Tuesday, February 22, 2011

Democracy on Life support

Democratic Wisconsin legislators leave the state so the legislature wouldn’t have a quorum to act on legislation. The reason being, they did not want to see certain legislation passed. If this isn’t an undemocratic act, what is? These representatives need to be relieved of their elected position and replaced. An example needs to be set here. Democracy works because of the vote, not from the lack of it.

The idea that the money is there, if it is spent “our way,” doesn’t float. Pay as you go or forget the trip. And that doesn’t set well with Democrats, social programs are their agenda, the funding is just not there. What is going to be cut? Easy answer, if you don’t pay taxes, whatever you are collecting will be cut. What’s that mean? They are cutting benefits to everyone that pays little or no taxes.

Some Congressman the other day defended not cutting Social Security entitlements. He stated that “Social Security is independently funded with no cost to the taxpayer.” What he said was true and very misleading. Congress uses this fund as a piggy bank. Our government has borrowed and spent the 2.5 trillion dollar Social Security surplus. What we need to look at, is the fact that the government can’t pay back the funds borrowed or meet the obligations of promised Social Security benefits for the future. In FDR’s time, 7/8th of the population was dead before retirement. That alone was enough money for the 1/8th that survived to collect benefits.

So let’s see if I have this right now. You pay in 12 percent of your earnings into Social Security per year and when you retire, you get to collect 10 times what you paid in. If this sounds too good to be true, then it probably is. To top that off, your contributed funds are not invested, they are spent that year on the budget. Of course the Social Security fund gets an IOU from Uncle Sam. The words “Congress” and “Pond Scum” seem to define each other here.

Then we have the word “Bipartisan,” repeated incessantly in every Congressional interview. It’s the panacea for what ails the economy. It translates from the Latin as “two parties together.” Today it is defined as “Complementary rectal loading.”

The States are literally falling apart and are bankrupt. Most have already spent that loan we gave them (over payment of 2010 taxes) (They will probably apply your refund to next year’s taxes). We have 5 months before the new fiscal year begins for most of the States, this is when it will "hit the fan."

It is becoming very apparent that something is wrong with government on the State level that cannot be fixed. Obama pulled a fast one on the Republicans in Congress with health care and now we have a similar situation in Wisconsin where the outcome is a given. In this case it was different. The Democrats got up and left the state; what they did was very un-American. Voters, not protesters make our laws--hmmm, I might be wrong about that.

Tongue in Cheek Solution for California Budget shortfall:

Governor Brown should send several armed ships to Somali to hijack oil tankers and hold them for ransom. The insurance companies would pay the ransom and California could then make its budget; 29 ships and 660 hostages held in that country is a travesty. The only reason they are there, is because piracy has become very profitable.


Anonymous said...

This will be an ongoing story for years. The "haves" (government workers) want more and more from the "have nots" (the slobs who pay their salaries.)
Don't expect Gov. Brown to stand up to them- he is in their hip pocket.

Drewbert said...

Except that the Unions have already said they would accept the Governor's demands for pay and benefit reduction, they just don't want to lose their collective bargaining rights for the future. So they've removed themselves as the "problem" in this budget situation.

The Governor however says "No Dice! You've gotta give up your collective bargaining rights anyway."

It's no longer about the budget, (one which includes a tax cut for rich folks paid for by benefits cuts for state workers) it's now simply a partisan issue. This is punishment for the unions who supported Walker's opponent... but only the unions who supported Walker's opponent. State Police and Firefighters who did support Walker are exempt from this "reform".

Oh yeah, and Walker wants to sell any state owned utilities to private companies via a no bid process.

Jim in San Marcos said...

Hi Drewbert

The governor doesn't write the laws, the legislature does.

The concept "I won't play unless it is in my best interest" isn't what Democracy is all about. The last time we had a dissagreement like this, it resulted in a civil war.

IMHO, these legislators that are absent by design, need to go to jail for their actions.

There are a lot of tough decisions that lie ahead and this is just one of many, that we won't like, but have to live with.

Hold on to your hat, it is just starting.

Anonymous said...

