The Conference Committee of the Legislature dealing with the separate House and Senate Pension reform efforts reported out a bill in the last couple of days, and it contained the deeper reforms that were contained in the original Senate bill. (Reforms enacted to apply to existing personnel.) And those reforms took out some of the most prominent abuses that the existing system had promulgated. The Boston Globe highlighted the changes:
Removing a provision that credits a full year of service to employees after they have worked as little as one day in that year.
Preventing elected officials from claiming a “termination allowance” that has been granted after they have failed to win reelection.
Changing the current accidental disability retirement benefit for individuals who are injured while temporarily filing in for their supervisor. Some firefighters in Boston have collected pension benefits based on their bosses’ higher pay level after they were injured on the job while subbing for them.
Limiting the definition of “compensation” to wages and salary and specifically excluding housing benefits, annuities, or the use of motor vehicles. This would prevent presidents at the state’s public colleges and universities from counting housing and transportation allowances as compensation.
Eliminating a current provision that allows certain officials to establish pension credits for holding unpaid jobs.
And while everyone agreed that this change was badly needed, it is clear that it is only a first step. The Massachusetts Pension system is in tatters.
State lawmakers characterized the pension legislation as a first step, one that largely addresses the symbolic abuses that resonate in the public, and they vowed to make further changes in the future that could save the state substantial money. The legislation calls for establishing a commission to review broader changes and issue a report by Sept. 1.
The press announcement of the conference report really highlighted the bruised feelings that still exist between the big three. Therese Murray treated Governor Patrick like he was radioactive waste. And although the Governor seems to be taking more than a few bows here the real credit belongs to Senate President Murray, whose chamber produced a bill that applies to current employees, and held the line when the House tried to limit reforms to future employees. As has been noted elsewhere the Governor did not produce a pension reform bill.
Bill Manzi.com 
Your Honor,
I was so excited when I heard this earth shattering news. My mind went awash in all the things we can do with the money to be saved.
The city budgets can be restored.
The Big Dig can be paid off.
The 25% sales tax can be shelved, saving jobs and even business in Methuen
Or, even….do I dare say it…..my real estate tax will be mitigated.
Na…what happened was equivalent to reducing the weight of the Queen Mary by throwing off some deck chairs.
The next stage will be throwing off the green ones.
Do you believe the Great General Court of Massachusetts will find the courage to make right all those perks it voted themselves at the expense of the taxpayer and save billions?
Is the Globe still in Business?
A lot of waisted space for so little accomplishment.
Jules
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Your Honor,
A warning. That word “inflation” is raising its ugly head. I hope the Obama/Manzi budget doesn’t trigger it.
Jules
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Your Honor,
Below is an article from a news page by my engineering society (SME) that discusses the potential rise of inflation. I place it without comment.
“Job Market, Rising Interest Rates Seen As Threats To Economic Recovery.
The Washington Post (6/12, Irwin) reports, “Rising long-term interest rates are…threatening to further stifle an already weak economy. In just the past two weeks, the rate on a 30-year, fixed-rate mortgage has risen to 5.6 percent from 4.9 percent, ending a boom in refinancing and working against a budding recovery in the housing market. Rates on corporate borrowing have also risen, making it more expensive for companies to expand. And the government has been forced to pay more to finance its deficit.” The Post adds that “the abrupt rise in rates has removed that key stimulant for the economy.”
The AP (6/12, Rugaber) reports that “the number of people receiving unemployment benefits has set another record, a development likely to weigh on consumer spending and slow the economy’s recovery.” Although “retail sales rose in May, the increase resulted largely from a spike in gasoline prices and higher auto sales, according to a report from the Commerce Department. Overall, the retail report Thursday showed consumers remain reluctant to spend, economists said.” The Wall Street Journal (6/12, A4, Lahart, Izzo) similarly reports that “with the labor market weak and household finances strained, it is doubtful that US consumers will be able to lead the economy to a robust recovery.”
The Financial Times (6/12, Rappeport) reports that “new jobless claims fell by 24,000 to 601,000 in the week ending June 6, the labour department said on Thursday. The decline was more than economists expected and marked the fourth consecutive week with fewer new claims. The less volatile four-week average fell by 10,500 to 621,750.”
Jules
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In kind, without comment:
”
The members of the political class face a set of monumental tasks. First, they have to persuade a country to postpone gratification for the sake of rebuilding the country. This country hasn’t accepted sacrifice in 50 years.
Second, political leaders will have to raise taxes and cut spending to get the federal fiscal house in order, and they will have to do it at a time when voters are already scaling back their lifestyles.
Third, they will have to refrain from doing anything that might further damage America’s fiscal position, which is extremely fragile. That means not passing a health care reform package unless it is really and truly paid for. That means forming a Social Security commission next year to tackle that entitlement problem.
