Precisely. But in fact, it's worse:

The people doing the promising and those receiving the benefits are in fact the same.

Who makes the promises? Local and state government employees.

Who receives the benefits? Local and state government employees.

Who pays for them? Us ordinary taxpayers who can only dream of such sweet defined-benefit pension deals.

Yet some folks see this as reason we should pay even higher taxes, and sacrifice our own pensions, which are already lower and less secure than these privileged government pensioners.

Unbelievable.

It costs money to run government. Employees need to be paid. We have had lay offs when budgets were constrained. The funding per pupil has steadily decreased the last 30 years and hence tuition has similarly increased. Our salaries relative to purchasing power has decreased over this time.

Exactly. So one group of state government employees (your state's DoE) meets another group of state government employees (your union) and decide to give each other an incredible defined-benefit pension deal that nobody outside of government can even dream of.

State government employees are giving each other dream pension plans, that are unsustainable and wildly over-budget even if they were well-managed (which generally they are not).

You know why nobody outside government has defined benefit pensions? Because they were proven to be unsustainable decades ago. Yet government employees keep conferring them upon themselves.

Then, when the inevitable deficit arises, as any economist would predict, you have a great solution: me and my peers in the private sectors should pay more taxes to bankroll your party!

I hope this slow-motion trainwreck would be a wakeup call, but either way, know this: there is no amount of taxes that will prop up your unsustainable pension plans. State and local governments wasted billions mismanaging these funds, that are unsustainable even under the best management.

Any more taxes you collect will just fuel this fire for a couple more years, before the inevitable next crisis arises.

You can't fix fiscal irresponsibility with more money, because all that money (and no accountability) is what created fiscal irresponsibility in the first place!

Your state government needs to start applying the same basic fiscal responsibility that every single business in your state is adhering to.

My pension plan is not a good one. You characterization of one group of state employees giving a dream set of benefits to another is not based in reality. Administration does not negotiate strongly with us the contract won't be approved by the legislature or signed by the governor. Our wages relative to buying power has not been going up or remaining steady.

If pensions are inherently unsustainable then you must conclude that it is unsustainable for a society to care for itself.

How do you figure?

It is unsustainable for us to support all people over e.g. 60. But we can support the 5% over 60 who really need the support and can't look after themselves.

Please read the link I posted above:

https://www.investopedia.com/articles/retirement/10/demise-d...

Defined Cost pensions are sustainable. That's what we in the private sector have: 401k and Roth.

Defined Benefit pensions aren't sustainable. That's why nobody outside of government has them, and the ones sponsored by the government suffer huge deficits and are slowly but surely edging towards bankruptcy.

We are all to blame (if you are older than about 25).

Collectively, we have known the pensions are unsustainable for at least the last 40 years.

Yet we have refused to face the problem head on and vote in people who will fix it. Instead we push the problems onto the next generations.

Teacher unions are also responsible for keeping bad teachers employeed. See NYC rubber rooms.

That's the key point. Budget broken so we can't pay for something? Let's talk about putting money in. Systemic problem where the people making decisions about spending the money are the same people receiving benefits? You can't write a check to fix that. This isn't a traditional "how much do we tax and what do we spend our money on?" public policy discussion.

Systemic problems are another kind of problem entirely. They deserve and require non-partisan attention and discussion.

There's simply no reason to believe that throwing more money at these systemic problems will fix them. In fact, it may well exacerbate them instead.

California has, along the US states, a fairly moderate pension issue measured per capita or per GDP. It has big absolute numbers, as with nearly every other issue, because it's a very big state.

A more important question is how much room to manoeuvre does California have?

If California increases taxes by 5% to fix the issue how many businesses and highly paid employees will leave?

That's very hard to say.

> If California increases taxes by 5% to fix the issue how many businesses and highly paid employees will leave?

Even if it was a simple as taxes being a single number where distribution of the taxes doesn't matter, there's no consensus on the average effect of increases. And, in reality the distribution probably matters intensely.

(And, of course, taxes aren't the only lever; maybe California instead radically cuts back on mass incarceration; to the extent that California has less room to maneuver in taxes it has more on spending, which in some ways is better for this purpose—spending cuts tend to also inherently reduce the rate at which the problem is made worse, before you even consider how the savings are applied. Either spending or tax, though, may take ballot action or legislative supermajority, because much of State spending in CA is programmed by Constitution/ballot measure, and tax increases can't be done with a simple legislative majority.)

