

Cities and pensions

Breaking a Californian taboo

A bankrupt city takes on a public-pensions behemoth

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Readers' comments



Euschanko's analysis concludes (correctly) that the minor impairment of delaying the CalPers payments results not in a loss of any kind but actually a gain. The payment is SO minor in relation to other invested amounts as to have almost a zero effect and the rate of return CalPers is making will actually be exceeded by the delayed payment. CalPers must be held in check or the resulting crash in the muni market will so impact municipal fiancé as to make municipal borrowing prohibitively expensive with all the resulting socioeconomic effects.


Those who do not live in California may not understand the powerful and greedy nature of the unions behind CALPERS. Like organized crime victims, Californians are held captive by the legal version of the Mob. They own the politicians in Sacramento, and the nutty Governor Brown is their best friend. You think Washington D.C. is corrupt? It is nothing compared to Sacramento.

California is nearly bankrupt, several counties and cities are in the same situation. And still, the solution is to raise taxes while increasing benefits for government "workers." Foolish voters.

The Golden State is now The Bankrupt State.


I am not a lawyer and my crystal ball is extremely foggy but my guess here is that Calpers cannot possibly get away without taking some haircut while every other creditor in San Bernardino or Stockton is forced to take a haircut. There may not be a CA precedent for this but there are other precedents for this situation. It will be most interesting to see how Calpers and Stockton can swing the argument of Stockton being granted the benefits of federal bankruptcy statutes yet at the same time allowing Stockton to keep paying Calpers in full while stiffing all other creditors. I have said this elsewhere and still stand by it. Wall St being stiffed in this manner and the repercussions it will create will not be acceptable to Sacramento who is also dependent on borrowing like a drug junkie. If push comes to shove, Sacramento will throw Stockton and San Bernardino under the bus to as to preserve their ability to keep borrowing. If laws or rules need to be changed, they will be.

Medicine4theDead in reply to MySetDancer

When you claim to speak for people who are not you to vilify others, it makes you a stupid bigot. The only parasite here is you for you clearly have decided to socialize your stupidity onto everyone else. When will you be paying me back for your wasted education?


Like many others I await eagerly Calpers formula for extracting blood from a turnip. Presumably patents for this are being filed in parallel.

MySetDancer in reply to Medicine4theDead

Ignorant? Really? California is nearly bankrupt, and if you include the un-funded liability of Calpers, California and many of its cities and counties are already bankrupt. Why future generations of Californians should be held in economic slavery to provide overly generous benefits to "retired" workers when they themselves receive nothing is unknown to me. Perhaps you can enlighten us?

Medicine seriously have you read this article and are you familiar with the issues pertaining to San Bernardino. Do you realize the absurdity of Calpers strong arming SB which has declared bk. Along with Econ 101 you need to get back to middle school level reading proficiency. READ THE ARTICLE FOR CRYIN OUT LOUD and put my comment in context. Strong arming bankrupt SB is the equivalent of extracting blood from a turnip. I hope the tools at Calpers aren't paying you a bundle to defend their position here because you sir are doing one hell of an awful job.

CalPERS is a non-profit and you can't discharge a debt to a non-profit in a bankruptcy. And, I did read this mindless drivel of an article because it isn't factually correct - duh. And yelling for cryin' out loud isn't going to change that. It isn't blood and it isn't a turnip.


"CalPERs sends the heavy mob to San Bernardino"

Actually, from the photo it looks like CalPERs sent them further east and over the mountains, to Palm Springs.


these pensions are a real problem, I am 26 years old and the Ohio public high school i went to gave my gym teacher retirement at 58 years old with $130,000 a year for the rest of my life (his pension).
In 7th grade at least half my math class where issued text books the covers had fallen off of because they were so old, it cost $400 a year for each sport you played in high school because the school "didn't have the money" to subsidize athletics, and (rare) field trips were always over $100 because, once again, the school claimed it didn't have any money to subsidize them.
Its clear to me that public schools look run-down and are assumed to be poor by mistake. They really have allot of money (in America per student spending even at the worst inner city schools is more,usually much more, than at a wonderful private school).
So where is the money going? Other than the fact that unionized government monopolies are inherently inefficient, the huge retirement packages are to be blamed for Americas government monopolies consuming huge amounts of money while turning out (in the best of cases) wildly mediocre results. At least that's what i think.

