Labor Attacks the Constitution
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CalPers, California’s $240 billion dollar giant employee pension fund, is asking the courts to give the State of California police powers to compel the City of San Bernardino to pay its pension bill for city employees. As the city is in bankruptcy court, Calpers will have to convince the judge to overturn the Supremacy Clause of the US Constitution as Federal bankruptcy laws, which include the right to withhold creditor payments, would have to be declared “unconstitutional.” The chances of this argument succeeding would normally be unheard of, but look at what happened to GM bondholders. We are living in a new “progressive” world where America’s Constitution is largely ignored.
You might ask why San Bernardino went bankrupt. Well it is the same reason the Federal government is already technically bankrupt ($138 trillion of funded and unfunded debt – see www.usdebtclock.org.) That is . . . too much spending. The only reason the federal government itself can avoid bankruptcy is because they can print money to pay their bills – “monetary easing” they call it. San Bernardino can’t print money so they went into bankruptcy court just like Stockton and many other cities throughout the country are doing. In fact it is an endemic international problem as well. Greece can’t print money and that is why they are in the tank.
CalPers is suing on principle. They are massively unfunded themselves and are desperately looking for any help they can get from the possibility that every city in California will go bankrupt and stop paying all or part of their of their pension obligations. This is an economic threat of unimaginable proportions to CalPers – the most successful and employee-friendly pension plan in America. Its beneficiaries get thousands more per month than those on Social Security. A large number of bankruptcies could limit pension payments.
The CalPers pension model is to be envied. The employer and employee contributions were funnelled not to Social Security but to CalPers. CalPers invested those funds into the stock market. In 2008, when the confluence of a real estate mortgage disaster met the realization that an anti-business administration was going to be elected, the Dow 500 fell from 12,000 to 6,000. Like many others who don’t understand long-term stock market investing, CalPers made moves to reduce their risk of losing all of their capital. That meant it “went to cash,” “went to bonds” and other risk-reducing schemes.
Needless to say when the Dow retraced its 50% fall with a 117% jump to 13,000 Calpers didn’t have all its capital in stock to enjoy the climb and recoup their losses – and predictably became underfunded. Unfortunately individuals, governments, their instrumentalities, as well as funds and investment concerns followed suit.
Trillions were lost because the losers really didn’t understand that the stock market is a weather vane and looks only to short-term profits. All they would have had to do was look at the GDP. It stayed constant. It didn’t have a disastrous fall.
However, the losers are those pension funds looking down the throat of government instrumentalities going bankrupt and their pensioners losing some or all of their pensions. Something has to be done and relying on politicians to do something positive hasn’t worked since Lincoln.
Inasmuch as “we the people” have to solve this debt and pension crisis we can’t look to conventional solutions politicians advance. They are the ones whose incompetence has put us into this crisis and they are incapable of getting us out. We need to look for a plan, an idea, an out-of-the-box solution to reduce our unfunded debts without sacrificing people’s pensions.
I have advanced a solution to this and many other financial concerns facing America as the Founder of the Prosperity Commission and the author of the USA Plan. Among the Plan’s many features it saves cities, counties, states and the federal government from the current pension and entitlement debacle. It also immediately reduces the government’s funded and unfunded liabilities from $138 trillion to $30 trillion.
If, in addition to saving pensions, you are interested in eradicating endemic poverty, increasing benefits of safety nets like Social Security, Medicare and Disability, economically emancipating women and a whole host of other things please go to the website and learn more. We need all the people to support and advance our Plan. It will really help your kids and grandkids. The kids can’t afford to pay the debt politicians and ideologues have run up.