Today’s Headlines

  • Assembly Bill Would Allow Local Regulation of Uber and Lyft (Politico)
  • To Promote Ferries, de Blasio Trolls Subway Riders (@2AvSagas); Soundview Residents Ready (NY1)
  • Will GWB Bus Terminal Developers and PANYNJ Keep Latest Appointment With the Public? (DNA)
  • IBO: NYC Could Raise Money by Cutting Bus Routes, Hiking Camera Fines (News)
  • AMNY Profiles DOT Initiative to Brighten Public Spaces
  • Attorney for Matthew von Ohlen’s Alleged Killer: My Client Is a Bike Lobby Victim (DNA)
  • Unlicensed Curb-Jumper Who Killed 4-Year-Old Ariel Russo Could Soon Be Driving Again (News)
  • Tow Truck Driver Critically Injures 81-Year-Old Woman in Flushing (News); DNA: “Truck” Also 81
  • MTA Crash Victim Struggles to Survive as Samuelsen Attacks Right of Way Law (NBC)
  • What Happens When Your Precinct Issues 4 Truck Route Summonses a Year (NBC)
  • People You Share the Streets With (@kathrynthomsPost; Advance 1, 2, 3)

More headlines at Streetsblog USA

  • Larry Littlefield

    Bottom line: New York City can save money by cutting services and use the savings to retroactively enrich public employee pensions. Over and over again. While raising taxes.

    While in the Red States they cut public services and benefits to cut taxes.

    https://larrylittlefield.wordpress.com/2017/02/26/state-and-local-taxes-in-fy-2004-and-2014-census-bureau-data/

    Meanwhile, tax exemptions for the retired keep growing, as does the cost of their benefits. But those benefits will be cut when younger generations become older themselves, due to “circumstances beyond our control.”

    The IBO is never going to suggest that those who fleeced the most give back anything. Or even call attention to the fact that they are not going to give back anything. It’s under Omerta.

  • Vooch

    Larry,

    visit a place like Punta Gorda FLA. Your head would explode. It’s hog heaven for gov’t retirees from the NE. The pensions are bad enough, but the insane medical largess is just as bad. I’d guess each household consumes around $75,000 maybe $150,000 of medical each year.

    You are most correct in your hammering on the topic of defined benefit pensions

  • bolwerk

    Defined benefit pensions are the cheapest way to provide pensions. Defined contribution pensions are more expensive because every person is an entity who has an independent risk.

    New York is just inept or corrupt. Defined benefits are good.

  • Larry Littlefield

    “Defined benefit pensions are the cheapest way to provide pensions.”

    That’s been exposed. They were cheap because they weren’t paid for. They were thus cheap for Generation Greed.

    Not paid for either because they were retroactively increased from already generous levels, as in NY. Or because taxpayers didn’t fund the pensions that public employees had been promised to begin with, as in NJ.

    But they are paying now, or at least will be soon. In California, they pushed through a huge retroactive pension increase that “cost nothing” in 1999. It is now 18 years later. It is only now that they are fessing up, and causing taxes to soar and services to be gutted. But it still isn’t enough, and they are still lying about it — there and here.

    http://www.sacbee.com/news/politics-government/politics-columns-blogs/dan-walters/article134832779.html

    But in those 18 years many of the beneficiaries of the retroactive pension increase were able to cash in and move away. They lied for 18 years to make sure older generations were not affected. Why is this? “Wall Street stole our money?” Stocks are at record highs! Retroactive pension increase? That was 18 years ago?

    You know why? Because defined benefit pensions WERE the “cheapest way” for Generation Greed to provide something rich for itself with lower taxes by shifting the cost to those coming after.

    And they did the same thing to Social Security, though not to the same extent. We’ll be getting 25 percent less (after paying in more) on lifetime wage levels that were, on average, 20 percent lower than those born before 1957 received.

    https://larrylittlefield.wordpress.com/2016/05/30/generational-equity-and-the-25-percent/

  • Larry Littlefield

    Pension increases cost nothing. Debts cost nothing. Tax cuts for the rich pay for themselves. It’s been the same thing for 35 years. Along with 35 years of soaring total debts relative to GDP, falling worker wages, yet rising consumer spending, and huge current account and trade deficits.

    And the only economic “solution” is one more party for the generations that have been partying all along, an Irish Wake for America.

    So here we are in the 8th year of an economic expansion, one in which NYC boomed more than anyplace else, with record stock prices, and we are given a list of ways we can pay more and accept less. Why?

    Thank God for Donald Trump, “progressives” must be saying. We’ll blame him the way the “fiscal conservatives” blamed the cities and those who live in them 20 years ago. Or we’ll just point fingers in a circle and laugh all the way to the bailed out bank.

