DYSFUNCTIONAL, DISHONEST, INSANE & INTOLERABLE

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Posted on 21st October 2012 by Administrator in Economy |Politics |Social Issues

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“I agree to this Constitution with all its faults, if they are such: because I think a General Government necessary for us, and there is no Form of Government but what may be a Blessing to the People if well-administered; and I believe farther that this is likely to be well administered for a Course of Years and can only end in Despotism as other Forms have done before it, when the People shall become so corrupted as to need Despotic Government, being incapable of any other.” Ben Franklin

In my last article – Decline, Decay, Denial, Delusion & Despair I tied my observations about the obesity epidemic after a weekend in Wildwood NJ to the overall decay and degradation of the American culture. I had further reflections, but the article was already too long. These musings centered upon the complete dysfunction of government and delusion of politicians who think they can create value by seizing money from taxpayers, creating programs and controlling our lives. The incompetence, arrogance, ineptitude and insanity of government officials at the Federal, State, and Local level are stunning to behold. A story from the local Wildwood newspaper crystallized why Wildwood and thousands of municipalities across the country continue to spiral downward as government assumes more hegemony over our economy and day to day lives. We need to ask ourselves whether we the people are getting better government service and efficiency today; with government spending at 35% to 40% of GDP, than we did in the 1950’s and early 1960’s when government spending was 20% to 25% of GDP.

I doubt that most people are getting 60% more value from our benevolent government today than they did in the 1950’s. The GDP of the United States was $300 billion in 1950. Today it is $15.6 trillion, a 5,200% increase in 62 years. Sounds pretty impressive until you realize that 4,500% was due to Federal Reserve scientifically created inflation. But don’t worry. Ben Bernanke’s assures us inflation is well contained. The 5,200% increase in GDP was blown away by the 9,100% increase in total government spending since 1950. When most people talk about government spending, they refer to the $3.8 trillion per year spent by the corrupt politicians and obtuse government bureaucrats in Washington, D.C. But, witless state and local politicians spend another $2.6 trillion of your tax dollars per year. The charts below detail the descent into a nanny state over the last six decades, where government has stepped in to the breach as the provider of healthcare, retirement savings, welfare, food stamps, housing, phones, cable, and SSDI if you get depressed by that non-existent inflation.

 

In the 1950’s defense accounted for a significant portion of government spending due to the Cold War and Korean conflict. Government did provide a safety net for the less fortunate during the 1950s, but people were also supported by their extended families, neighbors, churches, local communities, and charitable organizations. Medicare, Medicaid, and Food Stamps did not exist in the 1950s, and somehow, without government intervention, people were not dying in the streets or starving to death. The economy boomed as America was the manufacturer for the world. The middle class grew as blue collar jobs were plentiful and Americans took advantage of educational opportunity to move into white collar professions. Government did useful things like creating the Interstate highway system and beginning space exploration. What government did not do was create a class of dependent people who relied upon the government for their day to day existence. The transformation to a nanny state has not only created millions of non-productive members of society, but it can only be sustained by borrowing and passing the bill on to future unborn generations. This un-payable liability is the ultimate consequence of government spending outpacing GDP by 75% over the last six decades.

Johnny Can’t Add – Send Him to College

“The average American college fails… to achieve its ostensible ends. One failure… of the colleges lies in their apparent incompetence to select and train a sufficient body of intelligent teachers. Their choice is commonly limited to second-raters, for a man who really knows a subject is seldom content to spend his lifetime teaching it: he wants to function in a more active and satisfying way, as all other living organisms want to function. There are, of course, occasional exceptions to this rule, but they are very rare, and none of them are to be found in the average college. The pedagogues there incarcerated are all inferior men who really know very little about the things they pretend to teach, and are too stupid or too indolent to acquire more…. Being taught by them is roughly like being dosed in illness by third-year medical students.” H.L. Mencken

