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There's a new study out regarding parents as role models for financial advice, and apparently most of them aren't all that great. I know a number of people here have had good parental role models, and some have had bad role models (to the point where some people have said they deliberately dealt with finances totally differently from their parents).

http://moneyland.time.com/2012/03/23/study-parents-are-terri...

I don't recall my parents giving me a lot of financial information, other than not buying things I can't afford and how to balance a checkbook. Sometimes I could ask questions, and my mother would explain things, but I've done a lot of learning on my own. My mother had to learn everything after my father had his stroke. It was such a massive stroke that he could never deal with finances again.

I suppose in past generations it was a lot easier. You got paid, sometimes in cash, and you paid the bills. You were likely to get a pension of some kind after you retired, and you'd have your house paid off (unless you lived in a company town) and you generally stayed in one place for a lifetime.

But these days you need to know how to invest, and how to make informed decisions, and I suspect a lot of parents are so confused they don't want to talk finances with their children for fear of exposing their own ignorance.

Nancy
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I think a lot of people were taught "it's rude to talk about money" so they never talk about money with anyone - including their children.

Plus when kids are young they sometimes overshare something their parents have told them, and maybe they're a little afraid if they talk about the real household finances the kids might blurt it to their friends (kind of like the episode of "The Cosby Show" where Vanessa told her friends how much her mom paid for a painting).

And this is the first generation of parents where home computers and internet are fairly widespreed (so easier to get information and more computer programs for things like doing your taxes), and most people have to save for their own retirement versus pensions.
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Nancy I think about this sort of thing a lot. I've got two elementary school aged boys and want to raise them as best I can.

This is why I think it was easier in past generations:

Up until about a century ago, and forever prior to that, there was not nearly as much opportunity for consumerism as there is now. Modern manufacturing and efficient mass distribution have lead to the ability to sell more, and that ability to sell more has resulted in the development of the modern advertizing machine in order to create the demand necessary.

Prior to the last century, it was considered unethical to be in debt except for real business capital improvements with expected growth returns. It was a serious crime to default on a payment owed. That same advertizing machine, in combination without our own sheep-like qualities, has slowly converted us into a nation of spenders who blame lenders for our problems. Such behavior - that would have been reprehensible a mere hundred years ago - is reinforced due to lack of consequences. Those older ideals were absolutes. You wouldn't make an excuse about "sneaky fine print" because you would have been a social outcast. And you certainly would not have knowingly walked away from an underwater mortgage because you would have been chased down on horseback and shot.

Easy stock market investing was not available to the common man. A 19th century man with integrity was expected to work and save, securing stability for his family through slow accumulation of assets either financial or real via good old fashioned hard work. Making money by sitting in a chair and trading paper was not respectable. What we consider investment risk today was then considered the sin of gambling and wouldn't be tolerated by decent folk. It was the drive and promotion of government Liberty Bonds for WWI that broke the image. And it was the success of that promotion that led to the advent of public brokerage firms because some guys realized that they could turn such gambling into an acceptable product for the middle class.

And of course the standards of living, and of dying, were a lot lower back then. A lot more people worked the land, lived in log sheds or dugouts, had one pair of shoes, one book, no public utilities, no tuition costs, and on and on and on. What was normal middle class life in those days we would consider destitute today. And we just died like we were supposed to. We didn't spend half a million dollars trying to keep a ninety year old guy alive for an extra month. And we didn't spend another $10K on his funeral either.

I believe if our great-great-great-grand parents could see us today they would think we are all flippin out of our heads crazy with the gluttony of excess and waste and irresponsibility.

xtn
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And this is the first generation of parents where home computers and internet are fairly widespreed (so easier to get information and more computer programs for things like doing your taxes), and most people have to save for their own retirement versus pensions.

Most people had to save for their own livelihood long before corporate pensions were ever invented. Such pensions were only popular for a VERY short moment in history. In the grand scheme of things, they were basically a failed experiment.

xtn
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I believe if our great-great-great-grand parents could see us today they would think we are all flippin out of our heads crazy with the gluttony of excess and waste and irresponsibility.

I don't think you have to go that far back. My grandparents raised their children during the Great Depression. They learned the true value of a dollar earned and those lessons stayed with them even after they had accumulated enough wealth to buy pretty much anything they might want (provided they maintained their simple tastes ;0) They raised two sons who took those lessons to heart. And one daughter who saw everything they saved as somehow depriving her of joy. Needless to say, she's poor as a church mouse these days, while her surviving brother is very comfortable. My grandfather tried to instill saving and frugality, but honestly, sometimes common sense just gets overridden by impulse.

LWW
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I believe if our great-great-great-grand parents could see us today they would think we are all flippin out of our heads crazy with the gluttony of excess and waste and irresponsibility.

I think if they'd been born into a world like the one we came into, they'd have behaved as we have. If we'd been born into their world, we'd have behaved as they did.

People's characters haven't changed as much as the conditions have. People have always screwed up when better choices were available, then as now. There are just more choices now. I'd rather have those choices, including the consequences of making bad ones, than no choice but to eek out a subsistence surrounded by disenfranchised people (like I, as a woman, would've been).

I don't think we should romanticize about a noble world that never did, and never would, exist.
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<<Most people had to save for their own livelihood long before corporate pensions were ever invented. Such pensions were only popular for a VERY short moment in history. In the grand scheme of things, they were basically a failed experiment.

xtn >>


Public employee pensions continue to explode with increasing benefits.


What's with that?



Seattle Pioneer
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I don't think we should romanticize about a noble world that never did, and never would, exist.

Okay so it wasn't nobility that led to the financial habits and practices of our ancestors. But I do think we should look back and consider it as a sort of model to be aimed at. I don't mean we should strive to hit it 100%. I mean that if most of us would just practice a bit more restraint against all the choices we have available today, we quite possibly wouldn't be - as a group - up to our eyeballs in problems as we are.

I think people characters have changed. Sure, conditions have changed too and they are in large part responsible for the character changes. But regardless, there has been an overall decline in our character - as a group (and only in my opinion)- at least with regard to managing our financial lives.

xtn
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<<Most people had to save for their own livelihood long before corporate pensions were ever invented. Such pensions were only popular for a VERY short moment in history. In the grand scheme of things, they were basically a failed experiment.

xtn >>


Public employee pensions continue to explode with increasing benefits.

What's with that?



Personally, I think it should be filed under Failure along with the rest, but it seems those involved haven't reached the same conclusion.

xtn
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Public employee pensions continue to explode with increasing benefits.

As someone who is married to a state employee, WHAT THE HECK ARE YOU TALKING ABOUT?

They have been cutting benefits EVERY year since before the economy tanked. My Father-in-law is a state employee nearing retirement and has put in 40 years. He will likely retire with close to full pay. My husband with his 14 years? Nope, they changed the rules. Luckily so far he's been grandfathered from further cuts, so if he does his full time he might get 75% pay. 401k matching was dropped years ago. The amount he has to put into the pension fund has been steadily increasing (to make up for the state decreasing it's contribution) the last few years while there has been a freeze on any pay raises, so his check has been shrinking. Cost of health insurance has also gone up. We've also had unpaid furlough days, which sucks because it's not like they reduce his workload, he ends up staying late other days to still work 40 hours but get paid for 32.

