FedUpUSA

Archive for the ‘unions’ Category

On January 29 Bloomberg reported Bing Races to Beat Michigan Deadline for Union Detroit Deal

Democratic Mayor Dave Bing is racing to wrest concessions from 48 bargaining units to erase a $200 million deficit in the home of General Motors Co. and the cradle of the U.S. auto industry.

Otherwise, the city of 714,000 dominated by Democrats may face a Republican-appointed manager with authority to sell assets and nullify contracts. State Treasurer Andy Dillon has said Detroit will run out of cash by May, and called for concessions by early February.

This week, Bing began firing 1,000 of Detroit’s 11,300 employees. The mayor also proposes a 10 percent cut in payments to vendors and doubling the 1 percent tax on corporations.

Bing, 68, has said the city must trim annual employee benefit and pension costs, which have risen since 2001 to $35,000 per employee from $18,000.

“We are meeting, not daily but more than weekly, and there are sidebar conversations every day,” said Al Garrett, president of AFSCME Council 25, which represents about 3,000 employees. “I’m not sure an emergency manager would be any more Draconian than what the city itself is asking, but it’s a real possibility.”

Deal Reached?

Mayor Bing is taking his script straight from Greece where a deal has been “close” for days, weeks, and now months.

Today’s Bloomberg headline does not match the facts presented. Please consider Detroit Reaches Pact With City Unions to Avoid Takeover, Detroit News Says

Mayor Dave Bing and a majority of city employee unions have reached tentative agreement on concessions aimed at avoiding a state takeover.

“This agreement is the first meaningful step in achieving the necessary concessions and structural changes,” Bing, 68, said via Twitter.

The deal, but no details, was confirmed by Al Garrett, president of AFSCME Council 25. The agreement covers about 6,500 of the city’s about 11,000 employees, not including police and firefighters who have resisted a demand for a 10 percent wage cut, he said.

The city and unions must agree to concessions early this month to avoid state action, such as the appointment of an emergency manager with broad powers to cut spending, said state Treasurer Andy Dillon. Dillon is leading a review of city finances, after a preliminary review found it will run out of cash by May, and that it faces a $200 million operating deficit.

Deal Reached? Really? No, Not Really

According to mayor Bing we have an “agreement”, albeit an agreement with no details, and without covering police or firefighters. What kind of deal is that?

What’s Best for Detroit?

The best thing for Detroit would be if there is no deal, or the state rejects the deal.

Unions are the problem and the solution is to get rid of them entirely. That will not happen under Bing, but it could happen in a state takeover.

Bing is not interested in what’s best for Detroit taxpayers nor is he interested is what’s best for Detroit school children where shockingly only 25% graduate high schools. Rather, Bing is out to save as much of the status quo as he can, including his own job of course.

Detroit Schools Bankrupt

Flashback July 24,2009: The Wall Street Journal reports Detroit’s Schools Are Going Bankrupt, Too

Detroit is like many urban  school districts—large, unwieldy and bureaucratic, with a powerful union  that makes the system unable to adapt to changing circumstances and  that until very recently had an indulgent political class that insulated  it from reform. That insulation came in two forms. The first was  neglect. Mayor Kwame Kilpatrick spent several years distracted by a  scandal stemming from his affair with a staffer. He resigned last year,  pleaded guilty to obstruction of justice, and was sentenced to four  months in jail. Had he been an effective mayor, he might have also been a  powerful advocate for students.

The other insulating force was a  conscious decision to wall off Detroit from charter schools. In 1993,  Michigan’s legislature made it difficult to create new charters in  Detroit by declaring that only community colleges could authorize  charters for primary and secondary schools in “First-Class  Districts”—defined as those with more than 100,000 students. Detroit was  the only First-Class District. In  2003 the state, under pressure from the Detroit Federation of Teachers,  turned down a gift of $200 million from philanthropist Robert Thompson  that would have established 15 charter schools in the city. Those charters are needed today.

The  net result has been a school system that’s been coming apart as the  teachers union has dug in its heels. In 2006, the union illegally went  on strike, killing a plan to force teachers to take a pay cut to balance  the system’s books.

Collective Bargaining has Morally and Fiscally Bankrupted Detroit Schools

Read  that again. Under pressure from the Teachers’ Union, Detroit turned  down $200 Million. That was in 2003 dollars. Wow. No doubt the  union  “did it for the kids“.