I watched the two candidates, chosen for us by our overlords, debate this past week and blather on endlessly about education being the key to our future success. As you can see from the charts above, government spending on education has remained constant at 14% of total government spending. In 1950, education spending totaled 3.3% of GDP. Today it totals 5.6% of GDP. We are spending $900 billion per year on education and making our kids dumber by the day. There are 50 million government controlled public school students and $600 billion is spent to educate them. One wonders where the $12,000 per student per year is being allocated, considering the lack of critical thinking skills, ability to write a comprehensible sentence or even the most basic math skills of the dullards that are being matriculated into society. The majority of that funding couldn’t possibly be wasted on administration, bureaucracy, union pension and healthcare benefits, and supporting the 5,000 control freaks at the Department of Education and their $100 billion budget.

The rest of the $300 billion of government spending on education is being funneled towards luring young people into debt so they can attain a college degree that will land them a part time job at Ruby Tuesdays. The hundreds of billions in Federal student loans being syphoned from the taxpayers and handed out to unsuspecting dupes has resulted in $1 trillion of student loan debt outstanding, up from $600 billion in 2008 and $200 billion in 2000. This mountain of debt makes subprime mortgages look like a good risk. Since 2008, the Federal government has intentionally accelerated the disbursement of student loans in an effort to obfuscate the true level of unemployment in this country, as people enrolled in college are not considered unemployed. The looming bailout of this grand taxpayer theft will be colossal, as the delinquency rate of student loans not in their grace period already exceeds 18%. This should not come as a surprise, as even though 10 million more people have entered the working age population since 2008, there are 3 million less people employed than in 2008. Subsidizing kids who aren’t intelligent enough to graduate community college and shelling out billions to middle aged laid off blue collar dudes so they can get an on-line degree from the University of Phoenix or the myriad of other worthless blood sucking diploma mills, is a despicable waste of taxpayer money.

Politicians continuously churn out talking points about how they are going to fix education, when it has been government control and intervention in the education market that has devastated the youth of our country. The government controlled education system has produced a vast swath of non-critical thinking, non-questioning, vacuous, materialistic, iGadget addicted nimrods. By subsidizing students who don’t have the aptitude, intelligence or preparedness to achieve a college degree, the government has artificially created the large increases in tuition. False government subsidized demand combined with limited supply leads to higher prices. It happened with housing and it is happening in college education. Government bureaucrats are so proud of their achievement in driving college enrollment to a record high of 21.6 million, up from 15.4 million in 2000. The percentage of 18- to 24-year-olds enrolled in college has soared from 35.5% in 2000 to over 42.0% today. The trend of young people enrolling in college has been relentlessly higher. Based on this data, you would think the youth of our fine country are the best and brightest in history. You’d be wrong.

There is one slight problem with that storyline – FACTS. SAT scores for the high-school graduating class of 2012 fell in two of the test’s three sections, with Reading dropping to the lowest level in four decades on the college-entrance test. Only 43% of the 1.66 million private and public school students who took the college-entrance exam posted scores showing they are prepared to do well in college, according to data released by the College Board, the nonprofit group that administers the SAT. The SAT data mirror scores from the ACT college-entrance exam which showed about 75% of students failed to meet college-readiness standards. The graduating class of 2012 posted an average score of 496 (491 for public school seniors) in Reading, a one-point drop from 2011 and a 34-point decline since 1972. Writing dropped to 488 (481 for public school seniors) this year from 489 in 2011, the lowest score since that section was introduced in 2006. The average Math score was 514 (505 for public school seniors), virtually unchanged since 2007, but down by four points since 2006 and essentially flat over the last forty years. The decline from 1960 is even more dramatic.