So my husband (a state employee) is getting less benefits and less pay while doing the exact same or more work (freeze on new hires) and might find his pension slashed in the future.

So please post me an example of state benefits increasing since the economy tanked. I'd love to see where we should MOVE.

Lara Amber
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You know that before the 19th century, many countries had debtors prisons, going back to ancient Greece, right?

They didn't exist because no one had debt.

Ishtar
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You aren't in California.
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<<Public employee pensions continue to explode with increasing benefits.

As someone who is married to a state employee, WHAT THE HECK ARE YOU TALKING ABOUT?

They have been cutting benefits EVERY year since before the economy tanked. My Father-in-law is a state employee nearing retirement and has put in 40 years. He will likely retire with close to full pay. >>


Oh, I see pretty frequent articles about public employees retiring with stupefying pensions --- and then going back to work at their old jobs and such.

Public employees who have worked huge amounts of overtime their last year to three years before retiring in order to greatly pump up the benefits they receive.

But perhaps that should be described as abuses of current pension plans, rather than expansions of existing ones.

The simple fact is that public employees and public employee unions have often bamboozled politicians and the public by thinking long term, getting pensions benefits that would explode in cost decades down the pike.

Also, in Washington State and other states, public employee pensions can't be reduced in value once earned. They become obligations much like government bonds.

They OUGHT to be separate plans such as private employee plans, which public employees would have to fight politically to get and keep funded.

REAL collective bargaining is when employee benefits can go down too, not just increase. And unions should have to spend political capital to get pension schemes funded, not just negotiate increases.

In short, public employee pensions should be compared with those received by employers of private employers these days ---which are usually $0.00.



Seattle Pioneer
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You know that before the 19th century, many countries had debtors prisons, going back to ancient Greece, right?

They didn't exist because no one had debt.


That's right. But MOST people didn't, and of those who did, MOST of them didn't default. The existence of the prisons proves my point that what we consider "acceptable" financial decision making today was considered intolerable behavior then.

xtn
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Oh, I see pretty frequent articles about public employees retiring with stupefying pensions --- and then going back to work at their old jobs and such.

Yes, and isn't it interesting we did not see such articles while people who had more lucrative choices in private industry laughed at the idea of a career in public service in the 80s and 90s, while people who chose that path were plugging along giving up working years of their lives that cannot now be recovered.

Propaganda tends to wipe out historical perspective when done successfully.

Public employees who have worked huge amounts of overtime their last year to three years before retiring in order to greatly pump up the benefits they receive.

But perhaps that should be described as abuses of current pension plans, rather than expansions of existing ones.


Yes, those are abuses, and they are indefensible. You will not typically see that scenario applying to rank and file public employees, however. Many of those articles, if you drill down, will state somewhere that the average pension is something less than $30K a year or so. Whatever the typical figure is, it doesn't lead in the headlines, or through the first several paragraphs of those articles. Why is that? If the agenda is to paint all pensioners as thieves, this is a good way to accomplish that.

The simple fact is that public employees and public employee unions have often bamboozled politicians and the public by thinking long term, getting pensions benefits that would explode in cost decades down the pike.

Oh please. Where is the evidence that politicians were "bamboozled" into agreeing to unaffordable pension plans? Why isn't it more likely that they made promises to get short-term benefits, such as votes, with a typical kick-the-can-down-the-road mindset that left this problem for the next guys? Do you think first grade teachers and cops and firefighters sat around cackling over their own actuarial and financial projections, thinking, "they can't afford to pay us this benefit! Aren't we clever to get it?"

I think your "simple fact" is unsubstantiated propaganda designed to enable taxpayers to justify dishonoring promises made to public employees who are now too far along in their careers to make a different choice.

Also, in Washington State and other states, public employee pensions can't be reduced in value once earned. They become obligations much like government bonds.

They OUGHT to be separate plans such as private employee plans, which public employees would have to fight politically to get and keep funded.


Then be honorable about it, and don't hire people under false pretenses of compensation you've no intention of paying.

REAL collective bargaining is when employee benefits can go down too, not just increase. And unions should have to spend political capital to get pension schemes funded, not just negotiate increases.

Knock yourself out with negotiations over benefits going forward. Don't steal benefits already earned. How would you like if the various clients you had over the years started clawing into your bank accounts for money back for services you rendered years ago?

In short, public employee pensions should be compared with those received by employers of private employers these days ---which are usually $0.00.

By all means, accelerate the race to the bottom for middle class workers in both private and public jobs. You've got yours. Nothing else matters.
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<<In short, public employee pensions should be compared with those received by employers of private employers these days ---which are usually $0.00.

By all means, accelerate the race to the bottom for middle class workers in both private and public jobs. You've got yours. Nothing else matters. >>


Ahh. Suddenly you don't WANT to compare benefits between public and private employees.


<<
They OUGHT to be separate plans such as private employee plans, which public employees would have to fight politically to get and keep funded.

Then be honorable about it, and don't hire people under false pretenses of compensation you've no intention of paying.>>


Public employee unions bamboozled politicans into making promises that wouldn't mature for decades. But that doesn't mean such promises should be binding on future generations after the politicians that made them are dust.

REAL collective bargaining is when wages and benefits can go DOWN, not just up. You want wages and benefits only to be able to increase. That's NOT collective bargaining.



Seattle Pioneer
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But that doesn't mean such promises should be binding on future generations after the politicians that made them are dust.

Oh, cute. Now you insist that a contract can be ended at will by the government. No wonder no one trusts politicians. You're insisting that they be REQUIRED to lie.

Great going.
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The simple fact is that public employees and public employee unions have often bamboozled politicians and the public by thinking long term, getting pensions benefits that would explode in cost decades down the pike.

What are these unions, of which you speak? As employees of the State of Texas working for a public university, we get a pension that we contribute to every month whether we want to or not. The percentage of the gross pay that goes into that pension does not change, even though the cost of our medical and dental insurance continues to rise and our benefits continue to drop. The rules under TRS (teacher retirement of Texas) are that you get the average of your top three years of income when you retire as your retirement income. I don't know about other public venues, but we have no ability at all to get any type of overtime. If you somehow go over 40 hours in a week, you must take that amoutn of time off the following week. The only way most instructors manage to get their pay to go up significantly, is to move into administration. But there are only so many spots available for administrators. DH loves to teach, and as such has never moved towards administration. But after over 20 years of service, bot as a grad student teacher and full time instructor, he only makes about $50K a year. So if he gets a chance, in his last few years before retirement to make a little more money by moving to admin, you better believe he'll be doing it, and I will in no way think that he's gaming the system when he does.

Oh, I see pretty frequent articles about public employees retiring with stupefying pensions --- and then going back to work at their old jobs and such.

Really? This week I spoke to a recently retired professor here who was making about $90K a year after teaching for close to 30 years. I don't know about you, but i don't consider that stupefying. And since he's been hired back on to teach as an adjunct, he gets paid by the class, with no guarantee that he'll even have a class to teach from semester to semester.


LWW
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I don't know about other public venues, but we have no ability at all to get any type of overtime.

There was a time when California didn't allow overtime. Not just for their state employees, but for everyone. The law changed a while back, but it was definitely a rule.

And give-backs have been part of union negotiating, for both public employees and company employees, for quite a while. Obviously not in the state of Washington, but elsewhere.

