OBSIDIANXRF

Saving Social Security – making the rich pay their share

2010-09-28T19:05:00.000-07:00

There have been many proposed solutions to “saving” social security, particularly by those who probably don’t have to worry about having that check monthly, and those that think it is a hand out to the poor. The Social Security Administration states on our annual statement that: “Without changes, by 2037 the Social Security Trust Fund will be exhausted and there will be enough money to pay only about 76 cents for each dollar of scheduled benefits” (http://www.ssa.gov/mystatement/currentstatement.pdf; emphasis mine). This means that without doing anything someone collecting benefits will get 76% of his or her benefit – without doing anything. House Majority Leader Steny Hoyer and Republican counterpart John Boehner, both of which are so wealthy that Social Security will probably not be an issue for them have recently railed against the trust fund, but coming under criticism from their own constituencies. This is rather typical of those that are crying that Social Security will destroy the budget of the country and is another “tax”. Most recently Eugene Steuerle elucidated five “myths” about Social Security, some of which are more inserted into the public mind than others (August 27; in SFgate: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/08/27/EDSH1F21FI.DTL). Steuerle notes that Social Security is currently 20% of the Federal budget neglecting to state that it is funded by the participants. Steuerle also discusses the most popular current proposal to “save” social security by raising the retirement age from the current age of 66 to 70, or 75 or 80. Since actuarial data on age in the United States suggests that many people will live well beyond 70 this seems rational. As someone who is currently 61 and has worked since age 14, I’ll be “retiring” after 50 years of work; that’s one-half century. Steurle and others apparently think that the middle class and poor should work for at least 75 years. Leaving aside the physical and mental effects on an individual who works that long, and the real reason conservatives like that idea, getting cheap labor for longer, there is one method to “save” social security that no one will talk about, mainly because it will cause the rich to pay the same proportion of their salary as the rest of us – raising the minimum annual cap that contributions stop. This amount is currently $106, 800 according to the Social Security Administration (http://www.ssa.gov/mystatement/currentstatement.pdf). So, many salaried workers right here in the Bay Area pay a much smaller proportion of their salary to Social Security each year than those disdained middle class and poor who pay 6.2% of their salary all year. Some of my neighbors who work in Silicon Valley or many of my colleagues (mostly administrators) at UC, Berkeley, for example, make at least $213, 600.00 per year (double or more than the $106,800 cap). After July 1 of each year they and their employers get a 6.2% raise, every single year. If they make more than this, of course, they get that 6.2% raise earlier in the year. But, the rest of the population pays that 6.2% all year long; those of us who need to work until we’re 75 or 80 to provide for the common good. My good colleague, Robert Reich has mentioned this issue many times on his blog and in public: http://robertreich.org/post/1004761998/tax-jujitsu-why-democrats-should-propose-a-peoples. Kind of makes you wonder why this 2% of our population that are in this category are whining so bitterly about the Bush Tax Cuts for the Rich expiring. So, why won’t raising the minimum $106,800.00 to say $250,000.00 (the 2% of us) ever be on the table? Because the employer (read corporations) also kick in 6.2% payroll “tax” up to $106,800.00 annually, and we all know who really controls Congress don’t we? Why can’t the wealthy pay their fair share instead of getting that 6.2% raise for some portion of each year? Answer that Hoyer and Boehner!

Will President Obama be the last Democratic President: The Destruction of K-12 Education and the dumbing of America

2010-09-24T15:53:00.000-07:00

Will President Obama be the last Democratic President: The Destruction of K-12 Education and the dumbing of America

The Tea Party movement is much in the news lately. Seems that the “liberal media” is not interested in any “liberal” news. I’ve been struck by not only the tone, but the simple mindedness of the Tea Party members. Speaking of voting (or yelling) in opposition to your own best interests... I was fortunate to talk to a group of Tea Partiers in Walnut Creek the other day, and wow, I envy them. Life is just so black and white, but silly. One of the women was yelling that we must eliminate Social Security and Medicare “it’s not part of the Constitution”. Well I guess they’re “strict Constitutionalists”, but when I asked her if she was: “Well, I guess so...” Neat. She looked about my age (over 60) and I asked if she was currently getting Social Security, and she answered yes, but that the elimination of Social Security didn’t apply to her! Wow again.

