Funding Social Security vs. Public Pensions

In a previous post “Social Security vs. Public Pensions,” source data is presented to document the following reality in America today: Given a similar salary history, a non-safety public sector employee will collect a defined benefit pension approximately triple what they would have collected under social security, and a “safety” public sector employee will collect a defined benefit pension approximately 4.5 times what they would have collected under social security. This post is to explore how feasible it is to fund social security vs. public sector pensions.

As will be shown, the notion that social security is on the verge of insolvency, or will ever be on the verge of insolvency, is complete nonsense. In stark contrast, however, based on quantitative facts that are relatively easy to extract and analyze, public sector pensions are glaringly unsustainable and they are already grossly insolvent. To compare public sector pensions to social security in order to justify federal deficit spending to bail out public sector pension funds – rather than dramatically reduce their benefit formulas – is entirely fraudulent. Here’s how we get to these sweeping conclusions:

The social security fund has been described as a “ponzi scheme,” suggesting that it can only remain solvent if the new entrants who work and pay into the system fund the retiring beneficiaries who collect payments from the system. But this ponzi scheme metaphor quickly breaks down. First of all, a ponzi scheme typically implies an eventual return of principal […] Read More

Who Are The Carbon Criminals?

At first glance, one might think “Carbon Criminals” is meant to describe the people who extract carbon-based fuel, sell it to the public at a competitive price, and in the process, allegedly edge the planet towards a catastrophic environmental collapse. But perhaps one would be wrong.

There’s nothing wrong with questioning our inordinate dependence on fossil fuel, or taking measures to improve the process of extracting and burning fossil fuel in order to protect our environment. To fail to regularly and scrupulously upgrade safety procedures from top to bottom, throughout the fossil fuel industry, may indeed be considered criminal. And as our technology improves and our prosperity enables us to do more, it is arguably criminal to fail to make the burning of fossil fuel a cleaner proposition each and every decade. But the real criminals are not the industrialists who have made carbon based fossil fuel the engine of civilization – the real criminals are the faceless bureaucrats and cynical opportunists who have convinced us we have to auction and trade carbon emissions allowances and carbon offset credits.

Most people still haven’t thought about how this entire scheme is going to work. And even those who have given this considerable thought, such as the bureaucrats at the California Air Resources Board, are often still in the dark on the details. Read their “Scoping Plan,” and draw your own conclusions as to their readiness to dramatically transform our economy, our property rights, […] Read More

Social Security Benefits vs. Public Pensions

When discussing the issue of public employee pensions, it is easy to suggest that these pensions are necessary because public employees usually don’t earn a social security benefit. While this is true, it ignores the startling disparity between the value of a social security benefit and the value of the typical public employee pension. And it isn’t hard to make the comparison.

If you go to the Social Security online “Estimated Social Security Retirement Benefit” table, you will see what you may expect to receive from social security when you retire, based on how much you earned in your last year working. A person making $65K per year, retiring on their 66th birthday, will begin to collect a monthly social security benefit of $1,609, or $19,308 per year.

In California, public employee pensions typically are calculated based on how many years the employee works, times a set percentage that usually ranges between 2.0% and 3.0%. As an example of how this would work, here are some apples to apples comparisons with social security, i.e., a public employee who enters the workforce at age 22, works for 44 years, makes $65K per year, and retires on their 66th birthday. At a 2.0% per year pension factor – which is the low end of the scale for public employees – this person will qualify for a pension equivalent to 88% of their final salary, based on 2.0% per year times 44 years worked. This equates to […] Read More