by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, HYPOCRISY, POLITICS, RETIREMENT, TAXES
Minnesota’s pension fund was recently revealed to be in crisis-mode after changing the accounting formula to more accurately reflect market realities:
“The jump caused the finances of Minnesota’s pensions to erode more than any other state’s last year as accounting standards seek to prevent governments from using overly optimistic assumptions to minimize what they owe public employees decades from now. Because of changes in actuarial math, Minnesota in 2016 reported having just 53 percent of what it needed to cover promised benefits, down from 80 percent a year earlier, transforming it from one of the best funded state systems to the seventh worst, according to data compiled by Bloomberg.”
During the most recent recession, the Governmental Accounting Standards Boards made accounting rules changes because it began to be more apparent that a majority of local and state pension systems were continuously understating the long-term obligations. It was common practice to depend on and project 8%-10% investment returns even when the reality was more along the lines of 2%.
When the public sector (and unions) signed off on lavish pension provisions for the employee, they hoped there would be enough growth and investment returns to cover it way down the road. There were no provisions made to handle the possibility of a low-interest rate society or a fledgling economy like we’ve experienced the last nine years; they took their chances and their fallback was always that they could suck money from the taxpayer by raising taxes to cover budgeting shortfalls. That is reckless and irresponsible.
Years of fiscal mismanagement in the public sector has resulted in this fiscal nightmare. Because the public sector does not have the economic forces of competition to keep compensation levels in check, as the public sector does, it was always incumbent upon public negotiators to manage contracts properly. Failing to properly negotiate, making cozy deals, and maintaining unsustainable defined-benefit plans has created the soaring budget and pension deficits we see across the country. Though the rules changes to actuarial math are a start, in some places, it’s too little, too late.
by | ARTICLES, BUSINESS, FREEDOM, HYPOCRISY
The Wall Street Journal’s Kimberly Strassel had some sharp words regarding Jamie Dimon’s hefty donation to the Southern Poverty Law Center (SPLC):
Corporate America will do almost anything to stay on the safe side of public opinion—at least as it’s defined by the media. CEOs will apologize, grovel, resign, settle. They will even, as of this month, legitimize and fund an outfit that exists to smear conservatives.
The press is still obsessing over President Trump’s incompetent handling of the violence in Charlottesville, Va., and that has suited some profiteers just fine. The notorious Southern Poverty Law Center is quietly cashing in on the tragedy, raking in millions on its spun-up reputation as a group that “fights hate.” Apple CEO Tim Cook informed employees that his company is giving $1 million to SPLC and matching employee donations. J.P. Morgan Chase is pitching in $500,000, specifically to further the SPLC’s “work in tracking, exposing and fighting hate groups and other extremist organizations,” in the words of Peter Scher, the bank’s head of corporate responsibility.
What Mr. Scher is referring to is the SPLC’s “Hate Map,” its online list of 917 American “hate groups.” The SPLC alone decides who goes on the list, but its criteria are purposely vague. Since the SPLC is a far-left activist group, the map comes down to this: If the SPLC doesn’t agree with your views, it tags you as a hater.
Let’s not mince words: By funding this list, J.P. Morgan and Apple are saying they support labeling Christian organizations that oppose gay marriage as “hate groups.” That may come as a sour revelation to any bank customers who have donated to the Family Research Council (a mainstream Christian outfit on the SPLC’s list) or whose rights are protected by the Alliance Defending Freedom (which litigates for religious freedom and is also on the list).
Similarly put out may be iPhone owners who support the antiterror policies espoused by Frank Gaffney’s Washington think tank, the Center for Security Policy (on the SPLC’s list). Or any who back the proposals of the Center for Immigration Studies (on the list).
These corporations are presumably in favor of the SPLC’s practice of calling its political opponents “extremists,” which paints targets on their backs. The group’s “Field Guide to Anti-Muslim Extremists” lists Mr. Gaffney (who worked for the Reagan administration); Maajid Nawaz (a British activist whose crimes include tweeting a cartoon of Jesus and Muhammad ); and Ayaan Hirsi Ali (a Somali refugee who speaks out against Islamic extremism).
The SPLC has tarred the respected social scientist Charles Murray, author of the well-regarded book “Losing Ground,” as a “white nationalist.” Mr. Murray has been physically assaulted on campus as a result. He happens to be married to an Asian woman and has Asian daughters, so the slur is ludicrous. But what’s a little smearing and career destruction if J.P. Morgan Chase gets some good headlines?
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Despite Connecticut’s status as one of the wealthiest states in the country, its fiscal health is in rapid decline. A hefty debt load has left the state without a budget for two months as lawmakers squabble how to best deal with the reality of “high taxes, outmigration, falling revenues and $50 billion of unfunded pension liabilities.”
Governor Malloy has an executive order ready to go into effect that will reduce or eliminate funds for localities and schools if the state government cannot come to a consensus. Lawmakers are staring down a multi-billion deficit for the next two years so austerity measures could be both drastic and necessary.