SAT

To put it bluntly, the dumbest graduating high school class in forty years has the highest college enrollment percentage in history. To put the dreadful results detailed above in further perspective, there will be 3.4 million graduating seniors in the country. The 1.7 million seniors who took the SAT exam were the cream of the crop. Imagine how dumb the 50% who didn’t even attempt to take the exam must be. These results show that only 700,000 of all the graduating high school seniors (21%) are capable of getting a B minus or above in college. A critical thinking individual might ask why 42% of all 18 to 24 year olds are enrolled in college. And the answer is The Government. There are 13 million 18 to 24 year olds enrolled in college and at least 6 million of them should not be in college, based upon their actual intellectual abilities. Do you think tuition rates would be skyrocketing if these 6 million kids were not being subsidized with Federal government loans to occupy space at second rate colleges and for profit diploma mills across the land?

Where’s My Daddy

“Every third American devotes himself to improving and lifting up his fellow citizens, usually by force; the messianic delusion is our national disease.” H.L. Mencken

While the government continues to promote, encourage and subsidize insane solutions to our educational dysfunction, they declare we must “invest” more in education. We need more teachers, more money, more programs, more standardized government created tests, and more government control. This drivel is peddled to the dumbed down masses by politicians and the mainstream media and who could possibly disagree? We must invest in our children. They are our future. Again, facts keep getting in the way of a good yarn. The United States spends $3,000 more per student than the average OECD country. We spend 75% more than South Korea per student.

Based on spending alone, our children should have the highest test scores on earth. We missed by that much. Sadly, the average American high school graduate doesn’t have the math skills to understand the chart below, so I’ll interpret it for them. We suck at math. Math is hard and hurts our brains, so we would rather twitter and text. Korea seems to be getting a nice bang for their buck. I wonder if it has anything to do with two parent families that care about education, good teachers, a rigorous curriculum, and hardworking students. I wonder if Korean schools concentrate on social justice, multi-culturalism, the joys of diversity, promoting ego enhancement and rewarding mediocrity. Despite being 2nd in the world in spending per student, our students ranked 25th out of 34 countries in math and science scores. We’ve kept this information from our children because we don’t want to hurt their self-esteem. Everyone gets a trophy in America just for showing up. The job of teachers and educators is to inspire children and create a desire to learn, question and think. Filling their minds with rote government sanctioned pabulum and drugged up on Adderall is not the way to create critical thinking young adults.

The government bureaucrats and teachers unions declare that if we just had more teachers all would be well. Our top notch, dedicated, overburdened union teachers are just being crushed by their unbearable 9 month workload, one month of holidays, snow days, and in-service days, the grind of an 8 hour day and an average class size of 16 students. The facts are that in 1965, when SAT Reading scores were 542, the average class size for a public school teacher was 25 students. The number of students per teacher has dropped by 36% since 1965 and the public school SAT Reading scores reached a new low of 491 in 2012. Imagine how low the scores could go if we just hire another million teachers. Let’s be truthful. The majority of public school teachers in this country are mediocre at best. They are glorified babysitters. Students are unmotivated and distracted by their social media techno-gadgets. Parents, if there are two parents, are consumed by working, commuting, and their own techno-obsessions. The slow descent into national imbecility is almost complete.

Let’s not beat around the bush. As students learn less and less, taxpayers pay more and more. The Department of Education was created in 1979. This year they will spend over $80 Billion of your tax dollars on programs that will fail again. Teachers’ unions demand higher wages, pension payouts, and healthcare benefits, while thwarting efforts to fire poor performers. The Department of Education has not improved education. Its mandates, programs, and subsidies have destroyed any incentive to improve the system. The Department of Education should be eliminated, but neither party would ever do it. As States and municipalities across the land are forced to acknowledge the $2 trillion of unfunded pension liabilities owed to government union employees cannot be honored, the end of collective bargaining with the teacher’s unions will arrive. Taxpayers will revolt and refuse to pay for the gold plated benefits of second-rate teachers that produce students who can’t read, write or add.

In the politically correct society we inhabit today, you are not allowed to state the other obvious reason for the non-stop slide in test scores and the educational underachievement of our precious cherubs. In 1960, only 8% of families with a child under 18 were single parent households. Today, that number is 30%. The percentage of children born out of wedlock in this country is 41%, with 72% of black children born out of wedlock. Again, you can thank the government. You get more of what you encourage and subsidize. Government control over our educational system has created a nation of useful idiots who are compliant and malleable to whatever storyline their overlords announce through their media mouthpieces.

