The three biggest disasters in state government, it seems to me, are the Turnpike Authority, the MBTA, and the pension system. Today we seem to have hit the trifecta.
On the Turnpike, we‘ve got endless coverage (as well as the occasional senseless rant) about Easter Day traffic jams resulting from understaffed toll booths. We’ve also got the head of the Turnpike Authority gratefully accepting a $15,000 check from the architect who designed the Zakim Bridge — but then declining to turn the lights back on, which was the point of the gift. And our good friends the swaptions agreements, which continue to threaten the Pike with a $400 million termination payment to UBS, are back, as Bob explains.
The second leg of our three-legged stool — the MBTA, and transportation more generally — is also a mess. As far as we know, draconian service cuts to the T are still on the table. Meanwhile, Governor Patrick lambasted the legislative proposals for transportation reform, arguing that they don’t go far enough and don’t save enough money. BMGer eury13 tossed a few more logs on the fire, taking Senate President Murray and Transportation Chair Baddour to task for “play[ing] politics while not actually doing anything to help.” So the era of feel-good cooperation between the House, the Senate, and the Governor’s Office appears to be at an end (if it was ever really there). Likely result: House and Senate squabble for a while, then pass a watered-down transportation bill; Governor vetoes all or part of it; House and Senate override, thereby saddling the state with a transportation “reform” that solves a few short-term problems but doesn’t really address the long-term situation. Five years down the road, here we go again.
What will be really interesting there is to see whether the Governor can muster enough support from reform-minded legislators to sustain some or all of his vetoes. Now that would be an exciting development.
And then there’s pension reform. Today’s Globe editorial page, which I usually find to be on the namby-pamby side, unleashes a double-barreled assault on the House pension bill:
A lemon, veiled as reform
The House could try to hoodwink the public today by passing a pension reform bill that applies only to new hires in the public sector. If so, it would expose House Speaker Robert DeLeo’s repeated promises to restore the public’s trust as so much double-talk…. Any pension reform bill must cover both current and future employees if trust is to be restored. Perhaps the House speaker feels constrained by his own interpretation of contract law. [The editorial also notes that the Governor and the Senate have examined the legal issues and concluded that they can include current employees.] But the public will see this in a different light – another trick by the folks who brought us decades of pension pranks.
I don’t have much to add. Seems to me that the Globe is exactly right on this. Pension reform that includes only new hires locks in the current abuses for, what, 20 or 30 years? That’s just not acceptable.
The state has a big opportunity here, and also a big chance to blow it. If it gets these three things — fixing the Turnpike Authority, fixing the T and the transit agencies, and fixing the pension system (along with doing a decent job on ethics reform)– right, that’s a pretty good down payment on the work of restoring the public’s faith that government is capable of acting responsibly, and perhaps smoothing the way to new revenue options where nothing else will work.
If it gets them wrong, the message is: “we heard your call for reform loud and clear, and we didn’t listen. Instead, we looked after our own, as we always do. Please give us more money.” That’s not going to go over well.
One opportunity for transportation reform that is being totally missed is based on the fact that Mass is a small state. Connecticut, Rhode Island and Jersey have a statewide transit systems. Why don’t we? If we did then maybe we wouldn’t have Baddour out in Methuen not caring what happens to the MBTA.
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p>The benefit of a statewide system would be three-fold: 1) achieve economies of scale 2) link disparate transit networks to make transit trips between areas of the state more efficient and 3) make it politically necessary to care about transit for all legislators not just the legislators that happen to have a crisis at the bus stop nearest them with angry constituents awaiting a soon to be nixed link to their jobs.
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p>Further, there shouldn’t be so much competition between varying aspects of transportation in this state. The key to an efficient transportation system in the 21st century will be inter-modality. By having a slew of transit agencies, two highway agencies, and an aviation agency forces them to compete for funding. Competition among modes has lead to the inefficient, congested, and broken system we have today.
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p>To achieve inter-modality the state should not only have one statewide transit system, but just one transportation agency with the players inside of it working to make all aspects of transportation efficient through meaningful linkages among the modes. Mass by virtue of being small has this great opportunity and it is going unnoticed and or being cast aside for the status quo with window dressing treatments to fool the constituents into thinking things have been fixed.
Massachusetts has large swaths of land than are sparesely populated and thus not benefitted by mass transit nearly as much as greater Boston in a way that RI and NJ do not.
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p>What is Connecticut’s statewide transportation system to which you refer?
My mistake, I double checked what I thought was a statewide system, turns out its what Hartford calls CT Transit. A bit of a misnomer if you ask me.
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p>Anyway – Jersey has sparse areas too. I’m not calling for transit to reach up into the high hills of the Berkshires. I’m just saying that with the number of regional transit agencies a lot could be gained from merging them into a single entity – even if they don’t necessarily have routes that connect areas of the state that are too far from another transit served area.