According to Reuters, “one major factor for the debt load is municipal spending. Some $23 billion of outstanding municipal debt has also constrained spending. Bondholders must be paid ahead of most other expenses like non-essential services and payments to vendors….Connecticut has borrowed for decades to fund school construction, whereas nearly all other states typically borrow at the local level for those projects.”
Other issues besides municipal projects have wreaked havoc. Skyrocketing pension costs have been a major contributor, although Connecticut has been staring down this problem for nearly a decade; Connecticut “piled on debt to bolster its public pensions, selling $2.3 billion of bonds in April 2008.” And budget deficits are not new; 18 months after the bond sale, “in December 2009, the state sold $916 million of economic recovery notes to close a budget deficit after depleting its rainy day fund during the Great Recession.”
So here we have a debt-ridden state — quite possibly the worst of all 50 states — suffering from financial woes for years now with only bandaid solutions. Sufficient tax revenue is not the problem; zealous overspending and fiscal mismanagement is. Unfortunately, Connecticut is one of several states facing the same issues; state insolvency is going to get worse in many places before it gets better.
by | ARTICLES, BLOG, ELECTIONS, GOVERNMENT, POLITICS
Kamala Harris, the junior Senator from California, has been fueling speculation that she might be a Democrat contender for President in 2020. For months now, she has been holding fundraisers with high-dollar big-wigs, and now there are indications that she will be “knocking on doors in Iowa” according to former Los Angeles Mayor Antonio Villaraigosa, who is running for Governor in California in 2018.
Harris first came on my radar in 2015, when she partnered with the Department of Education to close some for-profit colleges in California when she was the Attorney General. In an earlier post on the subject, I noted that Harris worked in conjunction with the Department of Education specifically targeting the Corinthian College system. According to the Wall Street Journal, “Last summer the Education Department began to drive Corinthian out of business by choking off federal student aid for supposedly stonewalling exhaustive document requests. The Department claimed to be investigating whether Corinthian misrepresented job placement rates as California Attorney General Kamala Harris alleged in a lawsuit.”
Corinthian agreed to turn over their education centers to other non-profits, but Kamala Harris refused to release any buyer of potential future liability, meaning anyone purchasing would be under constant threat of a lawsuit. Last November, “the nonprofit Education Credit Management Corporation (ECMC) “agreed to buy more than 50 Corinthian campuses for $24 million plus $17.25 million in protection money to the feds for a release from liability. But ECMC passed up Corinthian’s 23 schools in California because Ms. Harris wouldn’t quit.” The alternative to having no buyer for these particular schools would ultimately be to shut them down.
It was in April 2015 that Corinthian was slapped with the $30 million fine, which effectively drove the final nail in the coffin of the remaining schools because no one in their right mind would shoulder the liability. As for the hefty penalty, “The Department assessed the maximum fine of $35,000 per regulatory violation, which its bureaucrats count as each student that was improperly counted.” By the end of the month, all the rest of the schools indeed closed, throwing out of employment and school, thousands of people.
What makes this whole affair particularly odious is that that “the federal government [didn’t] specify how for-profits calculate their job placement rates. States and accrediting agencies have disparate and often vague rules, which notably don’t apply to nonprofit and public colleges.” Thus, Corinthian Colleges was really just a part of the larger assault on for-profit colleges by the Obama Administration, all tied to his recently implemented “Gainful Employment” rules.
Part of the new regulation change dealt with colleges and federal aid, and it appears Corinthian was a ripe target. What’s more, the Department of Education found a ready and willing partner in Kamala Harris, who just happened to be running for a very important Senate seat in California at the time, the seat of retiring Barbara Boxer. She was elected a year later. Harris has demonstrated her willingness to play along to get along — so it’s important to keep an eye on her in the many months ahead.
by | ARTICLES, BLOG, GOVERNMENT, TAXES, TRUMP
As always, CNSnews posts the monthly revenue data as it is released from the Treasury. I have reposted it below in its entirety:
“The federal government collected record amounts of both individual income taxes and payroll taxes through the first ten months of fiscal 2017 (Oct. 1, 2016 through the end of July), according to the Monthly Treasury Statement.
Through July, the federal government collected approximately $1,312,691,000,000 in individual income taxes.
At the same time, it collected $976,278,000,000 in Social Security and other payroll taxes.
Prior to this year, fiscal 2015 held the record for individual income tax collections through July. That year, the Treasury collected $1,309,431,860,000 (in constant 2017 dollars) in individual income taxes in the first ten months of the fiscal year.
Last year (fiscal 2016), individual income tax collections from October through July dropped to $1,293,490,000,000 (in constant 2017 dollars).
This year’s record of $1,312,691,000,000 in October-to-July individual income taxes is $3,259,140,000 more than the 2015’s previous record of $1,309,431,860,000.
Before this year’s record $976,278,000,000 in October-through-July payroll tax collections, fiscal 2016 held the record at $948,709,020,000 (in constant 2017 dollars)—or about $27,568,980,000 less than this year.