It’s no accident that in 1960, according to the Pew Research Center, five years before President Lyndon Johnson signed into law his War on Poverty, 61% of black adults were married. By 2008, this was down to 32%. In 1960, 2% of black children had a parent that had never been married. By 2008, this was up to 41%. The results speak for themselves:

  • 63% of youth suicides are from fatherless homes
  • 90% of all homeless and runaway children are from fatherless homes
  • 85% of all children who show behavior disorders come from fatherless homes
  • 80% of rapists with anger problems come from fatherless homes
  • 71% of all high school dropouts come from fatherless homes
  • 75% of all adolescent patients in chemical abuse centers come from fatherless homes
  • 85% of all youths in prison come from fatherless homes.

By encouraging dependency and reliance upon the all-powerful government, the motivation to educate yourself, get married before having children, work hard, and pull yourself out of poverty is diminished. Self-reliance and responsibility for your own life is lessened because the government is there to provide the basic needs of all. It sounds wonderful until you consider the $100 trillion bill being passed to future generations so we can sustain our nanny state today. After decades of ever increasing government control over our lives and the accumulation of a Himalayan mountain of debt, why anyone would conclude that more government is the solution is beyond my comprehension.

May I Have Another Voucher Please?

“The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, and intolerable…” H.L. Mencken

This brings me to the story in the Cape May County Herald that captures the insanity of government and how government solutions create unintended consequences that require more government solutions, ultimately creating such havoc and disarray that intelligent people just give up and move somewhere else. The story detailed all of the undercover operations of the Middle Township police department and the 77 arrests they made in Rio Grande for narcotics distribution, robberies, and assaults over the last year and a half. Rio Grande is a backwater town of 2,670 people living in a 3 square mile area, a few miles from Wildwood. One might wonder how a sleepy tiny seashore town could have such a crime epidemic. Well this one sentence from the article provides a clue:

With the majority of the twelve motels in the township that accept social services vouchers lining the highway, Route 47 seems to be a hotbed for crime in the township.    

It seems the community of Rio Grande supports the 43 Middle Township police officers with a tremendous level of job security. The police were confused as to why so much crime was centered at the year-round motels in Rio Grande. It seems their fellow government associates like to play hot potato with convicted criminals. The State Department of Corrections paroles the lowlife felons and puts them on a bus back to the county in which they were sentenced. The Cape May County Social Services then uses taxpayer money to provide a free housing voucher to the criminals whose families refuse to take them back. The dilapidated motels that have to accept these social services vouchers in order to survive in this terrible economy then end up filled with drug dealing troublemaking delinquents. In case you were considering a nice vacation stay at a Rio Grande motel, you should know there are currently 24 parolees living in Rio Grande motels as well as 20 Megan’s Law offenders. I bet they have some wild parties on Friday nights. I’m sure this news will do wonders for property values in Rio Grande. I was thrilled to find out that my home away from home – Wildwood – is the only place with more motels accepting these social services housing vouchers, with 15. That may help illuminate the reasons for the ten blocks of squalor that make up the heart of downtown Wildwood.

The story actually gets better. Governmental dysfunction and insanity has been taken to a new level, as described by the chief of police:

“What we found out with this funding, and this is particularly disturbing, is that the only way someone’s funding can be revoked is if they are involved activities that result in their own homelessness,” said Leusner. He gave an example of a resident at a motel that might commit a theft, break into someone’s car or shoplift and be arrested. If let go on their own recognizance, that person still receives a voucher. “They can’t revoke their funding,” said the chief. “I think that’s wrong. If you commit a crime and you victimize someone in that general area, your funding should be revoked.”