For more on the appalling behavior of Detroit’s teachers’ unions please see Detroit Public Schools (25% graduation rate) teachers unions opposing highly qualified volunteer teachers.

It is time to kill collective bargaining for public unions, every one of them, and nation-wide, not just Detroit.
Mike  “Mish”  Shedlock – Global Economic Analysis

The ratio of government handouts to wages and salaries in the United States is now at an all-time high.  According to TrimTabs Investment Research, government handouts have reached a level that is equivalent to 35 percent of all wages and salaries in the United States.  Considering the fact that this figure was only 21 percent back in the year 2000 and only 10 percent back in 1960 that is very frightening.  The sad truth is that today the American people are more dependent on direct government payments than they ever have been before.  What this does is that it takes formerly independent Americans and transforms them into “sheeple” and pets of the government.  Today we have tens of millions of Americans that eagerly await the crumbs that the federal government tosses them each month.  This is one reason why our national debt is exploding, but our politicians like this system because it enables them to buy votes.  Meanwhile, the federal government and the international corporations that dominate our economy have rigged the game so that power and money are becoming increasingly centralized in their hands.  As a result of the system that the “big boys” have developed, millions of small businesses across the country are being absolutely crushed, the standard of living of the middle class is gradually being destroyed and more American families slip into poverty ever single day.  What we need to do is to dramatically reduce the power of both the federal government and the big corporations so that small businesses and individuals can thrive once again, but instead “activists” such as Michael Moore are out there demanding even more taxes and even more government handouts.

Not that a “safety net” is a bad thing.  We simply are not going to allow tens of millions of Americans to starve out in our streets.  However, it has gotten to the point where the majority of American families are now dependent on the U.S. government in one form or another and that is very, very wrong.

More government handouts are never a long-term solution to anything.  Handouts do not give people dignity.  Handouts do not teach people to be independent.  Handouts do not enable people to live the “American Dream”.  Handouts are not the path to prosperity.

What the American people need are jobs and an environment where small businesses can thrive.  But instead, the federal government has allowed the big global corporations to ship millions of our jobs out of the country and the federal government continues to burden our small businesses with an endless array of new taxes and regulations.

Who is successful in America today?

It is the big boys.  Everyone else is being crushed.

This is what the founding fathers tried to warn us about.  They did not want the federal government to have much power at all, and they were deeply suspicious of large corporations.

But we have turned our backs on the principles of the founding fathers.

We should be figuring out how to get back to the America that our founding fathers originally tried to create, but instead all of the attention is being given to “activists” such as Michael Moore who are calling for even more taxes and even more government handouts.  The following video is of Michael Moore giving a speech to protesters in Madison, Wisconsin on March 5th, 2011.  His speech was entitled “America Is Not Broke”….

Yes, the “little guy” is being absolutely crushed in America today.  But for people like Michael Moore the solution is always to tax the middle class more and to pass out even more government handouts.

That isn’t going to solve anything.  Most of the ultra-wealthy have turned avoiding taxes into an art form.  A third of all the wealth in the world is now held in “offshore banks“.  Many of our largest corporations don’t pay a dime in federal taxes even as they pass out multi-million dollar bonuses to their executives.

Raising taxes in most definitely not the answer.  Those that have mastered the art of avoiding taxes will continue to do so no matter how high you raise them.

The truth is that we need to shut down the IRS and scrap the current tax system entirely.  It simply does not work.

What we need to do is to get the federal government and the big corporations under control and transfer the power back to the American people.

That is what our founding fathers intended.  They intended for the common man to be empowered  to start businesses, create wealth and pursue happiness.

But instead tens of millions of Americans have become addicted to government handouts.  When large numbers of people give up and willingly become wards of the government that is not good for society.

Unfortunately, more Americans today are dependent on the U.S. government than ever before.  Just consider the following statistics….

-According to TrimTabs Investment Research, social welfare benefits in the United States have risen by $514 billion over the past two years alone.

-As 2007 began, only about 26 million Americans were on food stamps, but today over 44 million Americans are now on food stamps.

-Over 50 million Americans are now on Medicaid.

-Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, one out of every 6 American is on Medicaid.

-53 million Americans received $703 billion in Social Security benefits in 2010.

-Right now the U.S. government is either writing or guaranteeing well over 90 percent of all mortgages in the United States.

-It is being projected that extended unemployment benefits will cost the federal government $34 billion over the next two years.

-30 U.S. states have borrowed a total of $41.5 billion from the federal government just so that they could continue paying out unemployment benefits during the recession.