Also, no reason to believe just 5% will fix the issue.

There is no such thing on significt public policy issues; if it matters, and there are different opinions, it will become partisan.

The critical error that pension providers made was to buy equities and 'alternative' investments instead of bonds. Had they bought bonds, their assets would have matched their liabilities. Instead, they assumed riskier investments would grow faster, effectively making pension promises cheaper.

Following the financial crisis, rates were cut aggressively, making bond prices and the present value of pension liabilities soar. IMO this is an under-appreciated facet of the financial crisis that's still waiting to bite us.

You need to go further however, as the vast budget deficit is ultimately an inflationary tax on the US people (we'll follow the Japan scenario, and debase the dollar to deal with it over time, hammering the standard of living). You can see that represented by the dramatic damage to the US dollar during the Bush deficit years, which simultaneously sent the dollar plunging, commodities soaring and all other nation GDP figures soaring (when priced in dollars).

Total spending is about $7.1 trillion, between Federal + State + Local. What kind of return are Americans getting for their $22,000(!) per year? An absolutely horrendous return, that's what.

The US state + local spending is like an entire extra Federal Government stapled on.

I'm not concerned with slashing spending as some are, I'm overwhelmingly concerned about using that spending effectively instead. There's vast progress to be had in focusing just on that.

The issue is that those pensions have been comically mismanaged; edit: and were not sustainable in the first place

[1] https://data.oecd.org/socialexp/pension-spending.htm

Of course, the fact these pensions were managed by state government (read: mismanaged) only accelerated the inevitable crisis.

[1] https://www.investopedia.com/articles/retirement/10/demise-d...

chicago is a poster child for the corruption that has created a system which will bankrupt in three years [1]. It was never sustainable but its continued expansion kept politicians in office. just look at the numbers in the story I linked, what reasonable group of people would have ever signed off on this? Chicago isn't alone. Its rampant. six figure retirements? no public service job warrants that.

and it isn't just the public sector employees, there are story after story of city bureaucrats making a quarter million or more and that is just up front money. simply put, they control the piggy bank and they are willing to loot it for gains today because they don't plan to be in office when the bill comes due

[1] https://chicagocitywire.com/stories/511130434-projection-chi...

It seems like some feel it's a catch 22, that citizens don't want to pay for things yet they want things. But in reality, those clamoring for the improvements and government assistance are rarely those that don't want to pay and/or recognize government fallacies wrt spending. If you want to tackle the problems, you need to first be honest with where they lie...and not having enough money is not where the problems lie.

I certainly don't advocate throwing money at the situation. I advocate that as a nation we take a step back on reassess what our views on government are. We've largely bought into the false beliefs that government is always incompetent, government regulation is inherently bad, and taxation is bad. I don't see how to get out of the mess we are in. These are structural problems in the nation and I think secession is going to occur in the next 50 years or so.

Gotta start at the top. Transparency and clarity of spending coupled with simplification of the tax code. In the meantime, deference to smaller regions can help (but not on everything) where accountability is more real.

> These are structural problems in the nation and I think secession is going to occur in the next 50 years or so.

Nah, apathy wins in these situations where boats are not rocked significantly on either side.

In my experience your average voter who opposes higher taxes isn't a Randian. Rather, they feel like they're not getting enough in return for what they pay in taxes. (And when you look at data about how we spend more to get less in education, transit, etc., turns out they're right!)

Right. You cannot begin fixing the first problem in a democracy until you begin fixing the second. The solutions cannot happen in parallel either. So we either need to better prioritize our complaints or accept that attempts to fix the first problem is often just flushing people's money that they may need. Perfection is not a requirement, just some level of mediocrity could be enough to restore some trust.

It costs NYC $2.1B per mile to build the Second Ave subway while in Europe it costs $200-500M per mile. There's California High Speed Rail, and then there's just the cost to build a condo in San Francisco (see the "historic" laundromat in The Mission).

You have interlocking legislation, many reasons and opportunities to sue, esoteric work rules. Regardless of the validity of each element the structure as a whole is patently absurd and abhorrent.