Washington DC public schools are ranked last in the country and are $30 grand a year to send an innocent child to, trying to explain the (almost) unexplainable must require a person to take into account retirement costs.

Medicine4theDead in reply to ned26

You have no facts or evidence to support this drivel. Schools do more than educate, they also have to bus students and provide other support services to students with disabilities. You claim that they have a lot of money but provide not a single number to support the claim. No citation for your imaginary teacher, no proof that a private education is less expensive than a public one, of course, ignoring the fact that private schools select their inputs while public schools have to take everyone, even students with your extrememly low cognitive abilities.

DC schools spend that much money in the imaginary land of Catopia, no one else supports that CATO institute claim - no one. Not the Heritage Foundation or the American Enterprise Institute.


isn't there is what they call "impossibility of performance" in which one party is excused of its obligations?

doesn't bankrupt city qualify for that?

Not when the debt is owed to a nonprofit. A debt is a debt my friend, unless you want to be known as a liar or a fraud? Representative democracy means the public is responsible for the leaders they hire and doesn't mean you get to blame them and then shirk your responsibilities.

ashbird in reply to guest-iijejwo

It's been a while, but I think "impossibility of performance" is a defense to contract that recognizes the validity of the contract (meeting of the mind in formation) but asserts that circumstances post formation not due to performer’s control have changed, rendering the performance impossible. An example is a football player signed on a 5-year contract who became a paraplegic due to injury received while playing a game. Conceptually, this seems a viable defense to me.
An alternative is Unconscionability. Unconscionability is a defense to contract formation where a contract is too unfair, one-sided or oppressive to be enforceable. The characteristics of an unconscionable contract include facts that shock the conscience of a court for being beyond reasonable standards of fair dealing. To prevail on the grounds of unconscionability, a contract must exhibit bargaining unfairness -- known as procedural unconscionability -- and unfair or oppressive terms, referred to as substantive unconscionability. I quote the foreging explanatory text on Unconscionability from this link: http://www.ehow.com/info_8136836_legal-defenses-contract-formation-enfor....
But the Supremacy Clause governing bankruptcy proceedings would seem to have a stronger say in the matter. I wish a bankruptcy lawyer would post his/thought on the issue.
Ultimately, it seems to me politics rule law in many matters developing in America, not the other way around. And sometimes yahoos rule politics.

Hey medicine got some news for ya buddy. Unless you happen to be close buddies with the federal bankruptcy court or possess some clairvoyance on the topic - the issue over whether Calpers is going to get stiffed or not in Stockton and San Bernardino is being litigated so we'll all just have to wait and see how this turns out. You appear to be confused between "facts" and opinion. Got some more news for ya. CA could be the largest economy in the world but the debt and deficits cannot be wished away. You are implying that the size of the economy equates to available money. Here is some Econ 101 for ya - it does not. CA is already a high tax state, so increasing further the taxes is likely not going to improve things. The size of CA GDP is not static and written in stone. It does and will react to the tax and political situation in CA. Also CA GDP ain't gonna save Stockton or San Bernardino's boat unless you are proposing that the employees/retirees of these 2 cities go after the state should they get stiffed.

teacup775 in reply to ashbird

Defense to contract formation? It sounds like such an odd english construction. But anyway, most municipalities seem to a city to have had finances and contract negotiation run by amateurs.
It seems no one considered downsides or down turns in fortune.
--curse you ipad spell checker--

ashbird in reply to teacup775

No,no,no. Just some technical and quasi-technical terms used in law. Pick up a contract law textbook, these are the terms used. I bet you they weren't run by amateurs. Megabucks contract? There are city attorneys paid less than private law firms pay. They can win suits though. I was trying to bring in some real world stuff in my comment. That was all. It's hard to do without using some technical concepts and terms from time to time. Contract is a one-year course in law school. Contract Falone Formation alone usually take up one semester of the two semesters. Hey, teach me words used in computer-related work, I follow your posts to learn them all the time.