Nancy
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<<But that doesn't mean such promises should be binding on future generations after the politicians that made them are dust.

Oh, cute. Now you insist that a contract can be ended at will by the government. No wonder no one trusts politicians. You're insisting that they be REQUIRED to lie.

Great going. >>


Somehow unions aren't too picky about INCREASING benefits paid by pension plans. It's only when there are proposals to cut benefits that they seem to have an issue with making changes.

I favor REAL collective bargaining, where changes in wages and benefits are subject to being increased OR decreased.



Seattle Pioneer
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<<But after over 20 years of service, bot as a grad student teacher and full time instructor, he only makes about $50K a year. So if he gets a chance, in his last few years before retirement to make a little more money by moving to admin, you better believe he'll be doing it, and I will in no way think that he's gaming the system when he does.>>


Of course allowing people to dramatically increase their pension benefits by increasing wages paid the last few years IS gaming the system, and a very popular one.


<<Really? This week I spoke to a recently retired professor here who was making about $90K a year after teaching for close to 30 years. I don't know about you, but i don't consider that stupefying. And since he's been hired back on to teach as an adjunct, he gets paid by the class, with no guarantee that he'll even have a class to teach from semester to semester.>>


So he's collecting his $90K pension and continuing to work too! It's amusing that you don't see that as the abuse that it is.

Of course, that's typical of employees, who can always pick another group of workers to compare themselves too who are making more. It's very rare that employees will compare themselves to employees who are making less, however numerous they may be.

And Texas, I would guess, probably has less pension abuse than a lot of other states.



Seattle Pioneer
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<<And give-backs have been part of union negotiating, for both public employees and company employees, for quite a while.>>


Well then, we have no issues. Playing politics for wage and benefit increases by public employees is perfectly fine with me as long as wage and benefit cuts can be negotiated just as freely.

Even Steven.



Seattle Pioneer
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Suddenly you don't WANT to compare benefits between public and private employees.

Not at all. I want to focus on what was promised for services already rendered by people who cannot step into a time machine and engineer a career do-over based on late-acquired knowledge that their employment terms will not be honored.

Public employee unions bamboozled politicans into making promises that wouldn't mature for decades. But that doesn't mean such promises should be binding on future generations after the politicians that made them are dust.

You repeat that again? Interesting choice of words. Not fraud, not contract of adhesion, not legally unconscionable or unenforceable, but rather: "Bamboozled." How may we know which promises are not binding on grounds of bamboozlement? Can usurious credit card terms be retroactively obliterated in this self-serving manner?

One could argue the politicians, who actually had access to information about revenue sources, and who wrote the laws concerning (under)funding of these pensions, fraudulently induced workers to provide services for deferred compensation which the governments knew or should have known was not being properly funded all these years. You could argue taxpayers were unjustly enriched by accepting services under false pretenses.

Or, you could respect the negotiated contract.

Or, you could just exclaim "Bamboozled!" No need to debate any complex factual, moral, or legal issues posed by willfully choosing not to pay workers' deferred compensation. No need to consider the broader economic or social consequences.

REAL collective bargaining is when wages and benefits can go DOWN, not just up. You want wages and benefits only to be able to increase. That's NOT collective bargaining.

This can be done for compensation for future services, of course.

Although why an employee or union would go back to the negotiating table across from someone prone to crying "Bamboozled!" is beyond me.
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SP, you seem to be assuming that public employees are unionized. My husband isn't in a union. He got hired expected that he would get less pay then if he went private sector (computer programmer in the 90s) but would have better job security and retirement options. He's found out that it's not really true when I started comparing things and showing him how the state did not shop their 401k investing well (all these fees every single month), that his health insurance really isn't better than private sector, and they started decreasing the employer contribution and increasing the MANDATORY employee contribution into pensions while dropping the % of payout when you retire. So why stick with the job with less pay??? They are losing some of their best employees who are sick of the changes. My husband doesn't want to go, he feels very loyal to the state. It depresses him to talk about it.

Also, what overtime? Many states are exempt from paying overtime to employees because of the realities of state agencies having fixed budgets. They want him to work 60 hours one week we don't see one extra dime and they sure as heck don't remember to give him a comp day off later.

As far as the idea people are "cheating the system" if they draw their pensions and work a second job? Many pensions if you stop working you HAVE to draw on it. You get X per year or you take your lump sum. For some if you don't take you're X per year even if you are working, you're an idiot because some don't have survivorship benefits, so your spouse wouldn't get anything if you died. People take that second job and sock the pension money into savings. The secondary work they take may or may not be for the state, it may be just for tying up certain projects, and it will be without benefits (no health insurance, etc.). I don't see it as being any different from drawing your pension and also going and getting a job in the private sector. My dad takes his military pension and puts it into his retirement accounts while he is working in the private sector.

Lara Amber
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Also, what overtime? Many states are exempt from paying overtime to employees because of the realities of state agencies having fixed budgets. They want him to work 60 hours one week we don't see one extra dime and they sure as heck don't remember to give him a comp day off later.

Don't expect this to be different in the private sector. It is unusual of exempt employees to work a 40 hour week. Overtime or comp time is unusual. Also, we have rotating 24 hour pager duty. There use to be some compensation while on pager duty, but no longer and the pool of people handling the pager has been signficantly decreased.
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So he's collecting his $90K pension and continuing to work too! It's amusing that you don't see that as the abuse that it is.

He's working so the university doesn't have to hire another professor and pay him or her benefits. It saves the university thousands yearly. Retired profs can teach classes with no benefits, no tenure, and no promise that a class will be available to teach from one semester to the next. It's a better deal for the university than bringing on a full time prof who would demand healthcare benefits, retirement benefits, and a tenure track. So no, in the long run it isn't an abuse of the system. It's the way the university found to encourage professors to voluntarily resign their tenure.

LWW
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It's the way the university found to encourage professors to voluntarily resign their tenure.

A lot of colleges and universities are cutting back on the number of tenured professors they have, too. There was a time when it was almost automatic for someone to start as an assistant professor, and over the years be automatically moved up to being a professor and getting tenure. These days it isn't quite so automatic a procedure.

Nancy
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I'm trying to figure out where this overtime for public employees is...I've never seen it in NC, and I'm a 2nd generation public employee, married to another one. After being hired into management, I didn't even get comp time. As for inflating earnings the last few years before retirement, good luck with that...with budget cuts, I kept the same salary for 3 years--they stopped COLA, longevity, and merit raises a long time ago.

DH kicks in his 8% contribution into the pension plan every month like he has for 34 years,(as I did) and the 20+ hours a week he works over the first 40 hours goes towards comp time he never has time to use.

Our pensions might be fixed, but our insurance costs aren't, and I expect that to go up every year (with the coverage going down if that's the changes made to the plan) while the pensions stay the same.

I don't think I bamboozled right...

cm, ret.
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<<REAL collective bargaining is when wages and benefits can go DOWN, not just up. You want wages and benefits only to be able to increase. That's NOT collective bargaining.

This can be done for compensation for future services, of course.>>



Unions aren't shy about INCREASING pension benefits for current employees. Simple equity suggests that DECREASING pension benefits for current employees should also be a part of the bargaining process.