  • bolwerk

    It’s not that they “were” cheap. They were never cheap. It’s still the case that a properly managed defined benefit program was and is the least expensive way to provide pensions and benefits to a large pool of workers (or the general population). That remains the case no matter how much corruption there was in the past, or how much there is in the present, or how much there could be in the future.

    I broadly agree though. Taxes are going up, unless the feds bail the whole system out. And I really don’t think the current system of having each agency managing benefits and pensions itself is very good idea, then or now. If the feds won’t handle it, the state should.

  • Larry Littlefield

    “Taxes are going up, unless the feds bail the whole system out.”

    Then FEDERAL taxes are going up, and FEDERAL old age benefits are being cut even more. The search for the free lunch goes on.

    As for state and local taxes, they’ve already gone up, from the highest levels, in NY. And will go up further. And with that, we get that list of what we have to give up. Saving nickels and dimes.

    And the MTA. Good news — $65 million shifted elsewhere might mean “no additional service cuts.” In exchange for saying that, you can get a raise that increase the pension you will collect in Florida.

  • bolwerk

    Well, federal taxes eventually should go up if the economy ever starts humming again. But that is probably some years away.

  • bolwerk

    Pension costs are extremely expensive as a percentage of GDP. It’s just that defined contribution pensions by nature have to be more expensive than defined benefits because a defined contribution can’t exploit the actuarial realities of having a large risk pool. Take a randomized pool of 100 workers in an organization like the MTA and some will be dead by 65, even as they contribute to the benefit pool. (In fact, I think I read a statistic somewhere that most bus drivers are dead within a decade of retirement. A defined contribution can’t account for that risk as easily.)

    I’ve never seen anyone except maybe some naive MMTers argue debt costs nothing. But even less insane neolibs (the ones who don’t think tax cuts for the rich pay for themselves) understand that debt has vastly different implications for different entities.

  • Larry Littlefield

    So you agree with the Republicans? “No problem, we’ll eventually grow our way out of it” if the rich get a big enough tax cut, and now that we’ve elected The Donald?

    After 35 years it’s time to suspect that perhaps that might be a ruse.

  • bolwerk

    We won’t grow without finding some way to stimulate consumer demand for American goods and services again, which ultimately does involve borrowing. Republikans have no interest in doing that. Everything they do is about maximizing the after-tax incomes of themselves and the people who purchase their seats for them. They would prefer, as you evidently do, to keep the money supply tight to maximize the value of their cash hoards. To some extent this is also true of the Rockefeller republican wing of the Democratic Party (e.g., Hillary, most Dem electeds), but that crowd is more willing to make concessions to necessity.

    The financial class hates inflation because it reduces the value of the (especially fixed income) notes they hold. Everyone else? Well, it’s not necessarily so bad for us.

    Edit: going back to the old timey policy of encouraging full employment would be helpful too. We used to care about that, but now we don’t. This feeds the real debt crisis, which is private.

  • Vooch

    the obvious solution is transition to gov’t workers to working 40 years until they are fully vested in systems that refuse to switch to defined contribution pensions

    and/or

    transition to defined benefit pension systems

    plus

    transition to medicaid

    the alternative is massive defaults on pension obligations. It’s just the tyranny of the math.

    Millennial when they start coming to real power will not accept the current methods

  • Joe R.

    The best solution would probably be a wealth tax. Tax any wealth over maybe $10 million at 10% or so. That will give the wealthy two choices. Either they invest their wealth in productive enterprises which will help grow it (and with it the entire economy), or they see it erode bit by bit. Such a tax is even “fair” in the sense that the wealthy only managed to accumulate their obscene levels of wealth by being undertaxed and by underpaying those working for them.

    As for inflation, it’s also bad for middle class people who either save for retirement or to buy a home. If prices were stable, you know if you put aside x dollars per year you’ll have enough money to buy a home in a certain number of years. Not so when the value of your savings erode and home prices are all over the place thanks to boom and bust cycles.

    I personally think a return to the gold standard would be the way to go. It would discipline government by limiting what they could spend. It would also limit borrowing by limiting inflation. You couldn’t borrow and hope to grow your way out of debt via inflation.

  • Joe R.

    Taxes should go up on the wealthy. I think the case has been thoroughly proven after 35 years that trickle down economics don’t work. The only trickle down effect is the middle class being pissed on by the wealthy.

  • Larry Littlefield

    Here is what they are facing. To save money on their pensions, so there will be money to pay the drastically richer pensions of prior public workers, the pensions of millennials were slashed to less than the value of their own contributions to the pension funds.

    https://www.nytimes.com/interactive/2017/03/06/business/dealbook/state-teachers-pensions.html?_r=0

    So what happens in 25 years. Retroactively increase pensions again, after claiming they were affordable?