ashbird in reply to Medicine4theDead

Hi Med,
Try this:
The leading case on unconscionability in the United States is Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965). In this case, the defendant, a retail furniture store, sold multiple items to a customer over the course of several years. The payment plan contract was written so that none of the furniture was considered paid for until all of it was paid for. When the plaintiff failed to make payments on the last furniture item, the furniture store attempted to repossess all of the furniture, not just the last one purchased. The court ruled that the lower court could rule the contract unconscionable and refuse to enforce it, and returned the case to the lower court to decide whether or not the contract was in fact unconscionable.
The concept of unconscienability as applied to sales of goods is codified in Section 2-302 of the Uniform Commercial Code.
I wasn't saying anything to argue against your comments, just observing a couple of points as a lawyer. I used the explanatory text from Wiki for expediency so I don't have to write the words. Wiki in this case is good. Further confirmation of reliability of source can be a three year education in law school.

teacup775 in reply to ashbird

:) My only quibble is the usage of "to contract formation", because when a contract comes to dispute in a court, it had already been formed. Feels like an odd construction in tense.

However, it would not be the first time my grammar unit has been bent out of shape. Take option trading terms: "I am short company X". By convention, I can see, I am short a few bucks, bottles in a six pack, a few cylinders, or I am shorting company X, but "short" as a verb? Viscerally, I rebel.

With regard to municipal contracts, it still seems to me that the majority in trouble are in trouble for lack of a few conditional clauses. The situation comes into sharp contrast when one is exposed to news reports of city managers who know their business.

ashbird in reply to teacup775

Yeah...I now follow what you meant on the tense. Did you read the other reply to @Med? The tense would be screwed up in terms of present and past. When a case comes to court, you are essentially reconstrucing a whole sequence of events and try to find "faults" or "holes" in them that can be argued in your favor. So in the case of a contract dispute, you scrutinze the different pieces that make for an enforceable contract from formation of the contract to performance of the contract.

Over at Johnson, really interesting discussions happen on these language items. What I really am fascinated by is how "live" English is. There is no set-in-stone form, although each person can pick and choose his/her own style as rigidly as to his/her taste. I think the "live" part is not only necessary, it is "cool".

I take your observation on municipal contracts seriously. I'll "park" the thought and keep my eyes open on that progress.

Thanks, Teacup.

teacup775 in reply to ashbird

"Did you read the other reply to @Med?"

In this thread? Yes. It seems like the law is so closely written to prevent abuse, I wonder how anyone could end up with inadvisable terms. :)

"I take your observation on municipal contracts seriously."

I wish I could remember the context enough to provide a link. There was one city manager who seemed (if you believed the reporting) to run a very tight ship in terms of how city service contracts where drawn up.. a bit OT with respect to pensions. The distinguishing factor in the contracts was the construction of metrics of performance and outcomes.

I'd be curious how pension terms were setup in that city though.

As for english it has a long and distinguished history being a rangy mutt language of empire. But on the down side, I'd could really really wish for a consistent spelling system like Dutch or Korean. Honestly, it'd make life easier for everyone.

Medicine4theDead in reply to ashbird

You are correct; though I do believe that that is a part of the "Good Fath" obligation of contracts. However, that case is different in that public employee contracts are written and negotiated with attorney's present and professional negotiators unlike the furniture contract. So, it isn't the same thing really. The problem is that CalPERS is a government agency and generally you can't discharge debts to a government agency.

ashbird in reply to Medicine4theDead

In concept, of course I'd agree with you. Unfortunately at law, you can't just declare what the law ought to be without first knowing what it is and then work to challenge it.

"Good Faith" is neither a commom law nor statutory defense to enforceability. However, in Insurance cases, the concept has been coopted from Tort law when in egregious cases, something akin to "scienter" can be proven. Scienter is a hard thing to prove. If successful, however, it allows for punitive damages. In Contract law, remedy is confined to liquidated damages.

I am not a contract expert, nor bankruptcy lawyer. As to contracutal liability to a government agency under the facts CalPERS is in, it is even further out of reach given my limited knowledge and expertise. It does help though to know what it is that I don't know.

ashbird in reply to teacup775

The law is set up pretty neatly (except in Taxation)in America. It is responsibly conceived (except in Taxation) and clearly written (except in Taxation).

It is the self-serving lunatics who abuse it. With half a bucket of smart and another overflowing with double-standard "morality" [you know what Book(s) they thump about to cite their authority from to override the law], these lunatics have caused America to lose most of its law, including what is spelled out in the Constitution.