Then you have government spending. A university does not need much beyond some blackboards and some professors to teach most everything from Philosophy to French to Advanced Data Structures to Topology. Certain PhDs need more equipment but essentially all the expensive equipment should be paid for by research grants or contracts.

Over the past decades more and more classes are taught by adjuncts at Starbucks level wages. Meanwhile the percentage of staff and spending on administrative functions has climbed dramatically. Adjusting for inflation, from 1947 to 1995, overall university spending increased 148 percent. Administrative spending, though, increased by a whopping 235 percent. Instructional spending, by contrast, increased only 128 percent, 20 points less than the overall rate of spending increase.

Obama promised to invest in "shovel ready jobs". There was a backlash because so much money was being spent on construction and thus, due to the current makeup of construction workers, the vast majority of money would go to men. Spending was adjusted to include other projects so that the gender balance of spending would be more palatable.

So to get $1 in new infrastructure spending you need an additional $1 in net new other government services. Or possibly much more than $1, depending on the various worker populations. This in an environment where you're getting only 25% to 10% of your initial money's worth.

So $1 in net new infrastructure costs $20 or more.

I wouldn't bundle military expenditure with the rest of public spending. Our military budget currently stands at a staggering $639bn (that's billion) for FY2019.

In fact, there's a good argument that if we diverted some of these enormous funds to invest in other areas, those problems you mentioned (infrastructure, etc) would be fixed.

> The situation is easy to fix in economic terms but not in political terms.

The article is about defined-benefit pensions. Nobody has those anymore, not in the US. This is a large group of privileged individuals, who years ago got themselves a sweetheart deal as employees of the state. It's basically another case of the previous generation mandating extremely comfortable benefits for themselves, and passing the bill to the next generation.

These are people who worked for the government their entire lives. They may not be rich, but they were generally comfortable, and certainly not the neediest part of the population. They can stand a modest cut to their pensions.

Otherwise, your argument is that all of us should pay substantially higher taxes to bankroll these lucky few individuals who got themselves a sweetheart deal thanks to their affiliation with state and local government. In most places, you'd call that "corruption".

I have no interest in seeing Chicago fix its pension problems by using funding taken from the US military. Chicago made its bed by intentionally, dramatically over-promising, it gets to sleep in that bed. National high speed rail? That would get my vote, so to speak.

We could throw some money at the university cost problem. However that's not lacking funding at all. In fact it has far too much funding, we need to deprive it of the federal slush money and legally mandate how funds can be spent (ie restrict admin spending). It's a massive theft cartel run by the admins at the universities, they're the ones that have universally benefitted by perpetually raising the cost. You can see that represented in the charts comparing the extreme expansion of admin cost & employment at universities, vs the employment of eg professors, over 30 years.

Taxpayer money should be not be used to fix any of these over-promised pension problems, and certainly federal tax money should not bail out corrupt, irresponsible local governments.

More accurately: we can't afford the pensions we've promised with the taxes we're willing to pay. It's not a normative argument but a descriptive one.

And within the American free market, there is little incentive for people to pay more taxes to close that gap. Why pay more taxes to Illinois--and not get any increased public services from those taxes, because the money is going to people who have already retired--when you can move to Tennessee or Texas and pay less?

Aren't you ignoring Social Security? For example, average Social Security monthly payments appear to be around $1400/month [1]. Spain, as an example of a high-tax, cradle-to-grave care system, provides pensions that appear to average a little under 800 euros/month ($940/month) [2]. And that's ignoring all of the Roth and 401(k) extras available out there. Am I missing something?

[1] https://www.investopedia.com/ask/answers/102814/what-maximum...

[2] https://www.20minutos.es/noticia/3287811/0/cuanto-cobra-medi...

Maybe it's ignoring corporate taxes? or ignoring other things on our W-2, like L&I and social security/medicare? It 's also probably ignoring local taxes, a 10% sales tax is hard to ignore.

I once calculated my effective marginal tax rate at 45%, and it stopped me from pursuing a higher paying job, since my take home didn't change enough to be worth the higher stress and the money I'd have to spend to combat said stress.