So the taxpayer has already footed the bill for a criminal’s stay in prison, pays for their free housing while still making their own mortgage payment, pays for the added police personnel to arrest them for their new crimes, and still pays for their housing after they are arrested again for committing crimes in their community. I’m sure Paul Krugman would see this as a wonderful example of Keynesian economics propelling the nation’s GDP. Government spending on housing vouchers results in more employment of police officers, revenue for motel owners, revenue for the construction industry to repair the motels after the drug crazed parties, revenue for the drug dealers, revenue for security firms and gun dealers as citizens scramble to protect themselves, and ultimately more employment of prison guards when the derelicts are eventually sent back to prison. It’s a government created dysfunctional cycle of insanity.

The cherry on top of this atrocious example of a bloodsucking government destroying its host is what happened when motel owners met with police and agreed to police the situation themselves. The motel owners immediately contacted Social Services whenever one of their parasite guests were seen doing or dealing drugs and would tell them they didn’t want them in their motel. Due to governmental confidentiality rules Social Services could not inform the police of this information. These government drones would then place the drug addict at another motel two blocks away without informing them about the prior complaints. This is the ultimate result of government run amuck. By putting complete faith in the wisdom of politicians and bureaucrats, we are left with a system that is consuming itself and what little remains of our national wealth.

Liberty & Critical Thinking

“All government, of course, is against liberty.” H.L. Mencken

Nothing in this world gets better as it gets bigger. The bigger an organization becomes, the less efficient, less responsive, less fair, less compassionate and less functional it becomes. Government attracts mediocre, low IQ, power hungry, narrow minded, paper pushing, rules oriented, dimwits who think they can run your life better than yourself. This applies across the board from the highest levels in Washington D.C. to your local school board. There is no problem that another law, statute, program, or initiative, funded by your tax dollars or future generations, that a politician or government pencil pusher doesn’t think they can’t solve. They are just too dense to anticipate the unintended consequences of their arrogant belief in their own wisdom.

Government programs created in the 1960s created a culture of dependency, government control, relentlessly higher debt, materialism, and willful ignorance. As government has grown in power, the people have sunk to the level of feudal serfs living in indentured servitude to their overlords. The government overlords and their banking and corporate co-conspirators created the educational system that produces the flaccid, oblivious, pliable dolts that make up the majority of the populace. As we’ve seen, government subsidization of dysfunctional lifestyles and dreadful government education provided to children from these households creates a corrupt, criminal culture that engenders calls for more government programs to fix the problems created by previous government programs. This is why government spending has far outpaced GDP growth over the last six decades. It’s a cycle of dysfunction and ultimately destruction, as the crony capitalists and government parasites suck the remaining life from our decaying economic system.

It always comes back to who benefits from such a dysfunctional, dishonest, insane, intolerable system. If the population had not been dumbed down through our educational system and was capable of critical thinking they would realize the corporate media propaganda used to turn them into materialistic, narcissistic consumers, along with easy access to consumer debt has lured them into debt servitude and impoverishment, while their overlords are enriched and empowered. Our education system sucks because our overlords need it to suck.

“There’s a reason that education sucks, and it’s the same reason it will never ever ever be fixed. It’s never going to get any better, don’t look for it. Be happy with what you’ve got. Because the owners of this country don’t want that. I’m talking about the real owners now, the big, wealthy, business interests that control all things and make the big decisions.

I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest.” George Carlin

The question remains. Can a small minority of critical thinking citizens lead a revolution that topples the existing social order and restores the Republic to its founding principles of liberty, self-responsibility, civic duty, and mutual obligation to future generations? The original Ron Paul led Tea Party movement was hijacked and defused by the overlords. The original OWS movement, with its focus on the criminal Wall Street banks, was crushed through brute force and corporate media propaganda. The few remaining citizens capable of critical thought need to decide whether they will fight for the country we should be or bow down to the overlords and accept that we have become so corrupted as to need a despotic government, being incapable of any other. The choice is ours.