Frank Keegan

Nothing in constitutional, statute, case or common law enforces contracts entered into through deception, coercion, duress or any other mitigating factor. Also, there is substantial legal question as to whether there is any contractual relationship between governments and workers who have retired. These and other questions were raised recently in a study by Boston University professor Jack Beermann. It is worth reading. But the biggest question no one can answer -- yet -- is what happens when the money runs out? California actually is more than $500 billion in debt for its pensions. Even if benefits are guaranteed, funding is not.

You clearly haven't thought about the judge/public worker who will hear the case? Why do you think CalPERS files suit so quickly? Duh. California has the seventh largest economy in the world, yet somehow you are convinced there isn't any money? Psst, I have a statue for sale. And if California is so horrible, then why does everyone want to live and work there? No one lives in North Dakota for a reason.

I'm going to assume you're a California resident.
Everyone I know who has emmigrated from there says the state is an overhyped crapshoot, I live in Minnesota and I frankly love it here. Granted this is just ancedotal evidence, but why would I want to move to a state on the verge of bankruptcy with a C bond rating with 10% unemployment and hundreds of thousands of people leaving every year? The climate might be a plus, then again they say the same about Greece don't they? Good luck with the feds bailing you out, it's not like they're in much better shape. At some point when you have more consumers than producers the ponzi scheme comes apart and us millenials won't feel inclined to pay the six-figure pensions anymore.

California says thank you for leaving. Funny how the Fed can bail out soul less corporations who try not to pay taxes, but not the states who do. Greece doesn't have the seventh largest economy the world. It doesn't have Apple, Google, Standford, UCLA, Los Angeles. Do you often ignore reality so that you can be right but in an ignorant deluded kind of way?

MySetDancer in reply to Medicine4theDead

Many companies and wealthy people have already left California, and the rate of departure is increasing. Recent increases in income tax rates will certainly increase that departure. A large economy does not mean an unlimited amount of taxes, which your posts repeatedly imply. I don't think you grasp the situation, and it sounds like you don't live here.

Quit pulling out "facts" from your rear end - seriously. There isn't a non-profit angle to Calpers position that their claim cannot get diluted. Care to cite any credible expert that says that? Also by the way, when both Stockton and San Bernardino borrowed money from the bond investors that they are trying to stiff, those are also contracts, these deals were not done on the basis of handshakes. If you are going to claim that Calpers absolutely and unquestionably will not get stiffed, why don't you write up your brilliant legal theory behind this and forward to your representative and the bk court. You will be a hero to both Stockton and SB residents for saving millions in legal fees. Again, if these issues were as black n white as you see them to be, there would not be lawsuits here. Go on pal, become a hero and give us all a glimpse of the brilliant legal scholar that is apparently hiding behind the foolish person who is ranting here on this forum.

SkippingDog in reply to guest-ljmsjwo

There may or may not be a non-profit issue with CalPERS, but CalPERS is certainly a statutory agency belonging to the State of California. San Bernardino is a California municipality and, therefore, a legal subdivision of the California state government.
I'm much more interested in the conflict between two government units that are both clearly subordinate entities of the state government. I'm not at all sure even Chapter 9 can address the 10th Amendment issues involved if the state itself determines that it wishes to exert legal control over two of its own subordinate units.

CalPERS is a non-profit government agency like the Department of Education which provides student loans. Can you discharge student loans? Nope. The law was meant for everyone and not just experts, so spare me the ignorance.

If you think that the existence of a lawsuit is proof of its merit, you are as big a moron as I thought.

Oh, we're talking about FEDERAL student loans now, and equating them to a pension agreement? Did San Bernardino BORROW money from CalPERS, was it a loan? Why do you lump the two together? Do you even understand how CalPERS administrates the payment obligations they expect from CA municipalities? It isn't a loan, bub, and CalPERS can segregate the pool of employee benefits specific to a municipality if said municipality stops making payments under the contract! Contracts can be voided in bankruptcy, skippy! Stop mixing apples and oranges, hahahaha. Or continue, I am amused by your misrepresentations.

Both are non-profit, which is how they are similar because apparently connecting dots is something you are incapable of doing. You clearly are too stupid to understand that it is a loan. When public employees are paid their pension is called "deferred compensation" meaning the employees is letting the local government pay them later instead of now in the form of a pension, so it is in fact a loan in exchange for work performed now. The work has been performed but the payment has not been made so it is in fact a loan. Maybe instead of learning about apples and oranges, you should try to read to law if it isn't too much for your pea brain.