-Entitlement programs such as Social Security and Medicare now account for 58% of all U.S. government spending.

But what else should we expect?  The federal government has been using a sledgehammer to endlessly pound away on the capacity of small businesses and individuals to create wealth and jobs and opportunities.  The business atmosphere in the United States is now so toxic that it is amazing that any small businesses have survived.

Most Americans find themselves with no other way to make a living other than to work for someone else.  But the big global corporations have discovered that they can make much larger profits by getting rid of American workers and by shipping our jobs overseas and our politicians are allowing them to get away with it.

The truth is that both political parties don’t have the answers.  Neither party seems to have any clue about how to stop millions of jobs from leaving the United States and neither party seems to have any clue about how to create a business environment inside the United States where individuals and small businesses can actually thrive.

How much longer will it be before we all finally admit that we are experiencing total system failure in this country?  Should we all just quit trying and sit on our couches waiting for the next government handout?  The truth is that there aren’t nearly enough jobs for all Americans anyway.

The middle class is dying and the establishment has us all fighting with each other.  The left and the right are busy fighting about taxes and budget cuts while the ultra-wealthy continue to enjoy massive profits and incredibly low taxes in the globalized economic system that we have allowed our politicians to create.

Yes, there are tens of millions of Americans that are deeply suffering right now and they need to be helped.

But government handouts are never a long-term solution to anything.  What we need to do is to massively reduce the power of the federal government, massively reduce the power of the big corporations and stop businesses and jobs from being shipped out of the country.  We also need to create an environment in the United States that is very favorable to small businesses.  That would give our country a chance to start creating good jobs again.

But instead, we continue to allow our politicians to destroy our economy.  We actually have 10 percent fewer middle class jobs in this country than we did just ten years ago.  The middle class is being systematically destroyed.  All of the wealth and all of the power are slowly being transferred into the hands of big government and the big corporations.

The vast majority of the rest of us are being transformed from strong, independent, prosperous Americans into dehumanized sheeple that can’t wait for the next government check to come in.

Does anyone out there actually believe that this is what our founding fathers originally intended?

The Economic Collapse

The first one: STATE.

You know, that thing that has all of the powers of government not explicitly delegated in The Constitution to The Federal government?  Yes, that thing.  There are 50 of them in The United States.

Notice that we don’t call the nation “The United Federal Government.”  We call it “The United STATES.”  That’s because States have supremacy.  Always have.  They originally joined together under a promise of a limited Federal government, which was mostly about the common defense – and little more.

Now as for the second word….. Sedition.

–noun
1. incitement of discontent or rebellion against a government.
2. any action, especially in speech or writing, promoting such discontent or rebellion.
3. Archaic . rebellious disorder.

I’m going to draw the line between the word sedition and the act of seditious conspiracy; the latter is a federal offense.  At least today, that line may still apply.  It may be true, however, that as facts develop we will discover that this line has been crossed.

In America we have these things called elections.  After the 2008 election Barack Obama was having a discussion with Republican lawmakers where they were objecting to some of his plans.  They asked him why they should negotiate with a wall, effectively, and his answer was simple:

“I won.”

Ok.  Fair enough.  Elections have consequences, right, and one of the key points that Barack Obama himself has put forward time and time again as justification for his alleged “mandate” was that he won the 2008 election.

Never mind that he lied about virtually everything he said he was going to do.  Among other things he said he did not come to Washington to favor the banksters, but in point of fact he has provided more Lewinskis to them than Monica ever did to Bill Clinton.  His so-called Attorney General, Eric “Place” Holder, can’t even find a felony to indict and prosecute when they’re apparently admitted to under oath before the FCIC.

It is clear at this point that the game is to run the Statute of Limitations so that prosecution becomes impossible.  That is, for those who elected Barack Obama, you by doing so – yes, this includes me – provided every bankster a “never go to jail” card for what they did.

In fact, Angelo Mozilo had the criminal probe against him dropped yesterday, if reports are correct.

Of course McStain was going to do the same thing.  So it’s not like we really had a choice between “D” and “R” in this regard, right?  Well, no.

We were also told our health insurance payments would go down.  Mine went up – more than 20%.  This, despite being told it wouldn’t.  That we would get “relief.”  Well, no, we didn’t get relief.  We got cornholed. 

After two years of this blatant abuse Americans had enough.  They went to the polls again.  And this time they threw a lot of Demoncrats out of office.  One of the newly-elected politicians was Republican Governor Walker in Wisconsin.