My next area I wanted to cover was health care. For a few minutes after I brought it up, the chaos was so loud I couldn’t really hear any individuals. By this time they were pretty sure I was a pinko, which is good, they would really let me have it, and there was a pretty good crowd by now. Health care is also not part of the Constitution I was told, and it was not right that the Government should force “Obamacare” on all of us. Right I said. Does anyone think health care should be a right of American citizens? Answer was a resounding yes. Hmmm. What if we had a health care system that was 1/3 the cost that it is now, would cover everyone and no one would be refused care for any reason. That sounded good to them. That’s single payer health care just like Medicare now I said. “No it isn’t, that’s a liberal health care system”. Well, it’s liberal in a social sense in that it covers everyone. “But the Government is too incompetent to provide something like that”. Well, I said, Medicare is the same thing, also VA health care is government run and both are considered well managed despite Congress tweaking it when the Republicans controlled Congress last time. An older guy who was silent through this piped up and said, “I have VA health care and they’re good doctors”. The guy got a dirty look from another woman, but I don’t think he was drinking the right tea.

It seems like the Tea Partiers are legitimately angry, but at what? I guess the Government in general, and it probably doesn’t help that there is an African-American President (he’s also ½ white). I expect that the Tea Party’s and the Republican’s opposition to Obamacare is partly due to his skin color and it doesn’t help that he’s a Democrat (maybe in reverse order).

This brings me to my worry about America. Are we becoming so conservative that rational thought has gone the way of landline phones? Have we generated people in their 20s through 40s who have been so poorly educated that they cannot really understand a concept beyond a simplistic knee jerk reaction? If so, we’re in for decades of conservative rule, because poor intellect generally equals a poor ability to think critically (re: my envy of the simple minded). I’ve seen it in my CAL students over the past 20 years. They are just as intelligent, but poorly trained to think critically.

And it seems the Republicans in Congress are just as poorly educated. They certainly can’t add and subtract. Take their “Pledge to America” revealed yesterday. I call it Pledge ON America, kinda like their previous “Contract ON America”. My reading of this tome is that they (wait for it) think that if we eliminate taxes we can eliminate the deficit. Where have I heard that before? Paul Krugman does a great job on this new “contract” in the NY Times today: http://www.nytimes.com/2010/09/24/opinion/24krugman.html?src=me&ref=general

I’ll just paraphrase some of it here. They infer that Social Security, Medicare and of course the Defense budget are off the table, so what’s left – National Park Service, National Institute of Health, National Science Foundation, etc. From Krugman: “Howard Gleckman of the nonpartisan Tax Policy Center has done the math. As he points out, the only way to balance the budget by 2020 [as in the Pledge], while simultaneously (a) making the Bush tax cuts permanent and (b) protecting all the programs Republicans say they won’t cut, is to completely abolish the rest of the federal government”. What a relief, I thought they might actually have a real idea this time. So, not only do the Tea Partiers not have a clue, can’t add, can’t subtract, can’t think, but their elected representatives can’t either!

But, the country, and my state of California seems to think these guys can do a much better job than the other side, even many of the so-called Democrats in California. Yesterday, 50% of the California electorate was supporting Republican Meg Whitman for our next Governator rather than Jerry Brown. Geez, (math is coming) since only about 30% of the California electorate is Republican and about 20% non-partisan like me, that means that there are some of those pesky California Democrats that are gonna vote for Meg. She has some of the same “Pledge ON America” ideas too – I guess it’ll be “Pledge ON California”. Her major talking point seems to be to fire 40,000 state workers immediately and cut the shit out of taxes right away. Holding aside for a moment that there are not that many state workers under Executive Branch control and the Democrats still control the Legislature, how can she balance the California budget that way. Oops, I forgot, eliminate government, but who will give her corporate and wealthy buddies all those tax cuts (don’t forget California is about 16 in tax rates among the states despite Republican whining). The Government gives tax cuts – can’t cut Government then.

A Republican talking head on NPR the other day (sorry don’t remember his name) stated that they think California is turning Red, at least Purple. Seems like he’s right. California is following the Tea Party lemmings off the cliff! And if our dumbed down electorate in America continually think this new conservatism is gonna save them even though it caused the economic problems by and large in the first place, then what is the hope of ever electing a Democratic President again, let alone a black man? We are reaping what we’ve sown by destroying education. And Democrats are to blame too. It was two prominent Democrats behind No Child Left Behind (or in the behind) Ted Kennedy and George Miller. If you award teachers for high test scores by their students, the students will be smarter! Right. I’ll take a student who performed mediocre on a structured test like the SAT, ACT, GRE but can think critically any day. Don’t think we’ll see many of those in the next generation, just like no Democratic Presidents.