A pension obligation is not a loan even in the more basic legal sense. Just because you desperately want to call it a loan does not make it so. You would think your mommy would have taught you this as a child.

Pension obligations represent a contract between the employer and the employee, you dolt. And federal bankruptcy courts dictate contract law, from start to finish. Some states have constitutional mandates to honor their pension obligations, however that is not a facet of federal bankruptcy law. Sorry,

I know this entire subject pains you, but you can't just make up lies to fit your agenda and not expect knowledgeable people to call you out for being deceitful.


Alot more cities are going to have to go bankrupt before Californians "see the light." After Calif. voters were dumb enough to approve Prop. 30 - it is evident that they have no political will to fix the financial mess both the state and local governments are in. It's going to take fewer police and fire personnel, etc. in the cities for local voters to wake up!!


I don't think these cities will be able to recover until they've detonated the ludicrous pension obligations that the corrupt relationship between greedy unchecked public unions and the politicians they've bought off has saddled them with.

but how do you convince normal people who end up having to support these outlandish schemes that their money won't get stolen a second time to pay off the politically hyperactive public unions?

Medicine4theDead in reply to forsize

Because "normal" people aren't so stupid to believe that the recession was caused by their local teacher or fireman, but rather the construction, real estate, banking industry which created an asset bubble that burst. Do you often ignore reality?

Who "caused" the recession is not at issue. It's resulting financial reality, however, is. We never had the means to permit highly (perhaps even "over") paid people to "retire" in their 40s/50s at taxpayer expense. The math did not then, nor does it now, add up. Before you question another's grasp on reality you may want to review your own.

The incestuous relationship between public unions & legistators is coming home to roost. Even FDR is on record as expressing substantial reservations on such. Government is a monopoly lacking market & real world controls. Unions hae no place in government, but are appropriate for the private sector as a check to corporate excess.

Yes, the cause is important because the "cause" is responsible and shouldn't be allowed to socialize it onto people who weren't responsible - comrade Stalin.

Second, they don't retire in their 40s and they retire in their fifties because they put 25 years in like everyone else. Not paying people for their work is stealing no matter what math you use.

The only incestuous relationship that exists is between corporations who don't pay any taxes while taking services. One of our politicians apologized to BP for the spill. Talk about incestuous.

Quoting FDR lacks credibility coming from people who think he is a socialist.

ned26 in reply to Medicine4theDead

in the military they retire after 20 years, so if a man enters when he is 18 then he retires when he turns 38.

So not only do people retire in their 40's but, as i have just shown, they even retire in their 30's.

LOL thanks for the good laugh medicine. Pot calling kettle black here. You are all over the map regards your responses most of which are not relevant to the topic of this article and you are lecturing somebody else. Dude seriously, put down the toke, take a walk, clear your brain, READ THE ARTICLE and hopefully we'll all see some sensible comments coming from you.

WT Economist

The question is, how much of the pension disaster is the result of retroactive pension enhancements, compared with the pensions promised when workers were hired? And how much is due to underfunding of the pensions workers had been promised to begin with?
No one wants to bring this up, let alone do the calculations fairly. In New York City it is mostly the unions who are to blame, although there was some underfunding around 2000. In New Jersey it is mostly the taxpayers who are to blame, though there were retroactive pension deals. No sure about California.
Those pension deals were a crime, and a social injustice. An unfair political deal. In a just society, they would simply be revoked. But that wouldn't solve the whole problem. And lower wages and benefits for future hires just makes it worse. Particularly when unions point to the lower wages most of their members aren't getting, and use it to justify a worse job by the richer workers with seniority.
This is yet another aspect of Generation Greed, with Democrats and unions playing the role in state and local government that Republicans and the rich did with Social Security at the federal level. The future selling is bi-partisan.


It is funny to see the Economist once again blaming unions without evidence. In a previous article, they complain about the decline of higher education and should have used their writers as examples.

There are several problems with the article that are factually absent. CalPERS is a non-profit government institution and under bankruptcy debts to non-profits cannot be discharged in the same manner as debts to for-profits. Please correct me if I am wrong. And if this is true, this article is a complete waste of space.