 

 

STATE OF CONFUSION

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Posted on 17th July 2012 by Administrator in Economy |Politics |Social Issues

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So let me get this straight. Most of the States are in deep financial trouble. Obamacare, which was sold to the American people as a budget neutral plan to fix our healthcare system, will dump tens of millions more Americans into the Medicaid system. This will destroy the crumbling state budgets just as the unfunded government pension crisis really gets going. This is not scare mongering. It’s math.  

State budget crisis seen lasting

By Matt Michaels of Medill News Service

WASHINGTON (MarketWatch) — Even if the U.S. economy rebounds from the meltdown of 2008, leading budget experts said Tuesday that the financial crises facing many states will continue indefinitely.

The State Budget Crisis Task Force — an independent group led by former Federal Reserve Chairman Paul Volcker and former New York Lieutenant Gov. Richard Ravitch — said rising Medicaid costs, expected federal budget cuts, underfunded pensions, volatile tax revenue and encumbering laws will prevent states from developing a sustainable budget unless significant changes are made.

One the biggest issues the findings highlighted is the growing discrepancy between Medicaid spending and tax revenue. The report found that Medicaid spending is the single largest spending category in most state budgets and grows at an average rate of 7.2%, while state revenue grow at a rate of just 3.9%. If that trend continues over the next five years, the report said the gap between the two would widen by $23 billion.

“We are digging a very, very serious hole for ourselves,” Ravitch said at a presentation at the Newseum.

He said that social service programs have already felt the impact of the increasing gap because more than 650,000 state employees have been laid off since 2008.

But the recently upheld Patient Protection and Affordable Care Act could increase the gap even more. The report said that Medicaid costs would increase by 8.1% between 2012 and 2020 if the health-care reforms in the law are implemented and by 6.6% if they were not.

Another significant finding by the task force is the impact a federal deficit reduction would have on states.

According to Pete Peterson, the secretary of commerce under President Richard Nixon and a contributor to the task force, federal aid accounts for one-third of a state’s budget. So if the federal government decided to cut state grants by 10%, the report said bigger states such as California and New York would lose more than $6 billion annually.

“If the federal government inevitably reduces these payments, the states are going to have to get their own fiscal house in order to continue making their critical investments,” Peterson said.

Other highlights of the report included the mounting pension and tax revenue issues in many large states. In California, Illinois, New Jersey, New York, Texas and Virginia — the six states the report focused on — pension liabilities are underfunded by more than $385 billion, and retiree health benefit promises by more than $500 billion, the report said.

Also, between 2008 and 2010, state tax revenues declined by more than 12% is greater than any decline in any previous recession.

Alice Rivlin, the founding director of the Congressional Budget Office and member of the task force board, said the goal of the report was not to provide solutions to the problems, but rather make people more aware of the gravity of the issues.

“We’ve got to get people thinking about what the solutions are,” Rivlin said. “Not just at the federal level, but at the state and local level as well.”

PROMISES ARE EASY – MATH IS HARD

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Posted on 12th June 2012 by Administrator in Economy

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It isn’t a problem that people in the modern world are living longer. The average working stiff should have paid attention in math class. People should have saved at least 10% of their income per year in order to ensure a retirement not based on eating Alpo three days per week. Sadly, few people understand math. They were lured into debt by the Wall Street/corporate Media machine and forgot to save. Now they’re panicked and want BIG GOVERNMENT to save their sorry asses. Well guess what? The corrupt politicians didn’t pay attention in math class either. They are REALLY REALLY good at making promises in order to get elected, they just aren’t very good at figuring out how to fullfill those promises.

The chart below paints about as bleak a picture of our future as you can get. You have hundreds of millions of Boomer era people who are retiring at ages between 59 and 65 who will live another 20 years, expecting BIG GOVERNMENT to fund their old age. This is supposed to be paid for by a dwindling number of younger workers. One itsy bitsy tiny problem. MATH!!!!

It is mathematically impossible to fund 23 year retirements for hundreds of millions of old folks with money that does not exist and cannot be generated by the existing number of younger workers. Your options are few. You can dramatically increase the retirement age. You can reduce the promised benefits. You can dramatically increase taxes on the younger workers. Or you can print the money out of thin air and destroy the purchasing power of the younger generations through inflation.