Seattle Pioneer
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<<As for inflating earnings the last few years before retirement, good luck with that...with budget cuts, I kept the same salary for 3 years->>


Well ----good. But a lot better would be to base pensions on a percent of income earned each year and not basing it on the last three years when people are probably at their highest pay rates and often have opportunities and huge incentives to inflate income in their last few years of employment.

By contrast there aren't many pensions left among private employers at all, and when there are, they are usually based on a percentage of income earned each year.

Public employees take their enormously favorable pensions for granted and usually find ways to feel aggrieved about slights too.


Seattle Pioneer
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These days it isn't quite so automatic a procedure.

At A&M it's becoming increasingly difficult. You essentially have 5 years to wow them. If you don't, then you'd better start looking for a new job, because they won't keep a tenure-track employee who has been denied tenure.

On the flip-side, they do have a few non-tenure track positions, but these don't have any more job security than anyone else in an employed at will state.

LWW
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You aren't in California.

I am--what are you talking about? I thought state employees were having to take unpaid furlough days, and such. What are you referring to, I honestly want to know.


--Booa
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That's right. But MOST people didn't, and of those who did, MOST of them didn't default. The existence of the prisons proves my point that what we consider "acceptable" financial decision making today was considered intolerable behavior then.

I think a lot of what you are referring to as "what we consider to be 'acceptable' financial decision making today" was not possible all that long ago. Credit cards were not as available. Loans for houses were certainly not as obtainable with such a small down payment, and something like a home equity line of credit existing, much less being able to be used for non-home-improvement related things, didn't exist either.

In fact, given that the penalties for the time were so much more dire (debtor's prison is pretty freakin' dire) and there were so much fewer, and certainly fewer convenient ways to get into debt, I put forth that people today probably have *more* financial self control than when there was debtor's prison--not less.

You can't eat yourself into a food coma for $3 when you have neither the $3 or the conveniently located McDonald's. As hard as it was to get a loan in the past, and there were still debtor's prisons? Shocking! :-)

Anyway, I really think it has very little to do with what behavior is tolerated or not. And if the price for progress is that financial misbehavior is seen as more acceptable, while other misbehavior that I dislike far more is considered less acceptable (like women being property of their husbands, or owning slaves, or not really thinking sexual harassment exists), then I will take it.


--Booa
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Public employee unions bamboozled politicans into making promises that wouldn't mature for decades. But that doesn't mean such promises should be binding on future generations after the politicians that made them are dust.

So if two parties agree to a contract, one should be able to renegotiate it if the terms become too onerous? Like, say a mortgage holder who's massively underwater on their house because they bought foolishly/more house than they can afford? And they didn't take into account what the numbers would mean long term?

Hmm, I never would have suspected you of holding such a liberal viewpoint, SP.


--Booa
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So he's collecting his $90K pension and continuing to work too! It's amusing that you don't see that as the abuse that it is.

At least at universities, there is an uncertainty about how many classes you will teach from semester to semester, and who will be teaching them. Sometimes there are visiting professors, but often someone will get hired to teach one class a semester when there aren't enough regular profs to teach that class.

That person isn't always a retired professor, they get industry professionals to do it, too, or people who are looking for professor jobs and need to get some experience on their resume. They try to talk grad students into it, but it usually pays less than TA-ing the same class, so it's hard to talk a grad student into taking a pay cut for more work.

Anyway, it's pretty standard practice at research universities, and it's really more of a favor to the university than anything else. I don't see it as double-dipping because they're not getting something for nothing--they earned their pension from their years of service, and they are providing a service at a hugely discounted rate.

Actually, they might even be able to write off the difference between their original rate to teach the class and their new one on their taxes, since they're effectively donating that amount by teaching the class. For the University of California system, to teach a one-quarter class for three months paid $3K. To TA that same class paid $1700 a month, or $5100. If you're setting up a new class, that's a considerable amount of hours, and if it's something you used to get paid $30,000 to do (plus benefits), that's a pretty good deal all around.


--Booa
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DrBooa: "Actually, they might even be able to write off the difference between their original rate to teach the class and their new one on their taxes, since they're effectively donating that amount by teaching the class."

That is not my understanding of hwo federal taxes work. Peter, Phil?

Regards, JAFO
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That is not my understanding of hwo federal taxes work. Peter, Phil?

Neither but my understanding is that you can't deduct donated services. I wanted to do something similar a few years ago. I ended up donating my net pay to the college's Foundation in cash.
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Actually, they might even be able to write off the difference between their original rate to teach the class and their new one on their taxes, since they're effectively donating that amount by teaching the class.

No, the value of your time is not deductible contribution.
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<<Public employee unions bamboozled politicans into making promises that wouldn't mature for decades. But that doesn't mean such promises should be binding on future generations after the politicians that made them are dust.

So if two parties agree to a contract, one should be able to renegotiate it if the terms become too onerous? >>


Pension schemes aren't contracts. They are government spending programs and ought to be subject to regular revision by law ---- or if you are a supporter of collective bargaining, then by collective bargaining.

But if pensions scheme benefits could RAISE benefits for existing employees, then those same employees should be eligible for benefit CUTS, too.

Even Steven.



Seattle Pioneer
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SP,

Are you capable of posting without using loaded words? "Pension Schemes"

And it IS part of a contract. It's called an employment contract and at least partially funded by the employees' own money. Just up and changing it on people by "regular revision by law" would be exactly the same as saying "hey we had a legislative meeting yesterday and now your pay is $45,000 instead of $65,000 oh, and we're making it retroactive to 2005, so you owe us money."



Lara Amber
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Are you capable of posting without using loaded words? "Pension Schemes"

I think he hates unions and union members so much that he views everything about them as being fundamentally evil.

Sometimes it's not worth arguing with him. It's just SP ranting again, as he rants about so much.

Nancy
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I am--what are you talking about? I thought state employees were having to take unpaid furlough days, and such. What are you referring to, I honestly want to know.


--Booa


The furlough days are more show than substance. The real funding issue is the ever increasing pension liability.

Even the estimate of the return on the pension fund is overestimated, because the taxpayers have to make up the difference if the estimate is high.
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The furlough days are more show than substance. The real funding issue is the ever increasing pension liability.

In general I agree, that furlough days are a short term solution to current budget woes and not going to solve long term issues. However, it sure doesn't feel like "show" to the families suddenly faced with an effective pay cut. It's not like you can work a second job with the randomness of furlough days and daycare sure doesn't refund your money because you only need them 4 days instead of 5 that week.

Lara Amber
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In general I agree, that furlough days are a short term solution to current budget woes and not going to solve long term issues.

The unions put the Brown in office. He is doing a good job of minimal changes (decreasing cell phones and use of state cars), and attempting to extract more money from taxpayers to pay for government pensions.
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But if pensions scheme benefits could RAISE benefits for existing employees, then those same employees should be eligible for benefit CUTS, too.

This is the case for federal employees, at least. They changed the whole system 20/30 years ago to make it less of a benefit for everyone coming in. They also can't bargain on money, whatever congress says goes.
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<< SP,

Are you capable of posting without using loaded words? "Pension Schemes"

And it IS part of a contract. It's called an employment contract and at least partially funded by the employees' own money. Just up and changing it on people by "regular revision by law" would be exactly the same as saying "hey we had a legislative meeting yesterday and now your pay is $45,000 instead of $65,000 oh, and we're making it retroactive to 2005, so you owe us money." >>


Somehow public employees can easily rationalize INCREASES in pension benefits. It's only cuts that are deemed to be unfair contract violations.