I agree Jim I was watching meet the press on weekend. Talking heads figure that current stalemate is resulting from one side waiting and hoping that other will make the unpopular choice. Gov. Walker may not be playing fair but neither are unions. They may agree to pay and benefit reductions but the implementation will be where things fall apart. This is only the beginning there are far more painful cutbacks to come. The unions want to keep their powder dry and live to fight another day. He was elected to do what he is now implementing if people don't like it too bad that's democracy.

AIM said...

All need to share the pain. No exceptions. Many politicians should be jailed. Judicial Branch is too corrupt for that to happen. It all comes down to morality. The lack thereof, in both the private and public sectors, is the reason for most of our woes.

Those waiting for politicians to solve our problems are really pathetic. It will take a crisis that will really hurt badly to dislodge the grip of the government status quo so that some fringe group can move in with viable solutions.

Jeffrey said...

All too often, Jim, these procedural complaints are just hypocracy, not principle. For example, how "democratic" is the 60 vote requirement in the Senate? Not at all. Yet the Republican party after Obama's election used it more than any other time in history to keep the party that won (the House, Senate and Presidency no less) from passing their legislation.

How are the Wisconsin Democrats acting any differently? They are using a legal procedural devise (lack of a quorum) to keep the majority from passing their legislation.

Yes, Republicans cited their principles when obstructing the Democratic majority. And so do the Wisconsin Democrats. And while I am no fan of public unions, the Wisconsin Democrats appear to have the facts on their side. In no way, shape or form can you blame public pensions for the Wisconsin deficit. See the Pew Research in today's HuffPost. Wisconsin public pensions are just about fully funded even after using mark to market -- which, as you know, none of our TBTF banks are required to do.

Jim in San Marcos said...

Hi Jeffrey

Let's forget about the Democrats and Republicans.

In a Democracy the people have the ability to change the way things are. If a group of elected officials decide not to attend the legislature in order to block its operation, the people as a whole have lost their rights of representation. There is no Democracy.

I agree there is no problem with Wisconson's pension plan, but the budget is out of whack and the governors other choice is to lay off 7,500 state workers.

These State employees have a very plush benefit package, a lot better than those in the private sector. The question is being asked is, Why?-- what makes them so special.

Jeffrey said...

Jim, I agree that in retrospect the benefits promised state workers are indeed excessive. But in most cases these promises were made years ago when those of us in the private sector were bragging about in the money options, bonuses and pay levels significantly above those in the public sector. (BTW, neither I nor anybody in my family is employed by any governmet agency nor do we work in any private company dependent on government contracts). Remember the "I want to buy an island" commercial at the peak of NASDAQ 5000?

Historically, government workers toiled for years at lower than private wages because they traded immediate income for future benefits. In the 1990s, as private wages began to outrun public income, non-wage benefits such as health and pension benefits were used to keep them from jumping to private employers.

At the time, those of us in the private sector didn't care. We were doing just fine with our own retirement 401k plans and rising home equity. In the 1990s I was a partner in a large SF law firm and I can tell you that I earned easily twice as much as government attorneys with my experience did. Yes, they punched out at 5, but I was having a whole lot more fun and challenge with private clients than they were. I was able to afford private school for my children, they were not. I was able to afford trips to Hawaii, they were not. There simply was no equivilent pay.

Fast forward to today and my how the tides have turned. My 401k is a 201k, my home has lost 30% of its value and my kids now attend public universities. I am envious of my government attorney friends with their "generous" benefits. But I ask you: how is this envy any different than the envy we rail against when the poor generally envy the rich?

And if we all democrats with a small "d", didn't our democratically elected government officials promise these benefits with our support and consent? Sure, MISH and his tribe are now correctly noting how "generous" these promises are, but where was he when the promises were made? I and quite a few other people protested against the Iraq War, an expensive boondoggle that cost you and me quite a bit more than teacher's pension ever will, yet do you see anybody suggesting that soldier's pensions not be honored? What's the difference?