He ran on a platform that, among other things, promised to do away with collective bargaining for teachers for all items other than pay. That is, pensions, health insurance, work rules, everything else.  All those things, if they were going to be larded up on the public, would have to survive a public vote by the people.

What’s wrong with this, may I ask?  Teachers are employed by the people.  Did you notice your property tax bill?  You’re the boss.  You pay the check.  You make the rules.  And in a representative government, you hire people through the ballots to do as you demand.

Wisconsin did exactly that.

Governor Walker did exactly what he promised.  Faced with a monstrous budget problem that was gimmicked and gamed by his predecessor to appear smaller than it really was (just as occurred in New Jersey with Governor Christie) he put forward a bill. 

Remember now, the standard is “I won” when it comes to justification – by our own President.

Mr. Walker won.

So what did our President’s campaign organization – “Organizing For America” – do?

OfA Wisconsin’s field efforts include filling buses and building turnout for the rallies this week in Madison, organizing 15 rapid response phone banks urging supporters to call their state legislators, and working on planning and producing rallies, a Democratic Party official in Washington said.

Really?

Our own President’s campaign apparatus is attempting to prevent a vote from taking place?  To overturn an election?  To incite discontent against a duly-elected government, perhaps by importing people who aren’t actually Wisconsin residents?  And to spread that discontent to other states?

Really?  Our own President is doing this?

That’s textbook stuff folks.  As in Mubarak’s textbook.

Didn’t we just see a government go down with our support in Egypt over this exact same thing?  A government where the people said “do X”, government did “Y”, and the people rose?  And let us not forget that in Egypt it was not the people who were shooting, it was government goons – rifles are prohibited from private ownership in Egypt.

These acts have a word folks: Sedition.

Just a month ago we heard from our very same President that we had a “responsibility” to tone down the political rhetoric.  This, incidentally, is why these bussed-in protesters who aren’t Wisconsin residents are waving signs that claim Walker is Adolph Hitler and have targets on him?

To anyone who believes that these teachers are in some way deprived, I’ve run the analysis.  The average teacher in Wisconsin receives about $86,000 in total pay and benefits annually.  Like all teachers they also get three months off every year.  That $86,000 has a huge benefit component, like all public employees – including pension and health care.  But the important point is this figure is roughly $25,000 more than the average private-sector worker makes – even when you include the ridiculously over-compensated people like those at Goldman Sachs.

Here’s the reality folks: We’re broke.  The States are broke and so is the Federal Government.  We’ve allowed political hacks from both sides to make promises that can’t be kept.  That’s a fact and no amount of spin is going to change it.  We must cut the Federal Budget by more than half and at the same time raise taxes in order to start to pay down the debt.

Five entitlement programs: Social Security, Medicare, Medicaid, Welfare and Unemployment consume more than half of the entire Federal Budget.  We borrow 42 cents of every dollar.  You can cut to zero every other program, including defense, and we can’t balance the budget if we do not severely cut these five programs. 

This is not a problem for the future, it’s a problem that must be solved right now.  We could have cut the budget by 10 or 20% a decade ago, but we didn’t.  Now it’s half.  Soon it will collapse.  And this same picture exists in the States.

The pension and health care cost issues are particularly severe.  There is no solution to these problems that “keeps the promises” people believe were made to them.  It’s not possible, no matter what you wish to believe or who is speaking.  These are mathematical facts.

But today, the issue is this: We have a President who is attempting to overturn the results of an election in a State.  That election was held, the people spoke, and the majority of Wisconsin residents support what Governor Walker is doing.  The President has exactly zero right to interfere in the sovereign matters of a State’s Government in violation of the expressed will of The People and by doing so he has, in my opinion, committed an impeachable offense.

There are also serious issues in Wisconsin with the Teachers and also with State Senators.  If you are a parent with children in a Wisconsin school you must demand that any teacher who falsely called in sick to protest be debarred from teaching your child.  It is absolutely essential that our children understand and be taught that the representative process of government is sacred and that violating that premise is unacceptable.  No parent who honors our form of government can permit their child to be instructed by a teacher who participated.  I therefore call upon all parents to perform a “KidOut” and demand these teachers be immediately fired and replaced, or their children will not return to class.  There are millions of unemployed people in this nation and many are qualified to teach.  There is no shortage in the labor pool.  Force the Superintendents to fire every one of these teachers – right now.