Personally, I'm in favor of REAL collective bargaining for public employees. That's when wages and benefits can go down, not just up.





Seattle Pioneer
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<<Are you capable of posting without using loaded words? "Pension Schemes"

I think he hates unions and union members so much that he views everything about them as being fundamentally evil.>>


Actually, I like labor unions. I've been a union organizer and business agent for the SEIU and a strike and boycott organizer for the Amalagamted Clothing Workers ---forty years ago.

I acquired a Masters degree in Labor and Industrial Relations at Michigan State University.

So I would say that I have a generous amount of both training and experience in the field of labor relations.


Pension plan - pension scheme. They mean the same thing. Pension scheme is probably more common in Britain.

And needless to say, across the country Democrats are busily cutting public employees wages, employment and benefits that have become unaffordable as well. It is quite simply NECESSARY for a lot of state and local governments who find their public employees unaffordable these days.

It is often NECESSARY and EQUITABLE these days to cut public employee wages and benefits in order to make it possible for state and local governments to continue to provide needed services.



Seattle Pioneer
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DrBooa: "Actually, they might even be able to write off the difference between their original rate to teach the class and their new one on their taxes, since they're effectively donating that amount by teaching the class."

------------------------------------------------------------

That is not my understanding of hwo federal taxes work. Peter, Phil?


Sorry, I forgot to put the "facetious" emoticon. :-)

My dad is always writing stuff off that he shouldn't--he's been audited but he really hasn't learned much from it, sadly. This is the sort of not-okay thing he used to do--I'm donating my time to this charitable organization, and my time is worth...1 meeellioon dollars </Dr. Evil voice>. I knew I was being silly and tongue-in-cheek, but I should have been more specific.


--Booa
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But if pensions scheme benefits could RAISE benefits for existing employees, then those same employees should be eligible for benefit CUTS, too.

Even Steven.


Nancy (Windowseat) already pointed out that they are eligible for cuts, and you said then you have no problem with them.

That was earlier in this same thread--did you forget?


--Booa
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Also, sorry, I could have sworn I was posting on imp's board. I totally zoomed the fact that I was on the CC board, where we try to be factual (and not too snarky).

Again, my apologies.


--Booa
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Nancy (Windowseat) already pointed out that they are eligible for cuts, and you said then you have no problem with them.

The MBTA unions had a unilateral health benefit change that should save the agency around 30 million dollars a year. They were simply switched over without any negotiating at all.

So yes, benefits go down sometimes.

Nancy
I bet he still keeps ranting about how unions should have give-backs, which, of course, they've done for years.
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It is often NECESSARY and EQUITABLE these days to cut public employee wages and benefits in order to make it possible for state and local governments to continue to provide needed services.

There is no reason for those needed services to be paid for disproportionately by a small subset of taxpayers - namely, public employees. Raise taxes across the board or cut services across the board. Otherwise, to the extent that deferred compensation is reduced for services that have already been performed, your proposal is simply a tax imposed very selectively.

Of course, that is exactly the intention.
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<<It is often NECESSARY and EQUITABLE these days to cut public employee wages and benefits in order to make it possible for state and local governments to continue to provide needed services.

There is no reason for those needed services to be paid for disproportionately by a small subset of taxpayers - namely, public employees.>>


Well --- you are being disingenuous by coyly describing public employees as being "taxpayers."

Public employee salaries and benefits are the largest or one of the largest categories of government expense in most cases.


<<Raise taxes across the board or cut services across the board.>>


I'm sure there are some public employees who think that the pockets of taxpayers are there to be rifled at will, but many taxpayers would disagree. Politicians are usually finding that a difficult thing to do these days.

In my opinion, the smart move by public employees is not to resist being part of cuts too hard, when they are reasonably necessary. When certain features of pension plans reveal themselves as creating outrageous payouts ---pruning them back and avoiding abuses is good for the public and for public employees as well.

Simply HAVING pension plans these days is a privilege, let alone abusive ones.



Seattle Pioneer



Seattle Pioneer
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I'm sure there are some public employees who think that the pockets of taxpayers are there to be rifled at will, but many taxpayers would disagree. Politicians are usually finding that a difficult thing to do these days.

In my opinion, the smart move by public employees is not to resist being part of cuts too hard, when they are reasonably necessary. When certain features of pension plans reveal themselves as creating outrageous payouts ---pruning them back and avoiding abuses is good for the public and for public employees as well.


In many cases pension plans are becoming the responsibility of the federal government. Large corporations are declaring bankruptcy, and as part of the process are handing over underfunded pension plans to the US. That puts even more onus on the government, due to the decisions of senior management not to fully fund the pensions they agreed to years ago.

Nancy
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Your contempt for public workers knows no bounds, SP, when you claim that they are not taxpayers and that their earned deferred compensation, for services already rendered, is merely a privilege to be waved away.

Coy and disingenuous, indeed.
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<<In many cases pension plans are becoming the responsibility of the federal government. Large corporations are declaring bankruptcy, and as part of the process are handing over underfunded pension plans to the US. That puts even more onus on the government, due to the decisions of senior management not to fully fund the pensions they agreed to years ago.

Nancy >>


That's true.

Private pension plans are usually set up as trusts independent of the corporation as such. That's the way public employee pension plans ought to be set up as well, in my opinion.

Private pension plans were funded according to standards set by the Congress. Many or most such plans were terminated in the 1990s and accrued benefits were often paid into IRAs owned by the beneficiaries.

Private pension plans which failed for various reasons were usually taken over by the Federal Government's Pension Benefit Guarantee Corporation, which was itself underfunded. Usually it would pay whatever part of planned benefits the plans assets could actually afford to pay.

Public employees these days are privileged to have ANY pension plan, let alone ones with abusive provisions that unreasonably pump up benefits.



Seattle Pioneer



Seattle Pioneer
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<<Your contempt for public workers knows no bounds, SP, when you claim that they are not taxpayers and that their earned deferred compensation, for services already rendered, is merely a privilege to be waved away.>>



Taxpayers recognize that they are being milked. And they understand who is getting the milk.


You may try to disguise that reality but I don't think your reasoning is going to impress many of the milkees.


Of course it's the nature of employees to be paid for their services. That is to be expected.


And while you protest that pension benefits must not be taken away once earned, I've never heard of a public employee who refused to take a pension increase on the grounds that he was hired under a previous arrangement and that benefit INCREASES were not just.

Why is it public employees fell that pension INCREASES are OK but that pension CUTS are not?



Seattle Pioneer
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<<It is often NECESSARY and EQUITABLE these days to cut public employee wages and benefits in order to make it possible for state and local governments to continue to provide needed services.

There is no reason for those needed services to be paid for disproportionately by a small subset of taxpayers - namely, public employees. Raise taxes across the board or cut services across the board. Otherwise, to the extent that deferred compensation is reduced for services that have already been performed, your proposal is simply a tax imposed very selectively. >>


I'll try to explain this in very simple terms.

A tax increase results in an INCREASE in revenue to the government agency imposing the tax.

A salary or benefit cut to a public employee results in a DECREASE in payments by a government agency.

A tax increase is not the same thing as a cut in payments.


I'm amazed that my liberals friends don't understand the difference between a tax increase and a cut in spending.