I wonder which “solution” our fearless leaders will choose? 

 

Fun with pensions

Jun 11th 2012, 15:48 by The Economist online

The burden of increased longevity in the rich world

ON JUNE 6th François Hollande, France’s new president, unveiled plans to reverse a planned rise in the official retirement age to 62. In most other countries the trend is in the other direction. According to a new report from the OECD, increases in the official retirement age are planned or underway in 28 out of its 34 member countries. As can be seen from the chart below, pensionable ages have failed to keep pace with longevity. This comes at an increasing cost to the state. The OECD expects governments’ expenditure on pensions to rise from 8.4% to 11.4% of GDP between 2010 and 2050. And in most countries people retire earlier than the official retirement age. In 1970 the average Frenchman entering retirement could expect to live for just over ten years. Now he could expect to live for 23.

 

 

 

STOCKTON – DEAD CANARY IN THE CALIFORNIA COALMINE

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Posted on 6th June 2012 by Administrator in Economy |Politics |Social Issues

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This story goes hand in hand with the PA pension story. Stockton is the dead canary in the coalmine. Over the next 5 to 10 years localities will be filing bankruptcy by the boatload because the money to pay for decades of promises is gone. For all the government drones out there, guess what happens in bankruptcy? That’s right. Your gold plated pensions and health benefits go poof. You get nada. So keep picketing and demanding more. You’ll get it. You’ll get it good and hard, just like you deserve.

I love the description of Stockton City Hall. It sounds delightful.

Stockton officials ready bankruptcy plan

STOCKTON — A California city that has the second-highest foreclosure rate in the nation is preparing for a possible bankruptcy filing if officials are unable to broker a deal with the city’s creditors.

Stockton would become the nation’s largest city ever to file for bankruptcy. City Council members late Tuesday granted the city manager authority to seek Chapter 9 bankruptcy protection in three weeks if a deal isn’t made.

The council’s 6-1 vote after four-and-a-half hours of urgent pleas, recriminations over past decisions and dire warnings comes as the river port city of 290,000 continues to negotiate to restructure hundreds of millions of dollars of debt under a new state law designed to help municipalities avoid bankruptcy.

The mediation was extended through June 25, and City Manager Bob Deis said he wanted to be ready to go to bankruptcy court the next day in case the talks fail.

“If a positive resolution is not possible, it is my fiduciary responsibility, just like a small business owner or the CEO of a Fortune 500 company, to have a Plan B. It’s not all right to simply not do anything and hope for the best,” Councilwoman Diana Lowery said. “There is no hoping for the best anymore.”

Stockton’s property tax, sales tax and other revenues have seen significant declines in recent years while expensive investments the city made in reinvigorating the downtown failed to produce the desired windfall. At the same time, it negotiated generous retiree benefits it cannot afford to make good on, said Ann Goodrich, a labor consultant hired by the city.

The insolvent city already has depleted its general fund, defaulted on bank bonds and slashed essential services and maintenance to dangerous levels, Deis said.

The city has the one of the highest crime and unemployment rates in the country. At City Hall itself, the water is undrinkable, rats roam the building, the computers are outmoded and workers are demoralized, he said.

“There have been unacceptable mistakes in this city, and I’m concerned about making more mistakes, and one of these days it’s going to be a catastrophic mistake,” he said.

Adding to the urgency is the fact that the city is facing a $26 million deficit in the fiscal year that begins July 1, but is required under state law to have a balanced budget.

Under the law city officials are using as a last-ditch effort to avoid bankruptcy, municipalities must first seek mediation with creditors, with the goal of settling debts without filing for Chapter 9 protection.