Don't get me wrong. What we cannot afford we will not be able to pay. My point is that ALL state promises must be partially defaulted on EQUALLY. And that includes promises to private companies with government contracts, promises to police as well as teachers, and promises to our veterans. If ALL share the cuts, the cuts do not have to be so draconian.

Jeffrey said...

BTW, MISH, who represents private investors who clearly don't want the state to reneg on their bond promises, suggests that promises to state employees are voidable through "fraud". His argument is that the system that allowed public employees to get certain people elected (Democrats) who then, in return, agreed to exhorbitant pensions, was essentially a fraudulent process. Even if I were to completely agree with that analysis (which is not accurate, as evidenced by all the Republican executives such as Reagan and The Terminator who oversaw similar rises in pension beneifts during their administrations), what a slippery slope THAT is! Let's see if I get that right: go and vote because that is our democratic duty. But if you support a candidate for selfish reasons and then do business with that candidate's administration, your deal can be voided in the next election as "fraudulent" if your candidate gets ousted. Is that the democracy you and MISH envision? Is this a principle that we should apply across the board to all government contracts, such as those with Halliburton and Blackwater who bill American taxpayers for the cost of their million dollar bonuses, or just to those poor schmoes who support Democratic candidates?

I can tell you right now what Scott Walker's answer is because he left untouched the police and firemen who supported his candidacy. He only went after the teachers and state workers who supported his opponent. That is not democracy, it is civil war with a pen. As his conversation with the fake Koch revealed, he is a tool of powerful financial interests in this country that are driving wages and benefits down while productivity and corporate profits, along with the percentage of wealth doing to the top 1%, are at all time highs. There is no sacrifice among the very wealthy in this country, only taxpayer bailouts. Walker is a corporate tool, not a patriot.

Jim in San Marcos said...

Hi Jeffrey

We are pretty much in agreement. I tend to believe that what we are seeing now, is from "overloading the Camel" over the last 60 years. A very slow process that finally reached it's limit.

The States have to have balanced budgets and the smoke and mirrors used to pass the liability's into the future have exploded. The bill is due. The States have painted themselves into a corner, from here it gets messy.

With the Federal government, there are two ways to tax, Income taxes and printing money. Inflation is the money printing. You mentioned your 401k turning into a 201K. Well with gas doubling in price, your 201K buys half of what it use to. You still have the same amount of dollars but they only purchase half of what they use to.

Everyone of us just got taxed 50% of our real savings, and no one even got mad.

In the future, you can count on your Social Security check of say $1,500 a month but the price of gas may be $100 a gallon. This happened to the people in the 1930's who saved for retirement. That 30 dollar a month annuity for their retirement in the 1960's only bought a couple of bags of groceries, it didn't quite cover the rent as anticipated.

frakrak said...

Complimentary rectal loading?

It does paint a vivid picture Jim :)

And yes I did google it just in case my aussie interpretation may have been a little off the mark, and yes it was, you weren't talking about an industrial accident in a soap factory were you Jim?

My question Jim; has there been any precedence for a large chunk of your States going bankrupt in American history?

What actually happens in five months? Does the Federal Government enact some sort of power over the states to get their books balanced? Is their some looming constitutional crises ahead with the current "state" of play?

Jim in San Marcos said...

Hi Frakrak

I don't think that you'll find "Complimentary rectal loading" defined. I was more or less describing the compromise involved with law making. To get the bill passed, you have to accept parts that you dislike in order to get the other side to vote for it. Soap factory was close, (they each take turns dropping the soap in the shower). Massage parlor would be a better location for that sort of "Industrial accident."

As to your question, several states in the 1840's stiffed creditors but all eventually repaid their debts. Arkansas in the 1930's did the same and later repaid in full. The 11th amendment to the Constitution prohibits anyone from suing the states for debts owed, so they don't have to file for bankruptcy protection and they can take their sweet time to pay you. Government can slow to a crawl when vendors demand cash on the barrelhead.

Many States will not have funding in 5 months. The tax collections being accepted now for the next fiscal year are being spent now. I don't see the Federal government doing much. If they help one State, they have to help them all and they are in worse shape than the states (of course that's a secret don't tell anybody).