Will UC's new pension plan be the final nail in the coffin?

2010-09-24T08:33:00.000-07:00

On September 16 the UC Regents voted to raise the contributions to a pension system that has been vitally harmed by past Regent's decisions (see http://universityofcalifornia.edu/sites/ucrpfuture/news-updates/uc-regents-vote-to-increase-pension-contributions/#more-760) In 1990 when I arrived at Berkeley there were nearly 2000 faculty all contributing to the pension plan at 2% of salary (I’ll return to this at the end). In the early 90s when California hit it's first funding wall, the Regents decided that the way to solve the budget crises was simply to "early retire" employees. TWICE they offered an early retirement called the VERIP for “very early retirement incentive program” that gave employees five years of extra service credit and five years on their age. So, employees in their 50s didn't let the door hit them in the ass to get out - in droves. At the same time the Regents using their fine business acumen (don't forget most Regents are business CEOs and investors – see below) decided to eliminate employees contributions to the pension plan. So, not only were hundreds of thousands of employees no longer contributing to their pensions, but thousands were now on that very pension plan in their 50s.

This idea was by Regents predominantly business gurus? Geez, if we in the Republican disdained Middle Class handled our finances that way - hell, we'd be broke (but I digress). Also during the 90s as the pension plan, even with all the new pensioners, was well into the black, those very fine Regents, like Mr. Blum and Mr. Parsky thought that the UC Treasurer who was doing such a fine job should be replaced by an investment firm with ideological if not business ties to these fine Regents. This very problem was reported on the Bay Area,s KALW NPR station last year and no one seemed to notice. Well, this fine investment company decided that upright corporations like ENRON were great investments. Wow, good thing we of the contemptible Middle Class didn't have the money to invest in those great corporations, but our fine university did that for us.

Today, we find that our pension is in the red, and what a surprise. Sure, the broken economy, busted by some of the very same philosophy employed by our Regents and cronies is partly responsible, but don't you think that 20 years of no employee investment might also have something to do with it?

What happened to that 2% that was not invested in the plan? The Regents gave it to us to invest as we like in what was called a Defined Compensation Plan (DCP). Well, I'm a full professor and in all those 20 years I have a whole 40,000 bucks and a broken pension after over 20 years of work for UC. So let's do some Middle Class calculation. There are currently about 150,000 UC employees, dwindling as the administrators fire more staff each year. Let's say that for 20 years that 2% of what's called the DCP investment all garnered only $20,000 each (this is very conservative) that would be at least $300,000,000.00 into the pension plan. What that would mean "actuarially" is beyond my abilities to calculate. The figure would be much higher actually since 1) this does not include those VERIP employees who would have been contributing before they left, and 2) it is difficult to tell how much investments would increase even with the dippy investments scheme of the Regent's investment buddies.

The Regents. Who are these guys? Well, they are 18 people appointed by the Governor for 12 year terms (http://www.universityofcalifornia.edu/regents/about.html) including a student Regent representing the students at all campuses. Now lets look at the Governors for the last 20 years. They have all been Republicans except for Gray Davis, remember that one that was recalled by the nitwit California voters and supplanted with the Terminator (who received less than 50% of the vote during the recall). Eleven of the 18 are Schwarzenegger appointees, the rest Davis. What do (or did) these Regents do before becoming Regents (D = Davis appointee; S = Schwarzenegger appointee)? Down the list: Richard Blum (Chairman of Blum Capital Partners, L.P.; Co-Chairman of Newbridge Capital, LLC; D); William de la Peña, M.D. (Ophthalmologist and medical director of the De La Peña Eye Clinic; S); Russell Gould (served as a Senior Vice President of Wachovia Bank, providing leadership in business development and strategic partnerships as Senior Managing Director of Wachovia Portfolio Services, formerly Metropolitan West Securities, which he joined in 1996. While at Metropolitan West, Mr. Gould also served as Executive Vice President of the J. Paul Getty Trust; S); Eddie Island (retired attorney, and executive; S); Odessa Johnson (Dean Emerita of Community Education, Modesto Junior College; D); George Kieffer (Partner and member of the Executive Committee of the national law firm of Manatt, Phelps & Phillips, LLP; S); Sherry Lansing (Founder of the Sherry Lansing Foundation and former Chair and CEO of Paramount Pictures' Motion Picture Group; S); Monica Lozano (Publisher and Chief Executive Officer of La Opinión Newspaper; D); Hadi Makarechian (Chairman of Makar Properties Board of Directors and Banning Lewis Ranch Management Company Board of Directors; S); George Marcus (founder and Chairman of Marcus & Millichap; Chairman, Essex Property Trust; D); Norman Pattiz (Founder and Chairman of the Board of Westwood One [owner of 5000 radio stations]; D); Bonnie Reiss (Operating Advisor to Pegasus Capital Advisors; S); Frederick Ruiz (Co-founder and Chairman, Ruiz Foods; S); Leslie Schilling (Director of Union Square Investments, Inc.; S); Bruce Varner (Partner in the law firm Varner & Brandt; S); Paul Wachter (Founder, President and CEO, Main Street Advisors; S); Charlene Zettel (Board member, San Diego Regional Airport Authority; S).