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p>The economic benefits of a statewide system could be evidenced in procurement. Imagine Berkshire RTA needs five new buses, Pioneer Valley needs 10 buses and Cape Ann wants a new bus. Lets also just say they all want similar sized buses. They could get a better deal by buying them together in bulk rather than independently. Further, having a unified fleet of just say a couple of sizes would save further by needing to only have mechanics trained in maintaining said unified fleet, and would also make parts ordering more cost efficient.
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p>It would also be beneficial to the users of the system. It would be very handy for users who say take a bus in Worcester to the MBTA commuter line and then hop on the T to use a single transit pass or have a single trip planner that could guide a user across the state.
a universal Charlie Card.
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p>And hey, there’s no reason why it shouldn’t interoperate with some private transit too. The ferry to the Cape? Charliecard it. Boltbus to NYC? Charliecard it.
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p>And while I’m at it, you get a $750 commuter deduction in Sched Y of MA taxes. Why not bump it up to $1000 and allow all Charlie Card hits. Just because I don’t use it enough to get a weekly/monthly pass doesn’t mean I don’t use it to commute. I get to deduct 100% of my FastLane usage, why not 100% of my CharlieCard? And, if I’m using mass transit that isn’t MBTA, why don’t I get a deduction at all?
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p>So, here’s the permanentstomv vision (if pstudent agrees):
1. CharlieCard works like FastLane by autodeducting $25 from my credit card when the balance gets below $10.
2. All CharlieCard usage is tax deductible on Schedule Y, not just weekly/monthly passes.
3. CharlieCard is expanded to other regional transit, either because of agency merge or just because it’s a good freaking idea.
4. CharlieCard is usable for private state mass transit options to/from MA to New England+NY — Greyhound, Peter Pan, Bolt, etc; Amtrak; ferries to Cape and Island.
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p>End result: MBTA gets more cash float (and maybe transfer payments), users get more flexibility and convenience for payment, the state subsidizes mass transit users uniformly and fairly and at the same level as FastLane users, and we might even get just a few cars off of the road backing up the tollbooths on Easter and Thanksgiving weekends.
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p>What say you, permanentstudent? What say you, BMG?
I have to tell you that I am very reluctant to bulk up my Charlie Card right now. It feels a lot like a Circuit City gift card, if you know what I mean.
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p>The “permanentstomv vision” is a great idea — after the reboot.
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p>By the way, just to build on the excellent points you’ve already made, here’s a way to collect more revenue from every bus, train, and subway in the state and improve the rider’s experience at the same time:
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p>1. Open every door on every vehicle at every stop.
2. Provide an automated machine that reads cash, Charlie Cards, debit cards, etc., and spits out a hard copy receipt showing the date and time of payment.
3. Have uniformed MBTA “controllers” randomly board buses, trains, and subways and check for receipts.
4. Establish a fee schedule such that the pre-paid fee is significantly lower than the fee charged after being caught without a receipt by a Controller.
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p>The spread between the pre- and post-paid fees and the frequency of Controller checks can be adjusted, based on real data to:
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p>a) Collect a greater percentage of the fares due than are collected today
b) Reward riders for pre-paying and making money off those who choose to take their chances with a Controller.
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p>Public transit systems in Europe have operated this way for a very long time.
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p>The enormous advantage of this is that every door opens on every vehicle at every stop. The driver has nothing to do with collecting fares. The rider experience is improved, the system works better.
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p>What’s the catch? You don’t need nearly as many fare-collectors. Tough noogies.
Maybe MBTA’s total implosion would be political reason to implement these changes.
is the model used in Vienna. Fine on the spot: on the order of $100. Can’t pay? Off to a holding cell.
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p>The problem with this, of course: selective enforcement. Maybe the MBTA cracks down on everybody fairly. Maybe it avoids the green line but nails the silver line. That sort of thing. I’m not claiming it can’t be done well… I’m simply claiming it’s easy to do poorly.
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p>Interesting though, to say the least. Ultimately though, what percent of fares go uncollected? 1%? Remember, monthly passes make up a lot of the ridership in pure numbers. Since fares make up about 30% of the revenue, getting that 1% of uncollected fares would increase revenue by 0.3%. I’m not saying that it’s not real money, but that’s a lot of overhead for not much added revenue.
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p>However — you made another point, and an important one. Speed of service. This is a nice touch. Figuring out how to get people on and off more quickly so the vehicle spends more time actually transporting people is a good thing to work on.
That sounds like it would work really well for the commuter rail. However, with the buses and subway, you would often be able to get off as soon as you see the controller get on. You have a decent chance of skipping out before they check you.