You've got to be kidding, do we need to go over the long list of union problems in every article? That's like needing to justify that 2+2=4

I'll give you a hint though, it has to do with huge retirements that start at early ages.

Medicine4theDead in reply to Kroneborge

Yes, you do need to prove your assertions; otherwise, it is just another bottle of snake oil you're selling. Do you lack the motivation and cognitive skills to perform these intellectual tasks? Rather sad statement about Economist readers when 19 think 2+2=4 is reasonable analogy that proves unions, which are membership organization with elected representation like our government - oh the horror.


Time will tell who is wrong or right but I think it is safe to say that the creditors in Stockton and San Bernardino would not be dropping several million in legal fees and taking on Calpers if the law on this was black n white. Unlike your blowing a lot of free hot air on this forum, the creditors have real money on the line and chances are that they are making a calculated gamble.

Do you even know that Calpers position that its claims cannot be diluted has NEVER been challenged in court. Hence the lawsuits, to test that very theory which is urban legend by now. The fact that the state judge is collecting a Calpers pension and might rule against the creditors is not relevant, this is why this will not stop at the state court level. Stockton creditors have more than 150M riding on this, they ain't gonna just disappear without a fight. Hopefully a few days after reading this post, the lightbulb flashes in your brain and you are able to put this all together without foaming at the mouth! Good luck!

The only person foaming at the mouth is you and the rest of the ignorant right wing haters who blame everyone else for their incompetent decisions. It hasn't been challenged because you can't discharge debt to a government agency that is also a non-profit otherwise criminals could discharge fines and restitution, so the city is going to waste more tax payer dollars fighting a losing cause because you morons insist on stabbing people in the back because we are in a recession that won't last forever. Yes, that is right, you are the tax dollar waster you claim to hate. Nice going comrade Stalin.

"you can't discharge debt to a government agency that is also a non-profit"

This is a 100% factually incorrect statement. Did you just make this up in an attempt to prove a hopelessly weak argument? Chapter 9 bankruptcy law segregates creditors into distinct classes based on the specific type of liability. If a hypothetical "California City A" owes its successor redevelopment agency $10 million, and City A files for Chapter 9 bankruptcy, that liability is absolutely subject to a plan of adjustment. The agreement between San Bernardino and CalPERS is an argument over contract law, which falls to the courts. Fines and court judgments are not treated as debt as they are not contractual obligations, moron. Intergovernmental loans, to the extent that a municipality operates via the use of segregated enterprise accounts, are subject to the court's jurisdiction.

It is frustrating to read factually incorrect comments being written by individuals who have no understand of the subject matter at hand. Educate yourself, son!

The law on this is clearly written and has been practiced for some time. But you are correct, a judge determines these cases. However, as a judge pointed out to me when I was young, a debt is a debt. So, if you are a backstabbing liar, I guess reneging on a promise is ok and not a lie.

Why don't you tell that to a bankruptcy judge or a bankruptcy attorney? The Economist didn't bother too. Would have taken a simple phone call. Too much work for right wing freeloaders. Just say whatever stupid thought comes to mind and an intelligent liberal will point out that it is wrong. So, you whine about wasting tax dollars while wasting tax dollars on a losing cause because being a cheap liar is more important than keeping your promises. When did Jesus say to backstab your neighbor? A backstabbing liar by any other name is still a backstabbing liar.

This comment coming from someone who has demonstrated a clear lack of understanding of the law and how the courts operate. Many people on this message board have given you sound, legal considerations for why a pension contract can be unilaterally adjusted under Chapter 9 of the bankruptcy code, yet you cling to your own misconceptions about the law like a petulant child clings to their teddy bear. Just because you want something to be true doesn't mean it will be. The real world is going to eat you for lunch unless you grow up, little boy.


Something has to be done about the pension system in California. According to CalPERS, the Dow was supposed to be at 25,000 by the end of 2009. We are currently at 13,000. It would take almost 7 years growing at 10% to just reach 25,000. I haven't seen the numbers in awhile but I believe their original projections has us at 50,000 by 2020. As Californians, we are all on the hook to make up for that shortfall.