If you earned $500k, and were single/no deps, and just took the standard $12K deduction, your Federal tax would be 29% ($145K). I can't imagine someone with that income not having more deductions or IRA/401 contributions that would minimize the tax burden, but I suppose there's always someone out there completely clueless.

You are looking at the wrong table. Look at the next table instead and see just how high the US is relative to other countries.

The only thing we don't tax is goods, but that's to help lower income people - the same people you want to help.

Yes.

> shows only the relative percent of where taxes come from. It does not describe tax rates.

I know. But if the US is to raise rates they would raise them on Goods and Services, not on income because the tax is already very heavily skewed toward income.

And regardless of that, the breakdown alone shows that the US tax code is more progressive than other countries.

All the right politicians bleat about lowering taxes - you really can't, the rich are already paying for everything as it is now, we can hardly get more progressive (on income taxes at least). You can't lower taxes on the bottom 75%, it's just pandering. The left bleats about the well-off not paying their fair share, somehow paying for nearly everything isn't a fair share. They're both wrong as usual. More plausibly, to pay for ballooning entitlement costs, infrastructure, expanding healthcare, etc. taxes need to go up on everyone.

Perhaps the observation of government wastefulness is conflated with feeling overtaxed. There are two ways the government can raise more money:

1) Raise taxes

2) Use existing taxes more efficiently

If you look at where the tax money is going, infrastructure is one of the smallest pieces of the pie. Why not divert defense and/or social service tax to infrastructure for a few years?

One thing I really appreciated about Bernie Sanders was that he did not shy away from the term "socialist". It's engendered a conversation America really needed to start having.

https://en.wikipedia.org/wiki/Atlas_Shrugged#Influence_and_l...

Edit: She did flee a terrible situation in Russia, which I think probably explains (but does not excuse) her positions on socialism vs. capitalism.

It always depresses me to read comments like this. Rand's central themes were about corrupt relationships between pseudo-capitalists and government, the immorality of a desire for the unearned, and the consequences of what will happen to a society that can't be bothered to concern themselves with ethics.

Well, one of these days these chickens are going to come home to roost, and instead of people hanging their heads in shame and regret because they ignored her supremely confident warnings, instead they're going to charge her with the crime. The irony.

"The Objectivist ethics holds that human good does not require human sacrifices and cannot be achieved by the sacrifice of anyone to anyone. It holds that the rational interests of men do not clash - that there is no conflict of interests among men who do not desire the unearned, who do not make sacrifices nor accept them, who deal with one another as traders, giving value for value."

As a cherry on top, while there's still time to recover from mistakes of the past (there is a great deal of ruin in a nation, as they say), rather than eating a little humble pie, listening for a change to those who said "I told you so", and getting our affairs in order, we will actually choose to blaze straight ahead at full throttle on the exact same trajectory. And in the end, we'll end up selling off infrastructure, piecemeal, for pennies on the dollar, some to the very criminals we were warned about, and the rest to other nations who were smart enough to crack a book.

a) Do you think it is responsible to be opaque on whom you are attributing the belief to, particularly considering the topic of conversation and the fact that her warnings on the matter were clear?

b) These people you cite, are they Ayn Rand supporters, or critics who "think", despite no actual evidence beyond 4th hand also-uneducated opinions, that Rand's philosophy was anything remotely resembling "I've got mine, fuck you." Here's a fun experiment: try to google up a statement by an actual Objectivism supporter that supports anything near that sentiment, and observe how many false hits you get of the latter in your search.

> I'm not critiquing her personally or her philosophy.

Of those HN'ers who hold an opinion on Rand, you belong to a very exclusive club in my experience. Regardless, your sentiment now being explicit is good enough for me, thanks for straightening it out.

I asked a question specifically about that above, see: (b)

Is asking for substantiation of a claim, an insulting claim at that, now considered improper etiquette around these parts?

Ask yourself this: how do you know this to be true? Can you share where you've encountered Randians in sufficient numbers to form an opinion with high certainty? And, can you no longer find any trace of these people and their words?

Thank you for the courtesy.

IMO corporations should be taxed in a way that the more they make with fewer people the more they get taxed relative to other companies who make the same but have more people.

Productivity in the age of digitalization is not what it used to be and I don't think it's a good way to measure anymore as we have way more supply than we have demand.

Today it's more about technology leverage.