First, geez with all these board members, business types, and lawyers you’d think they could buckle down and save the university (but I digress again). Well, you can see that there are very few on our UC Regents who have any experience with higher education. Davis’ appointee Odessa Johnson is virtually the only Regent with actual higher education experience. What we see here is the result of the California electorate’s love affair with Republican governors. If you want UC and CSU Regents who have California’s higher education in mind don’t vote for Republican governors. You can image what Meg Whitman’s appointees will look like.

The Final Nail in the Coffin of California’s higher education: Never thought I’d get here did ya: Let’s look at the proposed shiny new pension plan. The devil is certainly in the details, in this case the proposed tiered pension system that will enshrine the two tiered political system that Republicans (like most of the Regents) want to see a permanent part of America (http://universityofcalifornia.edu/sites/ucrpfuture/new-ucrp-tier/)

What fun! Someone now who after 20 years and age 60 retires, they get 50% of their highest average three years salary, 75% after 30 years and age 60 [kinda makes those other pension plans look good doesn’t it?]. We can now retire as early as 50, but wouldn’t get much, and after 2013 when these proposed changes would take effect the earliest one could retire is 55 and to get only 42% or your highest three years salary you’ll have to be 65 and if you’re a richer faculty or administrator you can contribute more, you’ll still only get 48% at 65. What a deal! But what does it do for the age grade composition of the university? One of the reasons to set the maximum benefit age at 60 is to get the old guys out and hire new and younger faculty. When that changes after 2013 it will force most faculty to stay until much older. Why will that make a difference? Well, now that the university gets such a tiny amount of funding from Sacramento (now under 20% of budget) we cannot hire new faculty until someone retires, and even then the pesky Social Sciences and Humanities are lucky to get one for each three retirees. So, the future University of California will have many fewer faculty, with more of those 20 something students, and faculty walking around with canes and no memory! Wow what a great state we live in. A fact (from above): In 1990 when I got here there were about 2000 faculty, now there are a bit over 1200 faculty and over 20% more students than in 1990. Just think of what it will be like in another 20 years – less than 1000 faculty at Berkeley as my Dean has suggested and 20% more students, and the faculty will only be 20% there mentally. Neat. What a great state we live in.

Oh, I forgot one other tidbit the “Post-Employment Benefits Task Force” has exclaimed: Don’t worry about these reduced pension benefits “with Social Security a pensioner will have nearly 100% of their salary at 40 years”. Great, let’s rely on Social Security to fill in the pension gaps. Real reliable in Washington too!

Will this pension plan be the final nail in the ever solidifying coffin of the University of California? I hope not, but we’ll see. Oh, I forgot: there were only a few faculty and staff on the “Post-Employment Benefits Task Force” that made the recommendations to the Regents. The majority were overpaid administrators. All but one of the faculty and staff members wrote a dissenting view that is being ignored: you can see that here: http://universityofcalifornia.edu/sites/ucrpfuture/files/2010/08/peb_dissenting_082510.pdf

Introduction

2009-08-20T10:36:00.000-07:00

Obsidian and XRF. While this blog is an extension of my lab at Berkeley and my private lab at home, as many of you know I have opinions about many of life's fun and not so fun things.