Second, Governor Walker needs to sign an executive order declaring a State of Emergency and ordering the Senate to come to order.  If the Democrats refuse he should then declare their seats abdicated and hold special elections.  The Democrats need only lose one seat in that special election to be irretrievably screwed.  It is fine to disagree but the fact remains that a legislator has a job, and that is to legislate.  That means showing up, speaking your peace, debating in a civil manner and voting.  That’s how we do things in America. 

Finally, to those in Organizing for America who are playing these games, let me make this very, very clear: You set the standard in 2008 when your President, who heads your group, said “I won” as justification for refusing to compromise on his bills.  Well, this time you lost.  Live to your own standards or you risk the people deciding to shut down commerce.  To de-fund the government and your goon squads by doing an entirely-legal thing – deciding to cease all commerce and demonstrate via peaceful means exactly as was done in Egypt.

Government exists only because it has a believed ability to raise revenues via taxation.  That’s what allows government at all levels to sell bonds and transact business.

We the people, via peaceful and lawful means, always have the right to revoke that belief among those who buy those bonds and transact business, and I believe we are not far from a critical mass in this country of people who are willing to do exactly that, particularly when our government refuses to honor the just results of a fair election of representatives and governors.

I call upon all Ticker [and FedUpUSA] readers to call Darryl Issa’s office Tuesday, along with their Representative and Senators, and demand an immediate halt to this interference in the affairs of Wisconsin and other States.  And while you’re at it, demand that Mr. Issa issue subpoenas and find out exactly where the money came from for those buses, where the people came from, and who’s coordinating what.

There may be a federal offense in there.

Speaking of which, is it time to impeach Eric Holder yet?

Representative Darrell Issa

Phone: 202-225-3906
Fax: 202-225-3303
E-Mail

Find Your Representatives

The Market-Ticker

Have you seen video of the teacher protests that are going on in Wisconsin?  We haven’t seen anything like this in America in quite some time.  If you haven’t seen video of the protests yet, some very good raw footage is posted below.  On the one hand it is good to see Americans coming together and standing up for what they believe in, but on the other hand what these teachers are freaking out about shows just how much America has changed.  These teachers are not protesting for liberty, freedom or to change the government.  Rather, they are protesting because they want things to remain the same.  They simply don’t want anyone to mess with their pay.  Well, the truth is that none of us ever wants to experience a pay cut.  It is not a lot of fun.  But sadly, states like Wisconsin are so broke that they have to find cuts somewhere.  Someone is going to have to make a sacrifice.  The teachers in Wisconsin just want to make sure that it is not them.

In the United States today, state and local governments are facing unprecedented budget crunches.  Tax revenues are way down and expenses are way up.  State and local government debt has reached at an all-time high of 22 percent of U.S. GDP, and many state and local governments are teetering on the brink of insolvency.

States like Wisconsin have to do something or else they will collapse financially.  Wisconsin is facing a $3.6 billion budget deficit (which for that state is huge), and Wisconsin Governor Scott Walker and the Republicans in the legislature are attempting to make some tough cuts.

In particular, they want public employees to pay a little more towards their health care premiums and pension programs.  In fact, what the Republicans are proposing would still leave Wisconsin public employees contributing far less to health care and pensions than their private sector counterparts.

U.S. Representative Paul Ryan recently appeared on MSNBC’s “Morning Joe” program and described what Governor Scott Walker is asking the teachers to do….

Scott and I are very close friends. We e-mail each other quite a bit… He’s basically saying that state workers which have extremely generous benefits packages relative to their private sector counterparts, they contribute next to nothing to their pensions, very, very little in their health care packages.

He’s asking that they contribute about 12 percent for their health care premiums, which is about half of the private sector average, and about 5.6 percent to their pensions. It’s not asking a lot. It’s still about half of what private sector pensions do and health care packages do.

So he’s basically saying “I want you public workers half of what your private sector counterparts do” and he’s getting riots. It’s like Cairo has moved to Madison these days.

These proposed changes have caused a massive uproar in Wisconsin.  Just check out the following raw video footage from the last few days….

But this is what we have come to as a nation.  Almost everyone agrees that reducing government debt is a good thing “in theory”, but whenever anyone starts to put forward some specific proposals to cut government spending it makes those that will be affected by the cuts extremely upset.

Just look at what is happening with the federal government.  Republicans and Democrats are both frothing at the mouth over extremely small budget cuts that have been proposed.  Virtually none of our national politicians are even willing to discuss budget cuts that would actually make a serious dent in our budget deficits.