I am okay with paying higher taxes to help pay for books and such for children, but I am getting frustrated paying additional taxes to pay for their shortfall in funding for their benefits when I see my own benefits being slashed to pay the higher taxes.

I don't have a good answer, I hate to see people not get what they were promised, but it sure seems like something must be done to stop this from taking the whole state under.

Medicine4theDead in reply to ChuckD43

The best solution would be to make politicians personally responsible for the promises they make.

Your comments denote a lack of personal responsibility in that you made decisions about your career that you were fully aware and now wish to socialize those decisions onto public workers as though they should be responsible for your behavior and not you.

California has the seventh largest economy in the world. They will recover, it will just take a little time.

WT Economist in reply to ChuckD43


You can start by cutting everyone's pension to what they were promised when they were hired, with all retroactive pension enhancements eliminated.

Then you can start a conversation about who deserves to suffer due to the remaining shortfall, as the result of past excess pension payments and taxpayer underfunding. In fairness, that would not be future taxpayers, and future employees. It would be past and older employees, perhaps by forcing them to pay more for retiree health insurance, and older taxpayers, perhaps through a huge "exit tax" when they sell their homes.

While that may seem like a good idea in theory, one has to take into account the fact that what you propose will lead to a lawsuit and that the judge hearing the case is a CalPERS pensioner too.

Also, it wasn't actually pensioners who caused the problem in the first place, it was the banking and real estate sectors who grew fat on a bubble. You, like most ignorant backstabbers, want to make those who aren't responsible for the economic situation to pay for it. Luckily, Californians are smarter than you.

Do you believe the garbage you type here? California's economy is so large that it cannot be harmed by the avalanche of pension and OPEB liabilities accruing each year? In your opinion, CalPERS should be able to sue for judgment and force all cities and counties to raise property taxes in an amount sufficient to pay for the outrageous benefits that the unions' pet politicians put in place. You should be embarrassed for speaking on a subject that you've clearly spent no time attempting to understand.

It is not nearly as big as the pile of crap you and the rest of the bigots spout minus facts and evidence. You are so ignorant you can't even provide a single mathematical fact to prove you're correct. Instead you just spout some stupid conspiracy theory crap and imagine it is true.

Name calling is a sure sign of a weak argument. Simply put: you just can't handle the truth, bub. According to The Center on Budget and Policy Priorities, as of 2010, the cumulative state pension shortfall ranged between $700 billion and $3 trillion, depending on the discount rate used to value the future obligations. The $700 billion figure is based on using a discount rate in the 8% range representative of historical pension fund investment returns, while the $3 trillion represents a discount rate in the 5% range. 30-year Treasury yields are at 2.85%, while the trailing 10-year annualized return on the S&P 500 is 6.35%. Considering any pension fund manager worth their salt is going to go with a mix of bonds and stocks, what do you think an appropriate discount rate is? The States would have to contribute 10% of their annual budget to their pension plans to fund the midpoint of this liability. Also, nice cherry picking with the Wisconsin reference. You do realize that as of 2010, Wisconsin was the only state with a fully funded pension. Maintaining that funding status was the thrust of Walker's effort, and it required appropriate legislative action. Sorry you weren't qualified to make it in the private sector, which is quite apparent based on the nonsensical tripe your posted to these message boards. Now, sir, please feel free to continue pounding sand!

I didn't call you a name, I called that which you "spout" a name. Again, you clearly have reading comprehension problems and spare us the self-victimization.

Citing the bond and s&p 500 rates is great but it doesn't prove you are right because you don't what CalPERS actually uses do you? Talk about cherry picking. You are cherry picking to bitch and moan during a recession, which will end. Where were you bigots during the growth years? Walker's efforts did what exactly? Please enlighten us with your knowledge?

You speak primarily from angry ignorance, so you lack a great deal of credibility. So, you would need citations. Maybe you hate public employees because they clearly have much higher standard than you do.

You don't know anything about what I do like most everything that comes out of your mouth. I don't answer to ignorants like you.

Last time I checked, CalPERS was still in California and still getting paid, so who is exactly pounding sand?

My, how short our memories are. Seems like just yesterday you called me a "bigot" and "backstabbing liar". But I suppose I can let that slip, sticks and stones and all that.

