way to help these people? And should we be accepting these refugees at all, or should we instead be helping them improve their own countries?

Whenever the government proposes a new tax on something “bad” to benefit something or some group defined as “good”, it’s just another tax. Don’t fall for it.

Soda taxes are the latest incarnation. Long considered a joke, Philadelphia managed to pass such a tax last year. Now they are poise to be decided on ballots around the country. The stated purpose of these taxes is to prevent obesity, but if that is the case then such taxes should be revenue neutral or the revenue should be dedicated to new obesity-prevention programs that are not currently funded. However, many generate revenue for the general fund, like in San Francisco, or are used to fund programs with existing funding (so that the original funding returns to the general fund to be spent on something else).

Here’s a bit of hypocrisy for you to mull: the stated goal of these taxes is to reduce sugary soda consumption – ostensibly for the public health benefits. This in theory will also reduce the tax collected over time. However, Philadelphia is expecting to fund pre-K education with revenue from this tax (a cost that is likely to rise each year) and claims that the tax revenue will only drop by ~ $20,000/year. Where do you think they will get the money to fund the pre-K system once the tax revenue drops? Also, if the tax revenues do not drop (much) then is their goal really the health benefits they claim, and if so hasn’t the tax failed?

It just seems to me to be a way to fund pre-K education on the backs of a small subset of the population (who likely can’t afford it). In any event, if it increases overall tax revenues then it’s just a tax. Think about that before you jump into the deep end of the pool.

… but it seems that more people are moving up rather than down.

From a NPR article today:

Nonetheless, the overall trend is upward: The middle class may be shrinking, but two-thirds of those who leave have moved up, while one-third have dropped to a lower income group.

“There is actually more progress than regression,” says Rakesh Kochhar, who studies the middle class and is associate director of research at the Pew Research Center.

So when the government says that they want to restore the middle class, it’s actually a bad thing…