But we have got to do something.  Spending by the U.S. government is spinning wildly out of control.  Back in 1970, the U.S. government only spent about 200 billion dollars for the whole year.  Well, this year the federal government is going to spend somewhere around 3.6 trillion dollars, and Barack Obama’s newest budget proposal calls for U.S. government spending to increase to 5.6 trillion dollars by the year 2021.  If the government continues to spend money at such a rapid pace it is going to completely wipe out our entire economic system….

But it is not just the U.S. government that is spending like a drunken sailor.  Most of our state governments are complete financial disaster zones at this point as well.

As I have written about previously, the state of Illinois is such a financial disaster zone that it is hard to even describe.  According to 60 Minutes,  the state of Illinois is six months behind on their bill payments.  60 Minutes correspondent Steve Croft asked Illinois state Comptroller Dan Hynes how many people and organizations are waiting to be paid by the state, and this is how Hynes responded….

“It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state.”

Something has got to be done about our national addiction to debt.

Government spending has to be dramatically cut.  All of us are going to have to make sacrifices.  We simply cannot continue to spend far, far, far more than we bring in.

But we are Americans – we do not like to make sacrifices.

Our founding fathers warned us about this.  They warned that when the American people figured out that they could vote themselves money out of the U.S. Treasury it would greatly endanger our republic.

Unfortunately that is exactly what is happening today.  The vast majority of government spending on both the national and state levels consists of direct payments to individuals of one sort or another.

The American people have become addicted to the bread crumbs that they receive from the hand of their master.

This is not what our republic was supposed to look like.

As the U.S. economy continues to decline, we are going to see a lot more riots like we have seen in Wisconsin.  Once the American people realize that the “good times” are over, all hell is going to break loose.

Already the anger and the frustration of the American people is starting to boil over.  Unfortunately, that anger and frustration is focused in 1000 different directions.  The ruling elite and the establishment media are constantly encouraging us to hate one another.  I recently wrote about this phenomenon in an article on another website….

The truth is that the “establishment” is constantly trying to divide us and get us fighting with one another. They pit the Republicans against the Democrats (even as though control both sides). They pit one race against another. They pit one gender against another. We are told that the rich are against the poor, the north is against the south, urban is against rural and that there are even “generational battles” going on. Frustration and hate are rapidly growing in the United States today, and a lot of that frustration and hate is unfortunately aimed at the targets that the mainstream media has programmed all of us to hate. Meanwhile, those at the top of the pyramid who are controlling the whole game love it when we are divided because we can never become united and challenge their control.

Unfortunately, America is more divided today than ever.  Our extreme affluence has kept the thin veneer of civilization that we all take for granted from disappearing so far, but once our affluence is gone all of the hate and frustration in society is going to come bubbling to the surface and it is going to be horrifying to behold.

Once the economic collapse happens, most Americans are not going to take it sitting down.  Most Americans are going to want someone to blame.  Most Americans are going to want to lash out somehow.

America today is like a big, fat spoiled baby that is about to have its favorite pacifier permanently taken away.  America is going to whine and cry and complain like there is no tomorrow.

For decades the financial “gloom and doomers” have been warning about what would happen to this country if we didn’t get our house in order, but nobody wanted to listen.  Everyone just kept piling up more debt as if it would never be a problem.

Well, now our entire country is covered in red ink.  Large numbers of state and local governments across the country are on the verge of defaulting on their debts, and they are hoping that the federal government will bail them out.  The federal government has already accumulated the biggest pile of debt the world has ever seen and continues to behave as if we can just keep borrowing and spending massive amounts of money forever.

There is no way out of this nightmare under the current system.  Taxing people more is not going to solve our problems.  Taxing people less is not going to solve our problems.

We have gotten to the point where it is inevitable that the debt bubble that we have created is going to burst.  Our politicians can try to delay it for a while, but in the end the whole house of cards is going to come crashing down.

When the U.S. economy does totally collapse, it is going to make the riots that we have seen in Egypt and throughout the Middle East this year seem tame by comparison.

What we are witnessing right now in Wisconsin are just the “birth pains”.  The American people don’t want to “tighten their belts”.  In fact, most Americans have absolutely no idea what “hard times” would even look like.  When things go from bad to worse we are going to see temper tantrums in this country like we have never seen before.

So get ready.  Unless there is some kind of dramatic transformation in this country, in the years ahead we are going to see some horrific economic riots.

It would be nice if we had a brighter future to look forward to, but we don’t do ourselves any favors by living in denial.