Can I educate you a little bit? Do you understand that a lower discount rate increases the unfunded liability estimate? CalPERS uses a 7.5% discount rate, bub. In reality it should be closer to 4.5%. Lets compare, shall we? According the the Economist, accounting rules dictate that British companies have to calculate their pension deficits using the AA corporate bond yield to discount liabilities. What do you think that number is? Let me shed some light - the Moody's AA Corp Index is yielding right around 3.66% as of 12/11.

As far as CalPERS getting paid, well...you may have a reading comprehension problem because the subject of the article we are commenting on is specifically about San Bernardino not paying CalPERS.

Funny how that works...CHEERS!

Well, when you make a promise and then break it while blaming the person you lied to, that makes you a backstabbing liar. The truth is the truth man, don't hate the messenger.

I don't really care what the discount rate is. None of that proves anything because as you say, you are cherry picking this recession to take the opportunity to backstab people. Kicking people down because it is opportunistic is a bit psychopathic to say the least.

Nobody kicked you idiots when you lost two wars and sank the economy now did they?

If you did any research on the subject you would know that this problem has been growing for the last 20 years. Discount rates don't matter, huh? A static retirement age doesn't matter, despite the average life span increasing by 10 years since 1970, huh? Do you live in La La Land? Didn't your daddy teach you that money doesn't grow on trees?

Contracts can be broken under federal bankruptcy laws. You may not like it, but that is reality, and that is a fact. My friend, here is a piece of advice to live by...the only constant in life is change. You aren't guaranteed anything anymore, regardless of how many tantrums you throw or how hard you stomp your feet. Time to grow up and understand how the real world works.


I can envision, if it has not already been drawn, a cartoon with Ebenezer Scrooge labeled as "The Elderly" walking the streets with a bunch of poor urchins labeled "The Young".

chubasco in reply to grinnell

I think it's been obvious to those with eyes and a brain for quite a while that sooner or later this country may be defined not so much by R vs. D but young vs. old...times are changing, and the elderly left alive are going to have to live in the now at some point, and the now is bankrupt from top to bottom. With ever increasing energy costs (irrespective of increasing volumes), there's simply less wealth per capita, and that's that. Life in the real world is a zero-sum game for the foreseeable future. Sucks.

Medicine4theDead in reply to chubasco

Your comments are ignorant to say the least. If the world was a zero sum game, the poor in the US wouldn't have two cars and a couple television sets. How does one claim the country is bankrupt when we have an economy three times larger than China's and a $15,000,000,000,000 GDP? Stop crying wolf, chicken little, no one believes you any more.

Medicine please take a refresher course in Econ 101. It will do you a world of good. Your comments about California's GDP and the US GDP and their connection to the issue at hand regards San Bernardino make absolutely no sense whatsoever. Did you even read the article and do you even know the issues?

Olgrich in reply to guest-ljmsjwo

Thanks guest-ljmsjwo,
It seem that Medecine4theDead could usefully take a course in anger management also. He (it has to be a he!) has effectively insulted the majority of the other commentators, for no useful purpose.

What exactly from Econ 101 am I missing here? Large GDP means lots of money moving around? The righties claim there isn't any money, yet reality says otherwise. Google is in California? And their capitalization is what exactly? California owns some land? What is that worth? The problem with Econ 101 is that much of it is based on the false assumption that markets actually work and that people make rational decisions when they don't on both accounts.

Medicine4theDead in reply to Olgrich

You want to take away someone's pension based on no facts and no evidence and can't understand why someone would be angry about that? If I insulted commentators, I apologize; I meant to insult ignorant and bigoted comments. You should spend more time caring about the reality of the judge you will have to tell your argument to to win and less about me.

You are seriously the least informed person I have ever read in TE comment section. The complete lack of knowledge, factually incorrect statements, the absence of civility, the vocabulary of an angry 15-year old...wake up. Do research if you want to be taken seriously. You advocate the State of CA selling assets to cover pension promises that accrue at 7.5% in perpetuity? With +50% in fixed income assets yielding sub-2%, how will the plan actuarially state afloat? This question alone will probably make your head explode so perhaps you should go back to the Fluffington Post where you won't be swimming with sharks.


That which can be asserted without evidence can be dismissed without evidence. You make accusations but provide not a single fact or piece of evidence to support it, so who exactly is the child. I haven't advocated anything except not stabbing people in the back for doing nothing wrong.


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