[misterno]

http://www.msn.com/en-us/money/retireme ... id=U220DHP

[Plantagenet]

The title on this topic isn't quite right. US govt pension benefits aren't being cut at all---the pensions paid to retired US government employees will continue to be generous---they don't change a bit.

What the budget bill will do is cut pension insurance payouts for PRIVATE workers who lose their private pensions.

If someone is privately employed and your employer goes bust or can't or won't pay your pension, then if they were covered by federal pension insurance, the govt. insurance program would step in and pay a tiny pension.

Under this new budget bill the tiny pension insurance payout would become an eetsy weetsy insurance payout.

[GHung]

Got a Plan B?

[Plantagenet]

Wait a minute---its not just pension insurance getting cut---pensions are going to be be cut as well. The new budget bill would let private pensions reduce benefits paid to some former employees

congressional-leaders-hammer-out-deal-to-allow-pension-plans-to-cut-retiree-benefits

And obama has already said he would sign this budget bill. SHEEESH!

[Loki]

From a deep history perspective, "retirement" will be understood as an ephemeral phenomenon. Some of my generation (X) might enjoy it, fewer of the Millenials, and even fewer thereafter until it peters out entirely.

[SILENTTODD]

And obama has already said he would sign this budget bill. SHEEESH!

As would I dare say a President McCain, Romney, Hillary, or Jeb Bush would. The ruling classes don't give a shit about the dumb proletariat. Marx (Karl or Groucho) would have predicted that.

[Revi]

We owe 6 trillion to Social Security and to various government retirement programs and retirement systems.

What do you think will happen?

[ROCKMAN]

FYI - The pensions of existing govt workers are risk free either. Heard a report the other day about Detroit getting its debt under better control. In addition to getting the major creditors to take less they also got retirees to reduce their benefits. They didn't give details. I suspect it wasn't a huge cut but those folks were probably given a choice: take some cut or risk getting nothing.

[SeaGypsy]

Loki is spot on. These pensions were written up, promised, on the basis of an impossibility, perpetual growth. Ok it's not pleasant that promises are being broken, but anyone thinking this is a big deal has yet to see the writing on the wall.

[phaster]

We owe 6 trillion to Social Security and to various government retirement programs and retirement systems.

What do you think will happen?

its going to suck much sooner than anyone expects!

figure you might find the punch line to a discussion on how unfunded pensions will affect the economy kinda interesting (basically I think its heading downward because of a change in accounting rules that places "pensions" on a balance sheet next year)

http://piggington.com/how_will_unfunded ... omy?page=4

to give ya an idea how bad it is consider that Fannie Mae and Freddie "The two GSEs have outstanding more than US$ 5 trillion in mortgage-backed securities (MBS)"

http://en.wikipedia.org/wiki/Federal_ta ... reddie_Mac

BUT that MBS figure is dwarfed because the unfunded public pensions alone I read is in the 4.1 trillion dollar range, and the real "unfunded" public pension figure basically doubles if one considers "promised" health care costs

[PrestonSturges]

Suicide rates are already skyrocketing for people in their 50s who are part of the long term unemployed. This will continue as people reach retirement age and find that Social Security won't save them.

[mikey123]

We owe 6 trillion to Social Security and to various government retirement programs and retirement systems.

What do you think will happen?

The solution to entitlements has always been means testing. It's hugely unpopular so politicians don't like to talk about it much. But in the end they will eventually have to raise the retirement age and apply means testing to social security and medicare benefits once the the system becomes insolvent. There are plenty of well off Americans who can afford to take some cuts and pay more out of pocket. Most people get far more benefits back than they ever payed into the system. It's really an old age welfare program that has been propped up in the past by the high ratio of working age to retired. Those demographics are changing. Luckily in the US the problem will be somewhat mitigated by immigration. Other countries are in much worse shape as far as aging populations and the burden it will create. Means testing definitely won't be implemented without a political bloodbath though drawn along generational and class lines. So I wouldn't expect it to happen until the burden becomes unbearable.

[Timo]

I have no problem with means testing for social security. My father-in-law saved so much during his life that he didn't need it, and thusly never took it. Good for him, and everyone else who did need it. Social Security would remain solvent long into the future if the rich did not receive money they don't need, while a base-minimum standard of living is garuanteed for everyone who does not have those same fiancial resources. During my life, i've managed to invest and save a bit, so chances are that i won't need ALL of my Social Security to remain comfortable in retirement. Some would/may be necessary, but if i receive less in order to preserve the entire program's existence, that's fine by me, as long as everyone is also in the same boat and are means tested for their Social Security payments.

[careinke]

We owe 6 trillion to Social Security and to various government retirement programs and retirement systems.

What do you think will happen?

We will owe 7 trillion in debt, then 8, then 9,.........sort of the same as we have been doing.

[vtsnowedin]

Years ago when I was making $6.00 an hour at a good job we were doing the math on the future of social security. I joked then that I was sure that they would pay me every penny they were promising (about $500/m) which would be good but the bad news was that by then a loaf of bread would cost $30.00. It doesn't seam anywhere near as funny now.

[wildbourgman]

Obama basically admitted that Social security was going to eventually be a failure when proposed MyRA.

In the big picture social security is nothing but a legal ponzi scheme and like all ponzi schemes it will eventually fail. If social security were such a good deal in the first place, then why didn't they make it optional? Heck you know, pro choice!