The Economic Collapse

The man who has rapidly emerged as the most vocal Obama critic, Mort Zuckerman, has just penned his most recent scathing anti-administration missive, this time focusing on the schism in US society between “preferred-status” public and shunned private-sector employees, concluding that “Americans cannot maintain their essential faith in government if there are two Americas, in which the private sector subsidises the disproportionate benefits of this new public sector elite.” Is this most recent split in US society being cultivated to take the place of the Wall Street – Main Street dialectic, which even Obama is now forced to realize is a fight he is set to lose (just imagine how anti-Obama Cramer would get if stocks drop by 0.001% during the teleprompter’s next media appearance)? Certainly, in a society that exists simply on the basis of a simple ongoing “us versus them” distraction, while the true crimes continue unabated behind the scenes, this is not an impossible assumption. Here’s a suggestion to Mort and whoever else wishes to peddle more such diversions: how about framing the next conflict where it rightfully belongs: as that between America’s people and its criminal ruling elite?

Full Op-Ed below:

America’s public servants are now its masters, first published in the Financial Times

by Mort Zuckerman

There really are two Americas, but they are not captured by the standard class warfare speeches that dramatise the gulf between the rich and the poor. Of the new divisions, one is the gap between employed and unemployed that President Barack Obama seeks to close with yet another $50bn stimulus programme. Another is between workers in the private and public sectors. No guesses which are the more protected. A recent study by the Mayo Research Institute found that “private-sector workers were nearly three times more likely to be jobless than public-sector workers”.

Political tension is bound to grow when jobs disappear faster in the private than the public sector, just as compensation in the former is squeezed more. There was a time when government work offered lower salaries than comparable jobs in the private sector, a difference for which the public sector compensated by providing more security and better benefits. No longer. These days, government employees are better off in almost every area: pay, benefits, time off and security, on top of working fewer hours. Public workers have become a privileged class – an elite who live better than their private-sector counterparts. Public servants have become the public’s masters.

Take federal employees. For nine years in a row, they have been awarded bigger average pay and benefit increases than private-sector workers. In 2008, the average wage for 1.9m federal civilian workers was more than $79,000, against an average of about $50,000 for the nation’s 108m private-sector workers, measured in full-time equivalents. Ninety per cent of government employees receive lifetime pension benefits versus 18 per cent of private employees. Public service employees continue to gain annual salary increases; they retire earlier with instant, guaranteed benefits paid for with the taxes of those very same private-sector workers.

More troubling still is the inherent political corruption. Elected officials tend to be accommodating when confronted by powerful constituencies such as the public service unions that agitate for plush benefits and often provide (or deny) a steady flow of cash to election campaign funds. Their successors will have to cope with the inherited debt burden – and ultimately the nation’s taxpayers are stuck with the bill.

As Governor Arnold Schwarzenegger has pointed out, spending on retirement benefits for California’s state employees is growing at three times the rate of state revenues, now exceeding $6bn annually and growing at the rate of 15 per cent a year. In other states, however, the politics of public pensions appear to be changing. In Michigan, Governor Jennifer Granholm, a Democrat, recently enacted a teacher pension reform that should save about $3bn over 10 years by increasing the amount workers must contribute. Illinois raised its retirement age for newly hired public workers from as low as 55 to 67. Chris Christie, the Republican governor of New Jersey, decided that even if it took bruising clashes with public worker unions, public service compensation reform was essential for the fiscal health of the state. His stance surprised many, but it made him a national figure.

There is no quick fix to deal with the billions in unfunded liabilities. Public service employees are almost impossible to fire, except after a long process and only for the most grievous offences. What is more, the courts have ruled in many states that pension increases granted by elected bodies are vested benefits that must be paid no matter what, precluding politicians from going back and changing past agreements.

The only fair solution is to take the politicians out of the equation and have fully independent commissions in charge, fixing the scale of salaries and benefits for public-service workers and establishing an affordable second retirement tier for new employees. More reasonable retirement ages should be in order, such as 65 for general employees and 55 for public safety employees. This would take nothing away from the existing benefits of current employees.

A fundamental rethinking of the public workforce is necessary. Americans cannot maintain their essential faith in government if there are two Americas, in which the private sector subsidises the disproportionate benefits of this new public sector elite.

ZeroHedge

Now that Schwarzenegger is a certifiable lame duck (dead duck may be a more appropriate term) Schwarzenegger sees fit to take on public unions in a major way. It’s too late now (for him) even as he speaks the truth.