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p>I have a better idea. Get rid of fares entirely for the subway and local bus service. According to the T’s budget, the total revenue for the 2009 budget from rapid transit, surface, and seniors, schools, and paratransit came out to just under $300M. They paid $4M in credit card fees, most of which were probably from the above $300M (some should be from commuter rail fares). The state paid $767M, or 2.5 times the total collected for local service fares. That means that we could raise sales taxes in the whole state by about .5% and it would provide more revenue than the fare collection does. Alternatively, we could raise the sales tax in the areas served by the subway and local buses by 1-2% and it would generate more revenue than fare collection. And there would be some cost savings as a result of not having to fix the fare collection machines anymore, not having to produce Charlie Cards or Charlie Tickets, and other expenses associated with fare collection. This would have made even more sense if it had been done instead of switching to the Charlie Card, as that was a fairly expensive transition. Bus service would improve because the bus drivers wouldn’t have to make sure that people pay before leaving a stop.
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p>Substantially reducing or eliminating the fares would not actually increase the T’s deficit all that much, while providing many benefits. T ridership would increase substantially, which would reduce pollution and congestion.
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p>Note that the mbta probably doesn’t collect enough from bus fares to justify collecting them. Total surface fare revenue (which I am assuming is the bus fares) is only $85M. But collecting that revenue is relatively expensive, because the machines break moderately often, they have to have their cash compartments emptied frequently, and the buses get delayed by people paying slowly. It is almost certainly a good idea to make the local buses free, even if they still charge for the subway.
a few thoughts:
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p>1. I’d bet that collecting fares dramatically decreases short riders. If the bus/T is nearby and I see it coming, I’ll hop on for a stop or two if it’s free. If not, I’ll walk. The extra ons and offs slows service. Maybe not as much as eliminating fare collection, but more than zero.
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p>2. Likewise, you’ll get better behavior from juveniles if kicking them off means they’ve got to pay a second time instead of not paying a second time. Again maybe it’s minor, but I think it would play out that way.
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p>3. I like the idea of an additional 1% sales tax for MBTA in MBTA region in exchange for free rides. It’s true that the sales tax is regressive, but there’s no question that the MBTA is more important for lower and middle class than for upper, so I’m willing to live with that “exchange” for no fares, which is far more important for lower and middle class users than the few upper class users.
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p>4. Surface transit may or may not include paying to board the green line above ground. Silver line too. Dunno.
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p>5. The problem with making the bus free but the subway not free is that it creates a class of people who’d prefer keep the slow, high variance, easy to eliminate subway route than upgrade to light rail or better. No reason to create the split incentive — just make subway free too.
Make everyone get one, then put readers at every door to every MBTA vehicle. They’d work at Turnpike toll booths, too. You could even use them to generate revenue at escalators.
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p>What could go wrong?
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p>That’s an enormous capital investment.
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p>It also slows everybody down. The point is to get people on and off vehicles as quickly as possible. The result is more trips, faster trips, and happier riders.
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p>I don’t know about pay-or-jail. While I was there, last fall, the few riders who were caught gaming the system simply shrugged and paid. I imagine that there’s more than one place in the US where consumers have the same choice (what happens if you attempt to skip a restaurant check or drive away from a gas station?), it’s not so draconian.
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p>I think the point is to encourage ridership, do everything possible to make it easy, and find non-intrusive ways to collect fares along the way. Will some people ride for free? Sure. The point is to make the ones who get caught pay for the ones who don’t. Instead of trying stop people from jumping turnstyles, make money from them instead.
That wwhhhooooossshhhh? That’s a hint.
CT Transit is a lot bigger than Hartford. It covers a significant portion of the population of the state, including the Hartford, New Haven, Stamford and Waterbury areas. Check it out. (Wikipedia)
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p>True, this is geographically a small area of the state, and true it is difficult to get from one metro area to another – there are a couple of express bus routes, but that’s it. It’s largely being operated as a cooperative network of local transit authorities under an umbrella organization which is part of the state DOT.
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p>Sort of like what the RTAs are supposed to be doing in MA (and failing, if you ask me). Big difference, though, being that our RTAs are not (if I remember aright) required to take each other’s tickets or passes. CT Transit does.
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p>I don’t know how successful they are in CT. The network does seem to be larger than the last time I checked, so I think they’re being successful. Wish I knew more.
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p>Heck, if the state solves those three things, they could staff every single government employee with his own police detail and they’d still be ahead in my book.
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p>Personally, I disagree with David (and the Globe) about pensions of current employees, in as much as (a) fixing the future is more important, and (b) I don’t like the idea of revisiting signed contracts for employment and changing them in the favor of the employer. It just makes me uncomfortable. So, in my mind getting it right for future employees is so much more important that I don’t want to let the perfect be the enemy of the good, especially when it’s so so so much easier to cut the benefits of a future employee who can’t yet fight back than the benefits of a current employee who certainly can (as well as quit, lose morale, etc etc).
