Sunday, November 28, 2010

The new House of Representatives

It is apparent that the new republican majority in the House of Representatives has much work that needs to be done and many voices that are giving them directions. However, these new representatives need to only listen to the voice of the people and complete the job that the people elected them to do. If they listen to the other voices and try to accommodate those concerns then the voters may vote them out in 2012.

The first order of business should be to investigate everything that has been forced upon the American people by the Obama government and at the same time cut the purse strings on all the spending that occurred! It is doubtful that everything that the house sends to the senate will get passed, however, that could and should become a 2012 election issue to use against the democrats and Obama.

The House republicans need to act less like liberals and refuse to use their methods, and above all do not give in to their socialist demands. The new members must be very aware of what the democrats will try to bate them with, having been a member of the democrat party before my eyes were opened; I know the tricks they will try. The republicans need to stay focused and force the democrats to vote against the bills that get passed by the house! Because of the results of the 2010 election it may be that a large number of democrats will vote for these bills in order to save themselves in the 2012 election.

I would hope that republicans begin to act like the representatives that the people want in Washington! Hopefully they will stop going along to get along with the democrats in congress. If they go back to that behavior then the people will replace them in the next election! The silent majority woke up during the past two years and they don’t plan on going back to being a silent majority ever again! Therefore, the politicians should be very cognizant of what the people are thinking and what they want to see done in Washington.

The democrats think that they are much better and smarter and able to take care of Americans and do what is best for them. This elitist attitude is what really got the Tea Party started in the first place, as a reaction to the congress and President in their ivory towers in Washington. The Tea Party members will be watching and those republicans who chose to go along with the liberals in order to get along will do so at their own peril!

Friday, November 5, 2010

State retirement systems

I recently read an article by Dick Morris about how the states will all face a fiscal crisis similar to Greece. This crisis is going to come to the United States next year via the vulnerable state governments of California, Michigan and New York. Look for these states to descend once more on Washington DC with their tin cups seeking additional federal subsidies, disguised as stimulus payments. But...with Republicans in control of the House they will meet a frosty reception on Capitol Hill. While Obama will try to pass the subsidies, the GOP will turn them down. The American people - from the other 47 states - will ask why they should reward state irresponsibility with federal dollars.

Faced with a cutoff of additional federal aid, these state legislatures will be unable to avoid bankruptcy. From there, the fiscal crunch will extend to states throughout the nation and the reduction of state expenditures will assume critical importance at just the time that a slew of Republican governors and state legislators - who have pledged not to raise taxes - will take office.

A key focus will be on reforming state pension systems. The recent crash of 2008-2009 cost the average state pension system 30% of its assets. Already, this crunch will force legislatures to slash current spending on education, highways, law enforcement, etc. to accommodate the needs of their pension systems.

Unfortunately, even though the market was crashing, the pension systems had to keep sending out checks. The result is a shortfall will take 25 years for the average state to make up for the losses they sustained in the few months of the crash and in the two years since. And, should the market crash again (think: Obama's economic policies and their impact) then the states will find they have to contribute more and more to their pension systems.

Enter a bold new proposal introduced by Utah State Senator Republican Dan Liljenquist for a massive overhaul of his state's pension system, a bill which was passed and signed into law in March of this year.

The Utah reform changes the pension system for public employees to a fixed defined state contribution so that the state has no longer to raise or lower its contributions to the retirement fund in response to the market fluctuations in the return these funds earn on their investments. It fixes the state contribution each year at 10% of the employees' salary whether pension fund investments are doing well or doing poorly.

If the investments are tanking and earning too little to sustain the guaranteed benefits, the state would not be obliged to pay more than 10% and the employee would have to make up the difference out of his or her salary. If the investments were doing well, the state would still invest 10% annually and, if this sum came to more than was required to meet the guaranteed benefits, the state worker will get to invest the difference in a personal 401 (k). The worker would not be permitted to borrow against his 401 (k) and would have to invest the funds according to parameters set by the Utah Retirement System so that the savings are not squandered. Each state employee would also have the option of opting out of the state system entirely. In that case, the state would just forward its 10% annual contribution to the employee's 401 (k). This system will start covering all new state workers after July 1, 2011. Existing workers are grandfathered in under the current system.

The Utah bill will allow the state to begin cutting its contributions to the pension system after seven years. For that to happen if they do not pass this reform, it will take twenty-five years.

States throughout America - and their taxpayers - need to study the Utah system and work to pass it in their states. Cut payments now or get soaked later...that's the choice for our states and their citizens.

Thanks to Dick Morris