Seattle Pioneer
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Booa -

If I understand correctly you are saying our ancestors didn't get into so much debt because it wasn't so readily available.

I submit the possibility that it wasn't made so readily available because most people just wouldn't have used it. That means there wouldn't have been such a profitable market for it.

I do acknowledge that the convenience has improved a lot. After all we didn't have magnetic strips in our pockets and ubiquitous readers at every cash register, nor did we have nearly as prolific of a retail machine scattered across the country. But I still believe the primary difference is attitude. Living in debt, beyond business capital investment, was seen as something good folk just didn't do.

xtn
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Why is it public employees fell that pension INCREASES are OK but that pension CUTS are not?

Okay, let me ask you this? Suppose you had an arrangement with someone to maintain his furnace, so that you would go to his house every fall and clean things and make sure everything was working for the winter months to come. You always got the same amount, except when, due to inflation, you had to pay more for any materials you might use. One year you were just finishing up when the guy said, "by the way, I had to take a pay cut at work, so this year you'll have to accept less money."

Would you feel that this was reasonable? Times are hard. The guy doesn't have as much money. You should understand this and accept the lesser amount. Isn't that fair? You shouldn't expect the trough to be just as full every year. Sometimes you just have to expect less.

Nancy
and, one more time, the courts will NOT allow a contract to be declared null and void just because it is no longer convenient for one side or the other.
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I submit the possibility that it wasn't made so readily available because most people just wouldn't have used it. That means there wouldn't have been such a profitable market for it.

Possible, but I'm not sure I agree.

http://en.wikipedia.org/wiki/Debtors'_prison
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I submit the possibility that it wasn't made so readily available because most people just wouldn't have used it. That means there wouldn't have been such a profitable market for it.

Tweet! Unintentional Foul!

There was debt in the older days. There were loans from the bank to start up a business, and plenty of store owners carried people and didn't ask for payments until a farmer's crop was in. My grandparents used to take out a loan in the spring to get their restaurant open and would pay it off by fall.

The difference was that back before mortgage corporations and credit, at least in small towns, everyone knew who did or didn't pay their debts, and they would cut off the faucet quickly for someone who owed a lot of money. Thus, there was public pressure to pay your debts.

These days people have their mortgage in one place, their bank accounts in another, their student loans from a different agency, their car loans at the dealers, and their credit cards in several other locations. Until you look at a credit report you don't know how much someone owes, and you still don't have anyone who is aware of how that persons spends his money. A small-town banker would have an idea as to whether a person was wasting money or spending carefully, and thus would know whether the loan was likely to be paid.

So, yes, people did use loans and credit. But those loans were likely to be in one place, with the result that the tap was likely to be cut off sooner. So peer pressure and cautious bankers kept most debtors under control.

Nancy
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<<and, one more time, the courts will NOT allow a contract to be declared null and void just because it is no longer convenient for one side or the other. >>



So courts wont permit pensions to be increased?


Courts have foolishly extended guarantees to public pension plans in some cases, including Washington State.

But of course, if unions can persuade politicians to INCREASE benefits to existing employees, that doesn't count. It's only cuts in pension benefits that the court prevents.

That's abusive. It's just the courts engaging in politics to protect their buddies at the expense of tax payers.


<<Why is it public employees fell that pension INCREASES are OK but that pension CUTS are not?

Okay, let me ask you this? Suppose you had an arrangement with someone to maintain his furnace, so that you would go to his house every fall and clean things and make sure everything was working for the winter months to come. You always got the same amount, except when, due to inflation, you had to pay more for any materials you might use.>>


Only a fool fails to reach an agreement on getting paid before starting a job. So the answer to your hypothetical is that I wouldn't ever be in that situation.




Seattle Pioneer
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Throughout history one of the most common ways to reduce people to peonage was to lend them money they couldn't repay.

Very often wealthy people have loads of money, but a limited ability to command labor. Reducing people to debt and peonage has historically been a great way to lock in sources of labor.

In this kind of scenario, the person who DID repay loans as arranged was a disappointment to the lender.


http://www.youtube.com/watch?v=QKGmTUStwXI



Seattle Pioneer
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Only a fool fails to reach an agreement on getting paid before starting a job. So the answer to your hypothetical is that I wouldn't ever be in that situation.

No, because this is an ongoing arrangement that has been working the same way for a number of years, and you had no idea that thinks would change. The guy didn't tell you that he wouldn't be paying as much until you'd already started work.

Why do they think cuts are unfair? Because they've spent their lives working with the promise that they would receive X number of dollars every year when they retired. They've planned their lives around receiving that amount. It's affected how much they've saved, where they plan to live, where they spent vacations, and a dozen other things. Sometimes they've even stayed at jobs they hate in order to get that pension. And now times are hard, and they suddenly aren't going to get the money they were promised. They've taken lower wages in order to fund the pension, and now SeattlePioneer wants them kicked to the street and left to beg for help.

Would you think that was fair? To take less money in order to get a pension, only to be told that they aren't going to get the pension after all?

Yes, I'll agree that pensions are on their way out. And a lot of union agreements now have a two-tier plan; pensions for the older workers and 401(k)s for younger employees. But please stop whining that employees who have spent their lives working in order to get a pension should be required to take a cut.

So courts wont permit pensions to be increased?

Okay, I'll put it this way. It's illegal to break a contract. If the contract writers had any sense at all they would include, in the contract, reasons for rewriting it under certain conditions. Go yell at the lawyers and stop ranting about retired people.

And what part about give-backs are you still not understanding? There are plenty of unions that have worked out give-backs, and things are working smoothly. If there are no union give-backs in Washington state, that Washington state, not the public employees of the country.

Also, I will admit a certain fondness for CALPers. They've always been first off the block when a company has screwed its shareholders.

Nancy
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Throughout history one of the most common ways to reduce people to peonage was to lend them money they couldn't repay.

And sometimes it wasn't a matter of debt, it was a matter of control. If you lived in a company town, and lived in a company house, you were less likely to speak up when you saw something wrong. If you did, you would find yourself on the street, unemployed and homeless. That was one reason company towns were eventually forced to sell homes to their employees.

Nancy
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<<Only a fool fails to reach an agreement on getting paid before starting a job. So the answer to your hypothetical is that I wouldn't ever be in that situation.

No, because this is an ongoing arrangement that has been working the same way for a number of years, and you had no idea that thinks would change. The guy didn't tell you that he wouldn't be paying as much until you'd already started work.>>



Only a fool would agree to that, and I'm not a fool. Frankly, it's foolish of you to advance that as a hypothetical.



Seattle Pioneer
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In many cases pension plans are becoming the responsibility of the federal government. Large corporations are declaring bankruptcy, and as part of the process are handing over underfunded pension plans to the US.

Payouts from bankrupt companies underfunded pension plans are frequently less and can be a lot less than the original terms.

Even without bankruptcy, companies are able to cut pension benefits for those who are already vested. I had stayed with a previous company long enough to be vested. As soon as I was vested, medical insurance was eliminated from the pension plan.
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Nancy I take no issue with your position, except to point out that I believe the transition in attitude began in the late 19th century, and therefor your grandparents' behavior likely falls into the latter half of said transition.

I believe their attitudes towards debt probably was a lot more stringent than the average consumer's attitude is today, yet likely less stringent than that of THEIR grandparents.