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p>So if they get good reforms for current and future, great. But, don’t get neither in an attempt to get both. At least make it right for the future.
I can see not changing the terms of contracts for the lower-level employees, but it’s hard to sympathize with those at the executive level.
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p>There’s also the problem that pensions, even modest ones, have become a sort of privilege, since so few private sector employees have them anymore.
are getting screwed, doesn’t mean we should try to screw public employees too. The biggest problem with pensions is that private sector employees aren’t getting them anymore, for the most part. We should be fighting for more pensions, not less. If everyone had a pension, the stock collapse wouldn’t have been nearly as painful for the average American.
I don’t think private employees are “being screwed”, I think the private sector is changing to reflect modern realities.
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p>Privately-funded employer pensions make sense in an economy where an average worker stays in the job for decades. That fell by the wayside in the 1970s. The concept of the paternalistic employer who “takes care of” the employee — who works for the same employer for life — has never benefited the worker.
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p>In my opinion, federal funding and expansion of social security and medicare is a far better answer. A pension, in my view, is society’s obligation to its oldest members. Top quality health care, in my opinion, is society’s obligation to every member, because it is society that benefits from a healthy populace.
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p>Seems like my grandfather, who had to quit high school to work to provide for his family during the great depression, did quite well in his GE job — and lived a very comfortable life, well after his retirement, with that GE pension he had paid into all his life. It’s amazing he could work at such a ‘paternalistic’ place, with not even a high school diploma, and provide a middle class lifestyle, buying a home, cars, etc, for his wife and 4 children. If only it was less paternalistic and he had a 401k instead of a pension!! /snark off
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p>I’m not saying that what worked in the past is the only thing that will work in the future — but 401(k)s have already proven a failure. Retirements were ruined because people were told that investing in stocks were a good idea. Maybe the government should be looking into portable pensions, or beefing up social security, as ways of getting away from pushing the middle and working classes into flushing more money down the drains of the stock market, without the expertise or time to do it safely and smartly.
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p>Ryan, stock investing is not the problem. What do you think the large pension plans invest in? They certainly aren’t going to earn their actuarially assumed 8% rate of return in T-bills! The issue between DB and DC plans is who bears the investment risk. I think it’s pretty well established that saddling industry with that risk puts our companies at a tremendous competitive disadvantage.
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p>The problem isn’t the 401(k) itself, which is just a way of deferring tax. The problem–and this relates to your point about stock investing–is asset allocation. A young investor should be investing in stocks, and in a sense, he or she should be thrilled with the recent nosedive in the market, since it allows additional purchases at a low price. (I never understand why folks my age are happy when the market is up and sad when it is down. We should be rooting for the market to skyrocket after we’ve accumulated a lot of shares.) An older investor should have shifted money from stocks to bonds–preferably government bonds, in my view–as retirement approached. The real problem, I think, is that people aren’t getting good advice about asset allocation. The government has a role here, both in terms of education and in terms of regulation of financial advisors, many of whom are nothing more than shills for big mutual fund companies.
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p>TedF
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p>Compared to whom? Last I checked, there were plenty countries around the world where many (more?) people have pensions. Sorry, just not buying that. Now, if you were talking about health care, you’d have a point, but you don’t have one when you bring up pensions.
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p>Please be careful about picking and choosing what you quote from me. I do believe I qualified that sentence in the very post:
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p>The difference is when you have a pension system, there are experts managing the funds and people forced to contribute very large sums of their paycheck to those funds, keeping them robust. 401k, on the other hand, are voluntary and force people to do much of the managing of their funds on their own – unless they get outside investment help, which is costly and another extra step for someone who worked 40-50 hours a week and just wants to crash and watch American Idol.
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p>Sorry, I just don’t support social darwinist policies that say it’s okay if people are screwed because they didn’t do things they “should have.” We need systems based off what actually works for our population as a whole – voluntary systems where employers may or may not match funds & force the onus of solid investment on the worker is not a good system for most Americans. Systems where people have to contribute to a reliable fund that they’ll have safe and sound when they retire, managed by professionals, is what both works and is what’s needed.
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p>I think I made my point poorly. The comparison isn’t U.S. companies against foreign companies. It’s companies with DB plans against companies that have moved away from them. I don’t think it’s news to anyone that businesses have been shedding pension plans for years. Why? Well, there are lots of reasons, but a big one is the volatility that DB plans can put on companies. Even if the company has a good year in terms of sales, events in the market may force it to make a large payment to its pension plan to meet minimum funding requirements. This is cash that its competitors can devote to their businesses. A defined contribution plan, in contrast, allows companies to plan and thus to compete better.
