Sunday, December 9, 2012

L.A.'s Taxpayer Citizens Have the Right Idea ... It's Time for Common Sense to Begin and for the Government Created Three Ring Circus to End

We the People have an abundance of common sense, and some of us even take the opportunity to use it occasionally.

When we do, and after we get past the political sound bites and feel good platitudes, things then tend to become very clear.

Politicians often present their case by using smoke and mirrors, since basic logic and common sense reasoning frequently isn't on their side. The pols also know that most people are hurried and occupied with other more immediately important things in their daily lives, and that they usually aren't paying close attention to what their elected representatives are doing. That's usually a mistake, of course, and that's often when trouble begins. Later on the fit hits the shan, so to speak.

So let's look now at L.A.'s Bankruptcy Plan and underfunded public sector pension plans as a hopeful example concerning our newly awakening and chock full of common sense fellow citizens in California:

"Former Los Angeles mayor Dick Riordan last week abandoned his campaign to place a pension reform initiative on the city's May ballot due to union shenanigans. He may now regret it.

An election day survey just released by Loyola Marymount University's Center for the Study of Los Angeles shows that city voters had backed his initiative to shift new workers to 401(k)-style plans and cap current workers' retirement defined benefits by an 18-point margin. By the way, these same voters supported Democratic Gov. Jerry Brown's tax hike by nearly 20 points.

The initiative would have been the most aggressive pension reform a city or state has ever passed—via legislation or referendum. But there were recent precedents. In June two-thirds of San Diego voters approved a measure switching new hires to defined contribution plans. Meanwhile, 70% of voters in San Jose okayed an initiative scaling back current workers' defined benefits. . . .

Mr. Riordan made waves a couple of years ago when he warned that the city could go bankrupt by 2014, and it may still if voters reject a half-cent sales tax on the March ballot that would raise $220 million. The Loyola poll shows a strong plurality of voters opposing the tax hike, no doubt in part because the city had just asked them to extend a half-cent sales tax increase to fund transportation for 30 years (which they nixed). The governor's initiative also included a quarter-of-a-cent increase in the state sales tax.

Unions will warn that without the additional revenues the city might have to lay off hundreds of police officers and fire fighters. But what's really endangering public safety is the city's retirement costs, which are projected to grow to $1.3 billion from $848 million in the next four years. If voters shoot down the sales tax increase in March, Mr. Riordan would have been primed to pitch his measure as a plan to prevent bankruptcy and preserve public safety.

After their defeats in San Diego and San Jose, the unions were determined to stop Mr. Riordan's initiative from even being put up for a vote. . . .

So Los Angeles workers will get to keep their cushy defined benefit plans, but how many will get to keep their jobs?"

Summing Up

There's an inevitable tradeoff between (1) higher taxes, (2) the public sector payroll for current workers and (3) funding pension benefits for retirees.

If taxpayers refuse to pay higher taxes, then the money to continue to pay the salaries of current workers and fund the pensions for future retirees won't be sufficient to meet all promises.

Hence, it's definitely a three ring circus, and L.A.'s citizens apparently already are, or soon will be, growing tired of paying higher and higher taxes just to see the by now all too familiar show.

That taxpayer weariness is a good sign, even if nothing good comes to pass anytime soon other than more chaos in California. At least common sense is alive and well among the citizens of the state, even if not yet functioning properly.

But if something can't go on forever, it won't.

In that regard, this "unaffordable" taxpayer financed three ring circus in California can't continue indefinitely, so it won't.

Thanks. Bob.

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