I'm not trying to say that a declining attitude is the ONLY factor in our modern debt, but I believe it is one of enough significance to be put right up there on the list next to increased availability.

xtn
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<<Even without bankruptcy, companies are able to cut pension benefits for those who are already vested. I had stayed with a previous company long enough to be vested. As soon as I was vested, medical insurance was eliminated from the pension plan. >>



Those who had retiree health coverage in private plans almost always were informed that coverage could be discontinued at will.

The practice in recent years has been to discontinue such coverage. It's something anyone who has such coverage should be aware of and should plan for.



Seattle Pioneer
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<<REAL collective bargaining is when wages and benefits can go DOWN, not just up. You want wages and benefits only to be able to increase. That's NOT collective bargaining.

This can be done for compensation for future services, of course.>>


Somehow public employees are always glad to negotiate their current pension benefits UPWARD but claim it is unreasonable to negotiate them DOWNWARD. Why is that?

Wouldn't it be a violation of contract to INCREASE pension benefits for current employees, not just to cut them?

And in any case, most public employee pension plans are not contracts with existing employees. Most government contracts are subject to being cut or terminated should elected officials choose to end them.



Seattle Pioneer
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Most government contracts are subject to being cut or terminated should elected officials choose to end them.

While I'm not the biggest fan of public unions, this simply is not true in any way. Contract law goes back millennia. You simply don't get to terminate a contract on a one-sided basis. Not you. Not me. Not even the government. Yes, any contract can be terminated by any party, but there are penalties.

I can decide my mortgage is too high and I don't want to pay it any more. And yes, I can absolutely walk away. But there are consequences and penalties that result to me from that.

And negotiation is just that - negotiation. If you negotiate a contract, all is open and possible - adjust up, adjust down, reconfigure the agreements, etc. But once the contract is inked, the negation period is over and you have contract obligations. It's no longer a question of "hey, I feel it would be better to pay less, so am changing my mind."

The period to do something about financial burdens from contracts is BEFORE they are agreed to.
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While I'm not the biggest fan of public unions, this simply is not true in any way. Contract law goes back millennia. You simply don't get to terminate a contract on a one-sided basis. Not you. Not me. Not even the government. Yes, any contract can be terminated by any party, but there are penalties.

I keep telling him that, and he refuses to believe that a written and signed contract means anything. Apparently it's just a worthless piece of paper as far as he's concerned.

Nancy
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Nancy I take no issue with your position, except to point out that I believe the transition in attitude began in the late 19th century, and therefor your grandparents' behavior likely falls into the latter half of said transition.

I believe their attitudes towards debt probably was a lot more stringent than the average consumer's attitude is today,


I think you may have skipped over part of my thinking, and it's probably because I didn't explain myself.

When my grandparents borrowed money it was for business. It was to get the building cleaned and painted, buy supplies, and so on. They weren't borrowing money to go on a cruise, or to buy diamond bracelets, or any other consumer good. And actually the reason they borrowed from the bank was that my grandfather once tried to borrow money, and the banker said he would have to refuse him, because he had no credit history. When he bought a tank of gas for the gas station he always paid in cash. I doubt he even had a checking account.

There's a difference between borrowing for business and borrowing for bling*. I suspect that the borrowing for bling did not become a regular habit until after the arrival of credit cards, but mortgages, car loans and small business loans were fairly common.

Nancy
*bling, for this post, is defined as a consumer purchase that is not strictly necessary and for which you do not have the money available.
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The other day my 3 year old was helping spread mulch and plant flowers in our yard. She had some of her toys outside too and was using her imagination to pretend the mulch was "food" (sort of a tea party setup)... I walked over to grab another bag and she said "Daddy, you have to pay for that! It's not free."

With a smile I replied... "will you accept grass as payment?" as I pulled some up to put on her table. "Yes, you'll do!"

Never too young to start with these valuable life lessons.

-Eric
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If I understand correctly you are saying our ancestors didn't get into so much debt because it wasn't so readily available.

I submit the possibility that it wasn't made so readily available because most people just wouldn't have used it. That means there wouldn't have been such a profitable market for it.

I do acknowledge that the convenience has improved a lot. After all we didn't have magnetic strips in our pockets and ubiquitous readers at every cash register, nor did we have nearly as prolific of a retail machine scattered across the country. But I still believe the primary difference is attitude. Living in debt, beyond business capital investment, was seen as something good folk just didn't do.


You may be right xtn, I don't think there's any way to know for sure. Maybe those people were just better than we are now. I guess I have a hard time believing people would change so much in such a basic way over such a short period of time (that is, not hundreds of thousands of years, but hundreds of years), BWDIK?

If we're some devolution of previous people, then isn't that the ultimate excuse for being in debt? I guess I feel people can still control their spending and their fates, but maybe we are just not good enough anymore. There are a few throwbacks, but maybe as a society we're just doomed to be in debt now. We don't have the moral fiber of previous societies. That thought makes me really sad, but maybe you are right. :-(


--Booa
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I continue to suggest that getting working people into debt has been a useful method and tactic for capturing a labor force, probably throughout history.

Sharecroppers and coal miners are two examples of that in recent American history:

<<According to Travis, the line from the chorus "another day older and deeper in debt" was a phrase often used by his father, a coal miner himself.[4] This and the line "I owe my soul to the company store" is a reference to the truck system and to debt bondage. Under this scrip system, workers were not paid cash; rather they were paid with non-transferable credit vouchers which could be exchanged for only goods sold at the company store. This made it impossible for workers to store up cash savings. Workers also usually lived in company-owned dormitories or houses, the rent for which was automatically deducted from their pay. In the United States the truck system and associated debt bondage persisted until the strikes of the newly formed United Mine Workers and affiliated unions forced an end to such practices.

>>


http://en.wikipedia.org/wiki/Sixteen_Tons


Some people say a man is made outta mud
A poor man's made outta muscle and blood
Muscle and blood and skin and bones
A mind that's a-weak and a back that's strong

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store




Seattle Pioneer
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If we're some devolution of previous people, then isn't that the ultimate excuse for being in debt? I guess I feel people can still control their spending and their fates, but maybe we are just not good enough anymore. There are a few throwbacks, but maybe as a society we're just doomed to be in debt now. We don't have the moral fiber of previous societies. That thought makes me really sad, but maybe you are right. :-(


I think people can still control their spending and their fates; they just aren't. (I don't mean all or even most, I just mean a higher percentage than a hundred or more years ago.)

I think we have just morally normalized our behavior. There's nobody around to tell us we're being dumb. Instead, everybody tells us, "It's good for the economy," and, "Oh go ahead you can afford it." The few people who do tell us it's dumb behavior can viewed as outliers who have just found a niche to write books and make money for themselves. They certainly don't have a majority following. Our own government sets the example of crazy spending with vague notions about how we might ever pay for it.

I read a book called The Mark Inside by Amy Reading. Sorry it took me so long to write that last sentence - I had to go back through my Amazon history to find it as I'm very bad about remembering titles and authors. It's a look at some con men and the men who tried to stop them back in the early 1900s. I think it reveals our progression as a society as regards our financial morals. Not that I got this whole idea from a book, but it did pinpoint some of the triggers in our history that contributed to the attitude change. It's also a very interesting peek into the organizational scope of the things that can be pulled over on the public.