[phaster]

Obama basically admitted that Social security was going to eventually be a failure when proposed MyRA.

In the big picture social security is nothing but a legal ponzi scheme and like all ponzi schemes it will eventually fail. If social security were such a good deal in the first place, then why didn't they make it optional? Heck you know, pro choice!

I've read FDR who initially proposed SS thought of it as an "insurance" policy for older workers.

Sadly SS is indeed a legal ponzu scheme robbing future generations, simply because the program for the most part has been static till now when it seems the "math" problem can no longer be ignored

http://www.alternet.org/books/how-congr ... y-benefits

Said another way SS does not use/apply actuarial science (which is the discipline that applies mathematical and statistical methods to assess risk of those in the pool), and politicians don't want tell the american public the truth that the existing program as setup is unsustainable...

BTW if you have a chance read an article about what happened in japan because "millennials" I seem to think are following what happened over there....

"When Japan’s real-estate bubble burst, young people had no point of reference other than boom times. So when the job market dried up, many of them welcomed the chance for self-exploration.

But we should spare a thought for our friends across the Pacific—not just for their sake but for ours as well. No one knows why Japan’s economy never fully recovered, but some economists are starting to trace the problem to young people like Iwabuchi who cannot find good jobs, don’t learn new skills, and neither earn nor spend enough to help get the economy moving."

http://theatlantic.com/magazine/archive ... ap/309285/

Now that its a new year, I'm kinda worried that another MISMANAGED social insurance program (public employee pensions) is going to make headlines because of a change in accounting rules which requires those costs be accounted for on the balance sheet (FOR THE 1st TIME), in other words its a debt wave many don't realize is out there...



One last depressing thought to consider is that SS like public employee pensions is only 1/2 of the actual debt out there because, the other side of the coin is medical care (i.e. MediCare, MediCaid, etc.)

So a rough "pension" calculation would be to double the costs (which somehow has to be paid for)

[Plantagenet]

The "Central States" Pension fund covering 400,000 midwestern govemrent employees is going to reduce what they pay out by over 50%

i-guess-its-food-stamps-400000-americans-jeopardy-giant-pension-fund-plans-50-benefi

Well, isn't that peachy. I guess thats what happens when you keep kicking the can down the road and never fix anything and then you reach the end of the road.

No wonder people are voting Trump----they've been lied to for decades and they are finally ticked off

[KaiserJeep]

Plant, these defaults are not directly the fault of the government.

The Central States Pension Fund is comprised of Teamsters Union members in 37 states. It has about 400,000 members, and 220,000 are already retired. It will go broke in 10 years because it pays out $3.54 in benefits to retirees for each $1.00 of new revenue from active working members. The pension fund got into trouble because many, many companies were allowed to go bankrupt owing the fund millions of dollars.

http://www.kansascity.com/news/business/article60760061.html

The General Motors hourly worker pension fund has 212,000 active participants but 360,000 existing retirees. It has $61B in assets which amounts to being $10.4B underfunded for current retiree obligations over the next decade. These are United Auto Worker (UAW) members.

http://www.nytimes.com/aponline/2016/02/18/business/ap-us-general-motors-notes.html?_r=0

Both the Teamsters Union and the UAW were of course VERY SUCCESSFUL at extracting wage and benefit concessions from employers. So much so that the old GM went into bankruptcy in 2009, and was re-structured on the taxpayer's nickle. At the time this happened, GM had to burden each new vehicle it constructed with $3000 in additional cost for the greatly enhanced payroll and benefits the UAW had negotiated.

The biggest light industry in the MidWest was the former automobile industry. Now with suddenly competitive imported automobiles, and jobs exported via NAFTA to Mexico and Canada, the state of Michigan is pretty broke, as are nearby states with stakes in the auto industry.

The causes are many, but the biggies are:

1) Competition from imported vehicles - hang this one on the labor unions. Both the Teamsters and the UAW are unofficial branches of the Democrats, making huge contributions in favor of beneficial legislation, and acting as a political machine to bring in the Democratic base. The quid-pro-quo labor legislation crippled the auto industry. The secondary tier of auto industry suppliers, and the Teamsters who were employed at such suppliers moving both raw materials and vehicle components followed the downward spiral.

2) Low interest rates curtailing revenues from the pension fund bonds - the financial meltdown and bailout of 2008 pretty much caused this, nobody wants the bonds because of low yields.

3) The new auto industry is highly mechanized. Robots build cars today, rather than people - meaning fewer dues paying members and (thanks to the Baby Boom) more retirees. What should have happened is sharply increased union dues, but it was easier to depend upon Obamacare in place of health benefits, and with Congress dumping new money into the union unemployment fund regularly, dues were actually cut during this period.

All these were foreseeable with 20/20 hindsight, and perhaps foreseeable period. But knowing one has a huge, hard to solve problem and solving it are not the same.

Ours is the last generation that will work and retire in the old model. Our children will work and lose everything they save for retirement, and their children largely will never work. I don't know what that economy looks like, only that it will be largely dis-functional.

Welcome to the Post Peak Oil world.

[wildbourgman]

Kaiser, I'm not so sure that some can't point out where the federal government had a hand in some of this. Also there were folks who predicted these things prior to now. I don't know how long back you want to go before you say that someone couldn't have predicted this but I'm pretty sure I remember some folks sounding the alarm.