ONE DAY REHIRING EQUALS $158K PENSION

17 comments

Posted on 22nd September 2011 by Yojimbo in Economy

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[ I think we have now entered into a period similiar to the Dark Ages, where local warlords fought over the wealth of the people. This union leader is a modern-day economic warlord who is using his power to steal as much wealth as possible.]

the link:  http://www.chicagotribune.com/news/local/ct-met-pensions-gannon-20110922,0,913026.story

By Jason Grotto, Tribune reporter

9:00 p.m. CDT, September 21, 2011
Most city workers spend decades in public service to build up modest pensions. But for former labor leader Dennis Gannon, the keys to securing a public pension were one day on the city payroll and some help from the Daley administration.

And his city pension is more than modest. It’s the highest of any retired union leader: $158,000. That’s roughly five times greater than what the typical retired city worker receives.

In fact, his pension is so high that it exceeds federal limits and required the city pension fund to file special paperwork with the Internal Revenue Service to give it to him.

Gannon’s inflated pension is a prime example of how government officials and labor leaders have manipulated city pension funds at the expense of union workers and taxpayers. Like other labor leaders, he was able to take a long leave from a city job to work for a union and then receive a city pension based on a high union salary.

But in a new twist, a Tribune/WGN-TV investigation has found that Gannon is eligible for the lucrative pension deal only because City Hall rehired the former Streets and Sanitation Department worker for a single day in 1994, then granted him an indefinite leave of absence.

Gannon quickly rose to become one of the most powerful labor leaders in the city, speaking on behalf of more than 300 Chicago-area unions as president of the Chicago Federation of Labor.

State law allowed Gannon to retire from the city in 2004, the year he turned 50; since then, he has received about $1 million from his city pension. He stands to collect approximately $5 million during his lifetime, according to an analysis based on the fund’s actuarial assumptions.

Until last year, that pension came on top of Gannon’s union salary, which had grown to more than $240,000. He now draws the pension while working for a hedge fund, Grosvenor Capital Management, that does work with public pensions, including the Teachers Retirement System of Illinois. The firm also was one of Mayor Rahm Emanuel’s largest campaign contributors.

Gannon declined to be interviewed for this story but issued a statement through a spokesman for the Illinois Sports Facilities Authority, where he is a board member.

“I am extremely proud of my many years of service to the city of Chicago and the working men and women of organized labor,” Gannon wrote. “I have always followed the pension laws governed by the state of Illinois statute as well as the city of Chicago municipal pension plan.”

Terrance Stefanski, who oversees the city’s municipal pension fund, confirmed that the city helped Gannon qualify for an inflated pension by hiring him for a day. But he said he has no control over city hiring and must follow the pension laws.

“Once the city rehired him and he went on a leave of absence to work for the union, he was eligible under the law,” Stefanski said.

Streets and San officials provided a statement about Gannon’s one-day hiring: “This was a personnel matter that happened more than 16 years ago, and at this time we don’t have all of the details needed to determine exactly why these decisions were made.”

Gannon’s inflated city pension is one of at least 23 handed out to union leaders who have retired from the city, records uncovered by the Tribune and WGN-TV show. The joint investigation revealed Wednesday how the legislation that created the pension perk for union leaders found its way in to the state statutes with no transparency or accountability.

Gannon started his climb to the top of organized labor in 1973. He was 19 years old and made $6.95 an hour working for Streets and San as a steamroller engineer, compressing asphalt on city streets.

During the next 17 years, he worked his way into the role of hoisting engineer foreman, overseeing the use of heavy cranes at road construction sites at a salary of about $56,000. He also gravitated toward union politics. By 1990, Gannon had been tapped to become a business agent with Local 150 of the International Union of Operating Engineers.

“It is with mixed emotions that I am requesting a leave of absence from my position as general foreman of hoisting engineers,” he wrote to his bosses at Streets and San in December 1990.

Although he was leaving city service, Gannon moved to take advantage of the law that allowed him to stay in the municipal pension fund. In April 1991, records show, Gannon had Local 150′s business manager write a letter on his behalf making that request.

Only a few months earlier, on his last day in office, Gov. Jim Thompson had signed into law the pension code changes that would allow Gannon’s city pension to be based on his salary as a union official.