Fourth, the political class is going to attempt the politically unthinkable. The U.S. is going to have to move toward a consumption tax, to discourage spending and encourage savings. There’s also a crying need for tax reform. As economist Douglas Holtz-Eakin points out, the tax code is rife with provisions that encourage leverage and discourage investment. The government will have to spend less on transfer payments and more on investments in science and infrastructure.
The members of the Obama administration fully understand this and are brimming with good ideas about how to move from a bubble economy to an investment economy. Finding a political strategy to accomplish this, however, is proving to be very difficult. And getting Congress to move in this direction might be impossible.
Congressional leaders have been fixated on short-term conventional priorities throughout this entire episode. There is no evidence that the power brokers understand the fundamental transition ahead. They are practicing the same self-indulgence that got us into this mess.
”
-FM
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Fred,
1. This is a free country for a while. It is none of the Government’s business how people live their life style.
2. I see raising taxes, a Democrats solution for everything. Cutting spending; never (both parties).
3. It is probably too late to hurt the “fiscal position” of the United States. To quote the president, “We are out of money”.
4. The work around for paying for health care is (surprise) rasing taxes.
Right now the entitlements contribute 60% of the US budget. I wonder how a blue ribbon commission will solve that. Of course, increase retirement age, taking cap off SS payments and yes, raise taxes, just for good measure.
Fred, any other ideas?
Tax reform, Fred? Consumption tax to change our behavior (Government control)? Right up your alley Fred.
The Government does not invest. It taxes.
The Obama administration is made up of men who are mad with power and seek to socialize the country. They remind me of the Nixon white house. Little nazis.
You got the last paragraph right. But, you give them too much imagination. These people are only interested in getting re-elected for their own selfish reasons.
Jules
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Geez, Jules, I thought you’d let this one go without comment. After all, it is from a conservative (but apparently a pariah to Republicans) David Brooks …
But, as long as we’re here … can’t waste a good posting … 😉
1) The only problem with letting people do exactly what they want is that we’ve wanted everything, right now, and we don’t want to pay for it. Brooks points this out, he stretches back farther than I would have (after all, we did try to keep Vietnam war spending in check, and did attempt to pay for it at the time). Up until 30 years ago and Sir Reagan, we were willing to invest, sacrifice, educate, and build a stronger America together. Starting with Reagan, it became “what’s in it for me?”, and that continues to this day.
2) As you point out, it has been both parties that have increased spending, but only the Republicans have gone wildly spending happy, with no intention to pay it back. Spend wildly while cutting taxes does not a solid economy make. We know that now by example, something we should have known through intelligence.
3) We may be out of money, but we are not without means. The happy part of this to me? Everyone else who depended on our prolifigate consumer spending is in worse shape right now than we are. Turns out the first half of the stimulus plan seems to be working, and we seem positioned for growth (something I didn’t think possible). Contrasted with EU, we’re in great shape.
4) Yes, but if we control costs, we as individuals will pay less. Insurance companies and hospitals are way out of control, and if we do not do something, it will eat up GDP just like interest on the debt does. This is where I disagree with what I posted from Brooks. Now, or never. And, much as you hate to admit this, government is far more efficient at providing this service than the private sector is: that’s why the insurance companies are scared. I know this violates your basic tenets, but truth is truth. Health care in this country has become a monopoly, and we’re all paying the price (both in premiums and in the Medicare contribution I make every week from my paycheck).
But, you’ve essentially named the revenue side of the solution, I think.
Retirement age will probably increase (though, this will be interesting, given the lack of jobs available to older Americans).
Some will pay more in SS taxes (again, only the first 102K of wages is taxed today). This will get SS solvent enough to get over the baby boom bubble. After my generation gets through, taxes can go down again (but likely won’t).
I do admit, I left that consumption tax paragraph from Brooks as a troll: see, at least one conservative believes we have to stop consuming and do more investing. And here, I would have thought you would have been in favor of this idea, is it not conservatism to invest rather than spend?
Well run government knows how to invest. Maybe it’s been so long sides we’ve had a well run government, you’ve forgotten what that looks like. Perhaps that’s one of the reasons this government looks so different to you now …
Obama == Nixon? Really? I’m not getting that one. What I see are a bunch of people who are determined to fill in the deep hole that’s been dug for them by three decades worth of mind numbing nonsense.
-FM
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Damn. Ran long again. Sorry.
-FM
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Fred,
1. It is still none of your business what free people do. After they are free. So there.
History is told through the eyes of the writer, even if it’s you. In the vietnam war we hear the term “guns and butter” meaning the country was, in fact, not making sacrifices back then, even though it was during a Democratic administration.
2 and 3. In the world of Fred this may be true, but no where else. It’s your twisted opinion versus my twisted opinion. Just remember the toxic derivatives were created by Democrats lowering the mortgage standards. Greed was the evil morality that drove us to Bank failures.
Fred, the stimulus pill is only working in your mind. Since its ill conceived inception, the unemployment has climbed almost 25%. It appears France may be better off than us.
