Thursday, July 25, 2013
No Free Lunch
Many thanks to a WSJ letter writer for supplying insight into why we get the political leaders we do.
One aspect of the pension problems in Detroit and elsewhere that I never see addressed is the loss of spendable income by those whose pensions will be affected. We can probably assume that the majority of pension income is spent, thus creating jobs, creating more spending, more taxes coming in, etc. As we were all told by the wise Nancy Pelosi: "Unemployment benefits are creating jobs faster than practically any other program." Wouldn't reducing pensions and thus spendable income take away jobs and hinder our recovery even more?
We need more people getting pension payments, not fewer.
Ah yes. The wisdom of Nancy (we've got to pass it to see what's in it) Pelosi.
Transferring wealth to retired pensioners from working taxpayers will allow the former to spend and grow the economy while having no impact on the latter's spending habits, their depleted incomes notwithstanding. I see.
Meanwhile some good sense still exists back on planet Earth.
The problem with Detroit pensions is obvious. You quote a police officer who retired in 1998 at about the age of 50 after working for 26 years, as well as a 50-year-old man who spent 25 years repairing potholes and who plans to retire in October.
How can someone expect to retire in their early 50s after working 25 years and expect to collect a pension for 35 years or more, much longer than the years worked? That's what happened in Greece.
Those of us in the private sector realize retirement isn't possible unless we work 35 to 40 years or more, or well into our mid-to-late '60s. Do the math. The expectation needs to be changed.
New Fairfield, Conn.
Detroit and Greece have much in common. The governments of each spend more than they take in. Both governments have accumulated years of increasing debt they can't repay. Neither government can print money to cover its spending habits. Both governments have antagonized private capital markets by forcing haircuts on bondholders. Where does the new money come from to finance their deficit spending? Not from me.
Unfortunately Mr. McDonald (and the rest of us) may not have a choice. King Barack may decide to support the reckless and immoral profligacy of his political allies with a bailout. Guess who pays?