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p>I question the “expertise” of the folks managing the pension plans and advising individual investors. I think that most people would do just fine with a so-called target date retirement fund that includes a stock index fund, a bond index fund, and a mechanism for shifting the balance from stocks to bonds as time goes on. Simple, and cheap. (That said, I think some of the target funds on offer from the big mutual fund complexes were allocated too aggressively to stocks). Again, I think the problem here is twofold–better education, and preventing investment advisors from giving dumb, expensive advice when the smart, cheap advice is so readily available.
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p>I have two problems with this. First, in life and in investing in particular, there is no reward without risk. I believe that the returns on the risk-free system you are proposing would not be sufficient to support a typical retiree until death. The yield on government securities today range from approximately 0 to 3% depending on time to maturity. Pension funds–the retirement plan you seem to support–generally assume an 8% rate of return over time. If plans are going to seek to earn stock-like returns, someone–the employee, the employer, taxpayers of the future, or whoever–is going to be taking the associated risk.
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p>Second, until recently we have had a more or less 0% savings rate. I don’t see how that will change, as it must, if, as you suggest, people are given reason to believe that no matter how imprudent they are during their working years, they are guaranteed a pension that, if I understand you correctly, exceeds their social security benefits. A little Yankee thrift is in order. One way to encourage this kind of thrift is an “opt-out” system.
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p>TedF
There’s no avoiding risk in investment for retirement. The question is who should assume it? I see three proposals in this thread: Employers (DB plans), Workers (401Ks), and the Government (expanded social security).
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p>Given that:
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p>A)If you work for enough years you should be entitled to whatever retirement level society can afford and
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p>B) With the division of labor and access to education we have in this society, you can’t expect people to have their retirement dependent on their investment skills.
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p>Therefore I would prefer the enhanced social security option. Let’s find a way to make social security actually sufficient for retirement. Retirement should be a social benefit. That way it can be portable and adaptable to different employment situations.
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p>But if that’s not politically feasible, it’s a lot fairer to put the risk on the employer, than on the individual workers.
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p>Why is this so? I’m in favor of a strongly progressive tax system to redistribute wealth in the interest of greater income and wealth equality, because I think it promotes social stability and solidarity and is a highly efficient way to achieve social goals. But I don’t think that people are entitled to have wealth redistributed to them. Where does your view come from?
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p>Why? I think you fall into the trap of believing that reasonable retirement investing requires a great deal of skill. That’s what the financial services industry wants you to believe, so that you will purchase mutual fund shares with high expense ratios and execute frequent trades (and pay frequent commissions). Are you sure it’s as complicated as all that? Would not a single low-cost balanced mutual fund, or better yet, a target fund, not be a reasonable choice for most people?
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p>TedF
On the first question, I believe there are certain benefits that everyone who works hard and plays by the rules should be entitled to. This includes some basic retirement threshold based on what society can afford. We should guarantee each other’s survival as best we can including our later years.
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p>Why? Basic humanity, because we’re all in this together, something like that. Same reason we should have unemployment benefits, public school, etc. We’re social animals.
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p>Of course there are a million questions about how you define “working hard”, “playing by the rules”, “what society can afford” etc. But you get the basic idea.
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p>Social Security was controversial at one time and it isn’t now. But it seems clear that it’s not enough as presently constituted. Let’s make it enough.
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p>On the second question, what seems obvious to one person isn’t obvious to another. Money is a very emotional subject for people; they’re not always rational about it. And there is precious little education about it in school.
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p>We don’t require people to invest successfully to ensure their grade school education, or their unemployment benefits or medicaid, so why should we do so for retirement?
This is easily done with my two-step program:
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p>1) Remove the income cap on Social Security contributions.
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p>2) Ignore the outraged bleating from the selfish prix who object to 1).
What worked for your grandfather, in the forties, stopped working in the seventies and hasn’t worked since.
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p>During the seventies, when I started working for Digital, inflation was driving prices higher much faster than any single company (including Digital) was willing to match. Technology was moving ahead much faster than any one company could keep up with. The net-net? In the computer industry of my career, the only way to stay current (not to mention advance in salary) was to change companies every 2-5 years. I suspect that any information-driven company was the same.
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p>Those pension plans that worked for your grandfather were worse than useless. Vacation benefits were similarly illusory — it’s easy for a company to offer three weeks after five years and four weeks after ten — nobody ever stayed in one job that long.
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p>Sorry, Ryan, but the modern economy moves far too fast for traditional employer-sponsored pension plans to work — at all.
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p>Why not? Pension arrangements are simply compensation paid in arrears. Imagine taking a job where the deal was “work your tail off for minimum wage, sell as much as you can sell, and when the year is over you’ll get 10% of the revenue you brought in”. And when the year ended, your employer said “oh yeah, about that, we decided that we’re not going to give you the 10%”.
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p>That is what you are suggesting the state do to people who worked for many years under the current scheme. You may envy their position, but a pension is an obligation that should only be yanked under terms of bankruptcy.