4.Health care is not a monopoly. Our health care system is imperfect and new ideas must be tried by the private sector. The problem our citizenry thinks health care should be free. There are good ideas out there, but nothing will happen until people realize they will need to pay more up front.
THE FEDERAL AND STATE GOVERNMENTS CAN’T RUN ANYTHING. Just look at the state system in Massachusetts; it’s unsustainable without Federal infusions of cash. In other words, some guy in Peoria has to help Massachusetts pay for it’s abortion.
This is my view.
Breaking News:The CBO just sent word to the congress and that great Lion, Ted Kennedy, that 1 trillion dollars would only cause 16,000,000 of the 44,000,000 to be covered. It would take another 2 trillion dollars to capture the rest. 3 trillion dollars we would need to raise immediately. Money that we are out of. Taxes have to go up.
I still don’t want to Federal health Care. Can you imagine a Government polit-bureau. who decides who does or does not get certain type of service.
Fred, you really believe the government can run an efficient system? Got examples.
Fred, I’m tired already. Let me finish this thing by saying I think Obama is trying to destroy this country. He has the complience of the congress and citizen like you.
I hope ALL his policy efforts fail.
Are you ready for inflation? It’s beginning.
Jules
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Jules:
Freedom without responsibility? I knew it. You’re one of those g**d**m Hippies.
And on the stimulus, I think we agree that we’re nowhere out of the woods yet, but it appears that crisis has been averted. We’re going to spend at least a couple of years wallowing around in the aftermath before things come to a new level (which I suspect will be below the old level). The stimulus spending isn’t enough to replace the GDP that’s been lost, but at least the situation appears to be stabilizing.
Our health care is imperfect? That’s like saying Bush is only a little dumb. And you think people should pay more? Consider …
– In 2008, health care spending in the United States reached $2.4 trillion (over 7K per capita), and was projected to reach $3.1 trillion in 2012. Health care spending is projected to reach $4.3 trillion by 2016.
– Health care spending is 4.3 times the amount spent on national defense.
– In 2008, the United States will spend 17 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent by 2017.
– Although nearly 46 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.
– Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France.
– The US spends six times more per capita on the administration of the health care system than its peer Western European nations.
– Half of all bankruptcies are caused by medical bills. Three-quarters of those filings are people with health insurance.
– Administrative costs account for 31 percent of all health care expenditures in the United
States. The average overhead for U.S. private health insurers is 11.7 percent; for
Medicare, it is 3.6 percent; for Canada’s national health insurance program, it is 1.3
percent.
– A baby born in El Salvador has a better chance of surviving than a baby in Detroit.
The infant mortality rate in Detroit is 15.5, compared to El Salvador’s rate of 9.7.
– Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage. Many experts believe that this figure is conservative and that $300,000 may be a more realistic number.
http://www.nchc.org/facts/cost.shtml
With our reduced GDP, these numbers only look worse in comparison.
PS: Did a little reading on the CBO scoring: looks like they scored an incomplete draft in the most conservative way possible (i.e., with no mandates at all, and no public option). They’re just doing their job, but these are not the final numbers of the plan that’s currently on the table.
Every state is on an unsustainable path right now: that’s what happens when unemployed people and businesses that aren’t booking revenue stop paying taxes. The guy in Peoria is in at least as much trouble as the guy in Worcester (and maybe more).
Get back in your microbus and get a haircut!
-FM
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Fred,
Who defines what is responsibility? Not you I hope.
Stimulus combined with all the other federal spending will generate inflation. Neither you nor I know where all that money is.
Federal Health care = Socialism. Enough said. This must fail. (Medicare is already there so don’t give me grief.
You are a dependent socialist, I’m not.
Jules
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Jules:
The cries of the conservatives were the same when Social Security was enacted during the New Deal, when Medicare was enacted in the Great Society. Socialism, Federalism, it’s the end of freedom and democracy as we know it!
And so it goes. Once again, another tried and tired argument from the gang who can’t shoot straight.
I do continue to notice that that you’re cashing those Social Security / Medicare checks. Must not be all that bad, then. Or only good when you do it, the rest of the country can be “free” to pay more, “free” to be denied claims, “free” to watch doctors, lawyers, hospitals, and HMOs bankrupt the healthcare system. “Free” to have the most expensive health care system in the world, with the efficacy of a third world country.
That’s some “freedom” you espouse.
Is that about it, my right honorable friend?
-FM
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Jules:
If you think this administration’s spending is going to cause inflation, what about that 10-12T of Republican-led debt we accumulated beforehand? How big a problem do you think that is, in hindsight?
-FM
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Jules:
Hey, it even looks like there are like-minded freedom fighters out there just like you!
http://online.wsj.com/article_email/SB122506801638770679-lMyQjAxMDI4MjI1NzAyNjc4Wj.html
Maybe you can kill two birds with one stone, stop being a socialist, and quit both programs!
What do you say?
-FM
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