  • Vooch

    we’d solve a lot of the problem if existing retirees would go on medicare and local taxpayers would only foot the bill for part B

    One needs to address the post retirement medical as well as the pension payouts. Post retirement medical is as costly as the pensions, might even be more expensive.

    I agree Larry with you but am only offering suggestions how to bring system into balance.

    Generation Greed is a perfect description.

  • Joe R.

    Post retirement medical is only costly because we insist on giving the elderly expensive treatments which often extend life by only weeks or months. At some point people need to accept that medical science can’t do any more for their loved ones. That’s one of the reasons per capita medical care is less in places like Europe. They’re not going to spend hundreds of thousands giving chemotherapy (which likely won’t work anyway) to an 85 year old. I’ve read that 80% of medical costs are in the last two years of life.

  • bolwerk

    True at the federal level. More compliocated at the state or local level because the wealthy can easily leave to go to a jurisdiction more favorable to them.

  • Joe R.

    Yes, most of the taxation should be at the federal level so people can’t “tax shop” for a cheap state to live in.

  • bolwerk

    Healthcare and pensions are two very expensive things that are best at least directed from the top, I think. People move around, from state to state, but their biological and material needs mostly come with them.

  • Larry Littlefield

    Retirees do go on Medicare. At 65. The problem is many of them retire a decade or more earlier.

    When they said cutting the retirement age from 62 to 55 “cost nothing,” needless to say, they didn’t talk about the cost of health insurance for 10 years rather than 3 years before Medicare picks up most of the bill.

  • bolwerk

    Oh, I don’t know how a wealth tax would fly (not well, methinks), but fuck the gold standard. Gold is a finite resource controlled by a very small number of people. The gold standard mainly benefits them. Gold doesn’t increase linearly with the population, guaranteeing wealth can’t be shared evenly as the economy grows. It does nothing much to impose discipline either, as nothing stops the government from de-valuing the currency against gold. Bitcoin is probably a fairly good microcosm for what the gold standard would do to the economy, and it’s not pretty. Though the chaos that would result whenever someone learns to synthesize gold would be…amusing. 😀

    I agree inflation can be risky for some people, but it has benefits and drawbacks. Inflation caused by, say, increasing incomes should make home ownership easier for many people with hefty mortgages. And there isn’t much reason to think home ownership should become more expensive relative to income under those conditions, so it doesn’t necessarily mean home ownership becomes less feasible.

  • Joe R.

    Actually, the real worry with gold isn’t if someone synthesizes it (which is highly unlikely) but rather when we start mining asteroids. An asteroid just a few km wide probably contains more gold than has been mined in history. Multiply that by thousands. When we can cheaply transport ourselves to asteroids what we think of now as “precious” metals will be plentiful. Gold won’t fall to the price of iron, but my guess is in 2100 it’ll probably be worth under a dollar an ounce. Ditto for platinum, iridium, osmium and so forth.

  • Vooch

    not too sure about gov’t employees going on Medicare when they turn 65.

  • ahwr

    Post retirement medical is as costly as the pensions, might even be more expensive.

    No it’s not, but the funding gap from the two is comparable in some systems. Pensions have largely been prepaid – 70% funded pension system is horrible public policy, but retiree health benefits largely haven’t been prepaid at all, closer to 0% funded than 70%.

  • Vooch

    so post retirement medical on a cash basis is costing taxpayers as much or more than pensions ?

  • Larry Littlefield

    I’m 100 percent sure. But retiree health insurance takes care of Part B premiums (and I guess part C) plus whatever stuff other people purchase “Medigap” policies for.

  • bolwerk

    Not sure I see asteroid mining predictably on the horizon, but who knows? Nothing about gold lends itself to having a stable monetary system.

    And the American monetary system works pretty well (for now anyway). It’s fiscal policy that is dopey.

  • Vooch

    then the only solution is transition to 40 years ‘service’ to be fully vested.

  • Larry Littlefield

    In France there is one pension system for everyone, public sector and private. And just about everyone has to work 40 years. Except for the much resented “special classes” of manual jobs, with a 35-year requirement. And everyone pays massively to fund it.

    Unionized public employees would never be willing to pay that much in taxes. If they were, public employee pension income would not be exempt from state and local income taxes in New York.

  • Vooch

    We should be so lucky to have gov’t workers work 35 years before being fully vested.’

    I also suspect disability ‘fraud’ comes into play also. There have numerous scandals over the years of NY gov’t employees getting unwarranted disability.

  • ahwr

    Post retirement medical is only costly because we insist on giving the elderly expensive treatments which often extend life by only weeks or months.

    The costs for the city/state are weighted pretty heavily towards benefits received while retirees are younger than 65.

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