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p>That said, I think there are ways to make it happen, primarily via buyouts. Offer a first year employee a couple thousand bucks today and he’ll probably give up the pension. Offer people working for 15-20 years more — because they have been living their lives as if their retirement was a lock, guaranteed, full faith and credit of the commonwealth. Do those workers even get Social Security?
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p>Sure, that makes the problem take longer to solve. It still doesn’t make it right to screw people like that.
Is the issue with pension reform whether to slow or stop the accrual of future benefits? Or is the issue whether to take away benefits that have already vested? If it’s the latter, then I agree that there are strong reasons against making a change for current employees. If it’s the former, then full speed ahead on public pension reform and, as I have advocated before, conversion of the public pension system to a defined contribution system like the rest of the world has.
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p>TedF
on defined contribution (401K or 403B types of systems) over pensions, which have gone the way of the dinosaur in the private sector.
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p>I wish “pension reform” included eliminating pensions entirely for future state employees. There is a reason the private sector has gone away from them; they are not cost effective (just ask GM). If we consider that the government is using our taxes to fund its operations, we should demand that it at least use the money wisely. Offering pensions, which are virtually non-existant in the private sector, is an example.
It has nothing to do with being cost effective, it’s who the risk falls on. With DB plans, the risk falls on the company and the government, with 401(k)s it falls entirely on the beneficiary.
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p>Your comparison to dinosaurs is wrong. A comet didn’t wipe out pensions, conservative economic policy (not just republicans) actively deregulated industry and dismantled worker protections. This empowered capital and weakened labor (and not just unions). Pensions, along with worker safety, health care protection and steadily rising wages, were taken away.
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p>So yes, there’s a reason the private sector eliminated retirement security – profits. Just like putting melamine in milk powder or antifreeze in kids medicine increases profits. Profitable, but bad public policy. I’m for equality, but achieving it by tearing everyone down doesn’t seem like the best approach.
Are you seriously telling me that someone who has been in the system for, say, 15 years, and was planning to get out at year 20, will be “screwed” because he or she will have to work the entire 20th year, instead of just one day of it, as was the original plan?
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p>Or that some university president who was hoping to include his generous housing allowance in his pension calculation, and now learns that he won’t be able to after all, is being “screwed”?
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p>I don’t buy it. Not for a second. These abuses have been abuses from day one, and eliminating them does no one any cognizable harm. They’ll all still get a nice pension.
I jumped the gun — I was thinking in terms of either reducing the amount paid or eliminating them entirely — things that have been floated. I agree that the “1 day rule” and closing other loopholes should be closed immediately — I always assumed they would be.
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p>No, not really, even if they had to pay into it.
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p>I gotta agree with Stomv and you on this point. Whatever the current pension system is, the people working now have paid into them. At the very least, those who are still employed should still be able to pay into them and then receive them.
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p>I swear, some people think pensions are for free. In reality, it’s a huge proportion of someone’s entire salary that they pay into it.
like it’s a painful thing when you write
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p>:) I kid. You and I agree on most things here on BMG.
that was not how I intended it to sound 😉
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p>If only half of BMG (including me) brought the facts and expertise you bring to the table in your (very well informed) opinions.
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p>If you think about the incentives in a collective bargaining negotiation, I think you see one of the big structural problems with DB plans. Management is compensated based on measures like quarterly earnings. So its incentive is to favor compensation that costs little now, even if it costs much more later. The union is thinking much longer-term–it is trying to maximize wealth for its members. The end result is a deal that promises high benefits down the road with a low up-front cost. The company uses various actuarial tricks to underfund the plan, thus making its bottom line look better than it is and increasing management compensation and stock price. Everyone is happy, until the moment of truth arrives and the company has to start paying out the benefits it promised decades ago.
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p>DC plans are superior, in my view, because they require honesty at the bargaining table.
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p>TedF
“Management is compensated based on measures like quarterly earnings.”
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p>I wish. If quarterly performance was really the foundation of CEO and upper management salaries, western capitalism would look very different than it does now. Indeed, the world might be better of managers (and shareholders) measured corporate time in decades rather than quarters.
Which require ongoing cash contributions but provide the security of a DB plan (and have far less wiggle room on upping payments at the end of a career) achieve the same thing, but the employer and the gov’t still maintains the risk. The Teamsters Central States Plan, the Steelworkers Pension Trust and the CWA pension all work like this.
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p>You’re right about the mechanics of “typical” DB plans, however. Jointly managed plans are the best of both worlds. Another reason to support EFCA!
I’m not sure I understand, dhammer. Can you explain? Why are the incentives different in a multi-employer DB plan? Why would the employer be less interested in minimizing up-front costs and trying to find actuarial assumptions that appear to improve short-term financial results for the firm, and why would unions be less inclined to help them do that?
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p>I find your comments generally very good and knowledgable, so I am sure you have an answer in mind!