Please consider Public Pensions and Our Fiscal Future by Arnold Schwarzenegger.

Recently some critics have accused me of bullying state employees. Headlines in California papers this month have been screaming “Gov assails state workers” and “Schwarzenegger threatens state workers.”

I’m doing no such thing. State employees are hard-working and valuable contributors to our society. But here’s the plain truth: California simply cannot solve its budgetary problems without addressing government-employee compensation and benefits.

Thanks to huge unfunded pension and retirement health-care promises granted by past governments, and also to deceptive pension-fund accounting that understated liabilities and overstated future investment returns, California is now saddled with $550 billion of retirement debt.

The cost of servicing that debt has grown at a rate of more than 15% annually over the last decade. This year, retirement benefits—more than $6 billion—will exceed what the state is spending on higher education. Next year, retirement costs will rise another 15%. In fact, they are destined to grow so much faster than state revenues that they threaten to suck up the money for every other program in the state budget.

At the same time that government-employee costs have been climbing, the private-sector workers whose taxes pay for them have been hurting. Since 2007, one million private jobs have been lost in California. Median incomes of workers in the state’s private sector have stagnated for more than a decade. To make matters worse, the retirement accounts of those workers in California have declined. The average 401(k) is down nationally nearly 20% since 2007. Meanwhile, the defined benefit retirement plans of government employees—for which private-sector workers are on the hook—have risen in value.

Few Californians in the private sector have $1 million in savings, but that’s effectively the retirement account they guarantee to public employees who opt to retire at age 55 and are entitled to a monthly, inflation-protected check of $3,000 for the rest of their lives.

In 2003, just before I became governor, the state assembly even passed a law permitting government employees to purchase additional taxpayer-guaranteed, high-yielding retirement annuities at a discount—adding even more retirement debt. It’s as if Sacramento legislators don’t want a government of the people, by the people, and for the people, but a government of the employees, by the employees, and for the employees.

For years I’ve asked state legislators to stop adding to retirement debt. They have refused. Now the Democratic leadership of the assembly proposes to raise the tax and debt burdens on private employees in order to cover rising public-employee compensation.

Much needs to be done. The Assembly needs to reverse the massive and retroactive increase in pension formulas it enacted 11 years ago. It also needs to prohibit “spiking”—giving someone a big raise in his last year of work so his pension is boosted. Government employees must be required to increase their contributions to pensions. Public pension funds must make truthful financial disclosures to the public as to the size of their liabilities, and they must use reasonable projected rates of returns on their investments. The legislature could pass those reforms in five minutes, the same amount of time it took them to pass that massive pension boost 11 years ago that adds additional costs every single day they refuse to act.

…

All of these reforms must be in place before I will sign a budget.

I am under no illusion about the difficulty of my task. Government-employee unions are the most powerful political forces in our state and largely control Democratic legislators. But for the future of our state, no task is more important.

Schwarzenegger Washes His Hands

Schwarzenegger drones on and on about who is to blame. He also acts as if he was fiscally responsible.

That is far from the truth. In Turn out the lights California, the party is over I blasted Schwarzenegger’s fiscally reckless proposals.

Flashback March 2, 2007: Schwarzenegger wants $500 billion to rebuild California

Sound Bites

• $42.7 billion in general obligation bonds issued last year is “only the foot in the door, to whet the appetite.”
• It will take $500 billion to “rebuild California the way it ought to be”.
• $500 billion is “too big for people to digest, so you don’t talk about that” even though he is talking about it.
• California needs $500 billion even though it has “done tremendously with the revenue increases”.
• California will not issue less debt even if the economy slows.
• California “could face lower tax revenues” but he opposes tax hikes.

Well here we are, 9 months later and the $4.1 billion reserve went to a $14 billion deficit in the last 4 months.

Thank God Schwarzenegger did not get what he asked.

Now in massive revisionist history he attempts to take credit for being fiscally conservative. Please, let’s stop the charades.

While there is some truth he wanted concessions from unions, unlike Governor Chris Christie, he never fought for them very hard. Only now is he saying “All of these reforms must be in place before I will sign a budget.”

He should have said that in 2009, 2008, and 2007. He is saying that now that he is a lame duck. While I commend the idea, the problems he was elected to fix are more broken than ever.

It will be interesting to see how this budget battle plays out, but no amount of hand-washing can absolve Schwarzenegger of his share of the blame.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com