Overall federal tax collections in the first ten months of fiscal 2017 were $2,739,861,000,000. Yet that did not the record for October-through-July total federal tax collections. In the first ten months of fiscal 2015, the Treasury collected $2,741,079,280,000 (in constant 2017 dollars) in total taxes. That was $361,218,280,000 more than this year.
While the Treasury has been collecting record amounts of individual income taxes and payroll taxes this fiscal year, some other categories of federal tax revenues have declined since 2015.
For example, in the first ten months of fiscal 2015, the Treasury collected $272,904,380,000 (in constant 2017 dollars) in corporate income taxes. In the first ten months of fiscal 2017, the Treasury collected only $232,294,000,000 corporate income taxes.
In the first ten months of fiscal 2015, customs duties were $30,705,180,000 (in constant 2017 dollars). In the first ten months of fiscal 2017, they were only $28,427,000,000.
In the first ten months of fiscal 2015, excise taxes were $68,686,630,000 (in constant 2017 dollars). In the first ten months of fiscal 2017, they were only $65,187,000,000.
Even as it was collecting record individual income taxes and payroll taxes in the first ten months of fiscal 2017, the Treasury still ran a deficit of $566,022,000,000.
That is because while the overall federal tax collections for the period were $2,739,861,000,000, overall federal spending was $3,305,882,000,000.”
(Historical tax revenues were put in constant 2017 dollars using the Bureau of Labor Statistics inflation calculator.)
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According to Bloomberg’s monthly economist poll, 78% of respondents think that Congress will be successful with tax cuts prior to mid-term elections next year — though they may be less ambitious than what has been originally planned.
Trump has promised to make this a priority. Whether or not this is a permanent change to the IRC — much like the reforms of 1986 — remains to be seen. Bloomberg notes that “White House officials have said they’re still committed to a permanent tax revamp, and the plan is to start hearings and a markup of a tax bill after Labor Day so a version can get through the House in October and the Senate in November.”
Tax reform and cuts are an indispensable way to boost floundering GDP growth, which has remained below 2% now for several years. Healthy GDP growth — 3% or higher — is imperative to restoring confidence in our continuously weak economy of the last decade.
by | ARTICLES, BLOG, ECONOMY, OBAMA, OBAMACARE, POLITICS, TRUMP
Anthem announced today that it would discontinue individual insurance coverage plans in Virginia in 2018, the third major insurer to do so this year; Aetna and United Health announced their plans earlier in the year. For Anthem, this marks the 4th state change so far in 2017, after Indiana, Ohio, and Wisconsin.
In their press release, Anthem noted,
“Today, planning and pricing for ACA-compliant health plans has become increasingly difficult due to a shrinking and deteriorating Individual market, as well as continual changes and uncertainty in federal operations, rules and guidance, including cost sharing reduction subsidies and the restoration of taxes on fully insured coverage. As a result, the continued uncertainty makes it difficult for us to offer Individual health plans statewide in Virginia.” Anthem will “reduce its plan offering and will only offer off-exchange plans in Washington and Scott Counties and the city of Bristol, VA.”
According to the Richmond Times-Dispatch, the move would be significant: “More than 206,000 Virginians could lose their individual health insurance policies with the sudden withdrawal of Anthem Blue Cross Blue Shield in Virginia, the state’s largest insurer, from the federal exchange and individual market in 2018.” Anthem will still employer-based plans, as well as Medicare and Medicaid plans.
The move leaves just five insurers in Virginia — Optima, Kaiser, Piedmont, Cigna, and CareFirst. Some localities will be left with just one insurer choice next year. This move by Anthem is a big deal, and yet another major failure of the poor structuring of the entire Obamacare apparatus. Americans deserve better.
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A soda tax in Philadelphia, implemented specifically to raise revenue (not to fight obesity) has failed to bring in the projected funds promised by the tax wizards. The tax was supposed to raise some $92 million a year, but people have taken to purchasing their soft drinks outside of the city, because the tax that is levied is a 1.5-cent per ounce tax.
The Tax Foundation studied the tax and its effects and found that, “According to some local distributors and retailers, sales have declined by nearly 50 percent. This is likely primarily due to higher prices, which discourage purchasing beverages in the city. Earlier this year PepsiCo announced it was laying off up to 100 workers because of the tax, which the company blames for costing a 43 percent drop in business. Philadelphians are also no longer able to buy 12-packs or 2-liters of Pepsi products in grocery stores due to the tax.”
This loss of revenue has begun to create further problems with the city budget. The tax was first passed to fund pre-K programs, but “in practice it awards just 49 percent of the soda tax revenues to local pre-K programs. Another 20 percent of the soda tax revenues fund government employee benefits or city programs, while the rest of the money will go towards parks, libraries, and community schools.” Thus, in July, city officials had to lower their beverage revenue projections which in turn affects the pre-K programs that are supposed to be funded by the tax.
In the final nail of absurdity, the report found that “that the tax is 24 times higher than the Pennsylvania tax rate on beer.”
Folks, here’s a prime example of how people change their behaviors — even the simplest ones like buying soda — in response to egregious, illogical, taxes.