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p>TedF
I generally agree with you.
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p>What I’m unclear on: what is the political motivation for the State House and Senate to do what you want? Honestly, why? (The Gov faces risks, definitely).
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p>Do you believe that any of them have any real political risk? With a totally incompetent opposition, I just don’t see it.
The Massachusetts GOP is dead, and shows no sign of being resurrected any time soon. The lege (not to mention local politicians — don’t get me started on Mr. Menino and his cronies) are sitting ducks for a new party that emphasizes:
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p>1. Intellectual rigor — realistic, hard-nosed attitudes towards real problems.
2. Authenticity — Say what they mean and mean what they say.
3. Progressive values — recognizes that progressive values are still shared by the overwhelming majority of the people of Massachusetts, when coupled with the above.
4. Pro-business — yes, pro-business. Small business. Independent startups. Progressive values, coupled with rigor and revenues, do more for creating a healthy business climate than any of the tired handouts that have been tossed around for so long. The new economic order will be dominated by the “long tail” — thousands of new, small, independent partnerships, LLCs, and sole proprietors. It’s time to stop promoting dead-end wage-slave factories, and start helping people learn how to do what they love and make enough money to sustain themselves doing it. It’s time to stop talking about cutting taxes, lowering fees, and “streamlining bureaucracy”, and start talking about quasi-public micro-lending, small business counseling, public/private partnerships to create new seed-stage funds, putting everything online, and similar actions. What, exactly, would the state lose by giving LLC owners a one-click online form with which to file their annual report?
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p>A functioning transportation system will do more for business productivity and growth than any number of tax breaks/giveaways. Suppose the state were to invest several billion dollars to build out state-of-the-art signaling and control systems on every rail line, including expanding commuter rail and light-rail service throughout the Commonwealth, suppose every bus-stop had electronic displays showing real-time bus arrival and departure times (like Europe has had for years). Suppose that Massachusetts vendors were given priority in granting contracts. Does anyone seriously want to argue that this would hurt our local economy?
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p>Affordable single-payer health care cuts direct and indirect medical expenses, improves contributor productivity, and cuts the health insurance parasites out of the game entirely.
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p>Restoring public education makes younger workers more productive. It will provide avenues for retraining and growth for middle-age workers and for those nearing retirement.
The difficulty with starting a third party in this state is that you currently you basically can’t be elected without being a Democrat (especially for Congress). If you try to start a third party, the Democrats are likely to shut you out in the future. Which means that if the idea fails, then your political career is over.
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p>So to start a third party, you have to find people sufficiently interested in running to put in the extra work of running without significant party support who are also willing to take the risk that if things don’t go well enough they won’t ever have a career in politics.
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p>This isn’t hopeless, but it is a difficult challenge. The Green-Rainbow party would be a good place to start if you actually want to make it happen. They are already more progressive then the Dems and probably agree with most of your points (I haven’t read their platform recently, so I’m not sure). You could start from scratch, but it would be a lot more work.
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p>That said, there is nothing stopping you from doing this. I think it would be great, but like most people I am too busy to do all the organizational work that would be required.
… we’re in the “more and better Democrats” era. At its core, the Democratic Party is still good, but because we have total control here, it has reverted to a virtual split between its many factions (Guy Glodis, anyone?). The lack of competition for most House seats is a real problem — and that’s not to say that the reps should be primaried, I would only do that in some cases. But there is a tremendous amount of phoning it in, and important matters (like David’s trinity) are “too big to fix.” Even well-intentioned members have no incentive to challenge the inertia.
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p>
You’d have to bet on a couple things happening:
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p>1) You’d need the full support of the “Blue Dog” Democrats in this state, which support an active government and taxes that pay for social services, but want it down responsibly, and sustainably.
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p>2) You’d have to negate the impact of the unions. There’s a reason why the unions are so powerful in this state — because they show up at the polls. (This includes municipal unions as well)
My pollyanna-ish answer is that the lege’s political motivation should be to do what’s right for the people of Massachusetts.
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p>Now, once you’ve all wiped the tears of laughter from your eyes, let’s try to get more realistic. Certainly, there’s no credible threat from the GOP. Progressive primary challenges? Maybe — but it’s a bit late to start a broad-based movement of that kind for 2010. Third party? I like Brookline Tom’s idea, but I doubt it will happen any time soon. Which is too bad.
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p>Pressure from the media? The incredible shrinking Globe seems unlikely to be in any position to ratchet up the pressure. Pressure from BMG and the like? Heh — good one.
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p>Pressure from constituents? That might work. But someone’s got to organize it. There’s the real challenge — a state version of OFA, perhaps.
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p>Other ideas?
What we need is a coalition of forces that support strong government action: human services, unions, various progressive activists (environmental, housing, education, etc.) to advocate together for increased government revenue. Right now as far as I can tell, these groups are all operating independently and single mindedly.
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p>Coalescing would require prioritizing some issues over others but it should be done.
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p>If they coalesced, they should then identify a reform program that they could support; one substantive enough to get support from the general public. That ought to be possible also, although some groups would have to take a longer view than they sometimes do.
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p>Such a coalition would have the motivation, the base and the resources to organize enough pressure to have a fighting chance to succeed, and the time is right for it.
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p>Unfortunately, I don’t see it happening. The progressive leadership doesn’t seem to be there.
Demanding reforms does not mean one is anti-revenue.
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p>By demanding revenue first, jhg, you are perpetuating the incredibly damaging myth that lefties don’t care about waste in government, so long as their programs are funded, regardless of how much money it takes.
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p>Lefties can and should be fiscal hawks as well.
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p>The point of this debate isn’t how much to cut, or why we shouldn’t raise revenue, but how much reform should we be deamnding. For every dollar of legitimate waste cut from the budget (legitimate as in no-show or no-work jobs, etc.)that’s a dollar freed up to spend on providing services, and a dollar’s worth of the public trust restored.
“Demanding reforms does not mean one is anti-revenue. “
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p>But it can be a dodge for dealing with a revenue problem.
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p>You’re right about being fiscal hawks. Conservatives make the assumption that being a fiscal hawk is about revenue, but it can be about value. That is,… it’s ‘hawkish’ to demand better value for what is paid for and not just being knee-jerk about paying for anything.
I agree with you, southshorepragmatist about reform. I’m not demanding revenue first. I’m responding to the political question raised above – how do we get the kind of fiscal reform we want, the kind that doesn’t tear down government, through the legislature?
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p>Who has the motivation, resources and base to get that done?
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p>There is no powerful coalition of good-government- intellectuals that can make political change. There are interest groups that can coalesce to do it. I’m trying to make your point: the progressive interest groups should adopt a reform platform in addition to their own interests.
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p>If progressive interests organized themselves around funding progressive programs and simultaneously agreed on reform measures we could get both revenue and reform.
On one side, you have people who know what is possible, doable, and practicable in the state of Massachusetts.
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p>On the other side, you have a relativ newcomer to the state denouncing anything that he doesn’t like as “watered-down”.
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p>And if they can’t get together on a bill, I’m supposed to automatically blame the Legislature? Listen, the Lege is lacking in motivation to do as much as they can, but to be squawked at by the guv for not doing enough while also being pressed for doing too much doesn’t help anything except maybe Deval’s poll numbers.
I will in no way, shape or form support Patrick for re-election. He was consistently shown he can’t take the heat and is no passing the blame on lower-level state workers? While he plays footsies with his head of the transportation agencies, EOHHS is being decimated and essential services for people with disabilities, the poor and the elderly are becoming what you would find in New Hampshire. It really is disgusting to watch and all this progress this state has made is now being reversed decades, not at the hands of Mittens, but Patrick! Support a primary challenge!
Is simply a holiday. People getting together for family dinners and such. Well if one eliminates the food, the real purpose of the get together then the lines would be gone!
HR875 The Soylent Green Frankenfoods Bill
http://video.google.com/videos…
FactCheck.org on H.R. 875.
These were major problems even back when the stock market was humming along at 12,000. But the Legislature has a motto: “If it isn’t a crisis, don’t fix it.”
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p>It’s kind of like the tide covering over the problems in a pier. Well, the water has receded and the pier’s broken, rotting pilings are now exposed.
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p>Sen. Baddour certainly should answer why transportation reform wasn’t a priority 2-3-4 years ago. People knew the MBTA and Turnpike was in bad shape years ago. At a MINIMUM, these discussions should have started in earnest when the Mass. Transportation Finance Commissionn released their report in 2006.
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p>Just a reminder…if Deval Patrick was so hot about transportation reform, why did it take him nearly 2 years to release a plan — and then only AFTER the Senate came out with their plan?
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p>And if you want to get wonkish, exactly how is Gov. Patrick’s transportation reform plan a panacea? Even if his plan was passed as proposed, it still wouldn’t come close to making up the money needed to fix the problem. (plus you have the liklihood of the MBTA unions fighting the changes in court, and I don’t want to bet who wins that shootout). A tax hike is still going to be needed no matter whose plan passes. Gov. Patrick “lambasting” the Senate and House plans is like a golfer who shoots an 82 criticizing his buddy for shooting an 83.
I don’t know which plan is better on reforms (House/Senate/Gov). Cherry pick the best from each and you might get somewhere. But so far the Governor is the only person to put forth a serious proposal to fund the ridiculous shortfall the state is facing.
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p>It’s not enough to fix everything, but even the stop-gap measure he has proposed has received little to no support from the public and has been the target for rampant attacks of tax-and-spend demagoguery.