Never thought I'd be the creepy guy pushing some obscure book to support my crazy theory (sigh) but there it is...

xtn
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<<I think people can still control their spending and their fates; they just aren't. (I don't mean all or even most, I just mean a higher percentage than a hundred or more years ago.)

I think we have just morally normalized our behavior. There's nobody around to tell us we're being dumb.>>


I think you are right, except that there ARE people explaining that the consumerist model is wastefully expensive. But people are usually choosing to follow the fashions of the day.

Personally, I think it's EASIER to follow a good financial plan today than in the day of the predatory company store with easy credit or the sharecropper in debt to his landlord.

In those days is was tough to avoid debt peonage. These days, there are ever so many financial vehicles to encourage savings and investment. And there are quite a number of people using those methods and opportunities wisely. Unfortunately, a lot of people choose the granite counter tops and new cars instead of financial independence.

You make your choices and live with the results.


Seattle Pioneer
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Personally, I think it's EASIER to follow a good financial plan today than in the day of the predatory company store with easy credit or the sharecropper in debt to his landlord.

And this is another example of how the less educated among us can end up in tight financial straights. If you don't understand how the system works, it's easy to get yourself into financial trouble.

In those days is was tough to avoid debt peonage. These days, there are ever so many financial vehicles to encourage savings and investment. And there are quite a number of people using those methods and opportunities wisely. Unfortunately, a lot of people choose the granite counter tops and new cars instead of financial independence.

Very true. But again, if you have parents who look to the big IRS "windfall" at tax time, never really understanding that it's their money that they're loaning to the govt. at 0% interest throughout the year, then the chances that the offspring are going to get it and break that cycle are slim. Not suggesting that people can't do it, just saying that those who grow up with parents who can show them how to save and invest sucessfully are better off than those who probably regard March as "get a new car or couch month"

LWW
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Very true. But again, if you have parents who look to the big IRS "windfall" at tax time, never really understanding that it's their money that they're loaning to the govt. at 0% interest throughout the year, then the chances that the offspring are going to get it and break that cycle are slim. Not suggesting that people can't do it, just saying that those who grow up with parents who can show them how to save and invest sucessfully are better off than those who probably regard March as "get a new car or couch month"

An additional problem with families that depend on the tax windfall is that they don't always understand the "save up to buy what you want" system, which means that if they need something they buy on credit and end up having to pay more because of the interest. Some kids understand this bit about saving even without having it explained to them, but others don't, and need to have it carefully explained to them. Like the Steve Martin bit.

http://www.viddler.com/v/5433dbbf

Nancy
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<<But again, if you have parents who look to the big IRS "windfall" at tax time, never really understanding that it's their money that they're loaning to the govt. at 0% interest throughout the year, >>


A rather large number of those people getting those tax refunds are getting them not because they overpaid their taxes, but because they are getting a welfare benefit through the Earned Income Tax Credit.




Seattle Pioneer
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A rather large number of those people getting those tax refunds are getting them not because they overpaid their taxes, but because they are getting a welfare benefit through the Earned Income Tax Credit.

That's no different than people who receive a refund because they are getting a welfare benefit called the mortgage interest deduction.
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A rather large number of those people getting those tax refunds are getting them not because they overpaid their taxes, but because they are getting a welfare benefit through the Earned Income Tax Credit.

True. But that doesn't change that their kids are still getting the wrong message. Whether they overpay or make a low enough wage to qualify for the earned income credit. Of course the EIC only applies to couples who file jointly.


LWW
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My mortgage deduction is just as much welfare. There's no difference between it and the EITC. It's all just monkeying around with tax rates based on what is supposedly a benefit to society. Calling it welfare just means, "I don't happen to like this tax credit."

I think mortgage deductions incentivize people to buy houses they cannot really afford, and I do think it shouldn't exist. But it really is just middle and upper-middle class welfare.
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A rather large number of those people getting those tax refunds are getting them not because they overpaid their taxes, but because they are getting a welfare benefit through the Earned Income Tax Credit.

That's no different than people who receive a refund because they are getting a welfare benefit called the mortgage interest deduction.


Yeah, it is considerably different.

Mortgage interest deduction may reduce tax liability, but it isn't a refundable credit.

EIC is a refundable credit. It is a welfare payment that is made through the IRS. The person filing an income tax returns receives a refund in excess of any taxes they have had withheld.
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Of course the EIC only applies to couples who file jointly.
===============================

While your filing status can't be married filing separately, single filers can also get it.

http://www.irs.gov/individuals/article/0,,id=96466,00.html

And you must meet one of the following:
Have a qualifying child (see who is a qualifying child below), or
If you do not have a qualifying child, you must:
be age 25 but under 65 at the end of the year,
live in the United States for more than half the year, and
not qualify as a dependent of another person.
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Of course the EIC only applies to couples who file jointly.

And single parent head of households. . .

Ishtar
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<<My mortgage deduction is just as much welfare. There's no difference between it and the EITC. It's all just monkeying around with tax rates based on what is supposedly a benefit to society. Calling it welfare just means, "I don't happen to like this tax credit.">>


The EITC is a welfare program administered by the IRS.

The mortgage interest deduction is a subsidy for buying a house, which usually reduces taxes that would otherwise be owed.


There's a big difference between paying out money to people and reducing the amount of taxes that people owe.


Sorry if you can't appreciate the difference.

There is a good argument for eliminating the mortgage interest deduction. Good luck on getting that through the Congress, though.



Seattle Pioneer
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It absolutely is paying money out to people to get a mortgage deduction. There's no logical reason for it to exist. The US has just decided that people who buy houses should get a subsidy from the government. I happen to think it's ridiculous, but there you go.
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Good point, Jeanwa. I forgot that single parents can file for it as well. Thanks for the clarification!

LWW
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It absolutely is paying money out to people to get a mortgage deduction. There's no logical reason for it to exist. The US has just decided that people who buy houses should get a subsidy from the government. I happen to think it's ridiculous, but there you go.

I agree with Gingko. It's extra money in my pocket for no reason other than the gov't thinks it's good for people to own homes.

Money is fungible. It doesn't matter if it comes from taxes I paid or taxes I didn't pay, it's money that I'm getting for no reason other than I own a house. The tax system is just how the gov't chooses to handle it, they could also mail me a check every year, separate from my taxes, if it was some fixed percentage of what I pay in mortgage interest or however they wanted to calculate it.


--Booa (mostly bought a house because of the $8k incentive and prices were low--too good a combo to pass up.)
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<<I agree with Gingko. It's extra money in my pocket for no reason other than the gov't thinks it's good for people to own homes.

Money is fungible. It doesn't matter if it comes from taxes I paid or taxes I didn't pay, it's money that I'm getting for no reason other than I own a house. >>


You guys are OUT OF YOUR MINDS if you can't distinguish between getting more back in income tax refunds than you paid in and not paying as large a tax bill as you otherwise would have to pay.

Less than half the households in the United States pay ANY income taxes, and of those a substantial number get a payment from the government courtesy of the EITC.


If you want to oppose the mortgage tax deduction --- help yourself. I don't think it's a very good portion of the tax code. Good luck in fighting all the real estate agents and beneficiaries of the tax deduction.

It has no meaningful connection with the EITC.

And incidentally, you don't get it just because you own a house, and it has a variety of pretty substantial restrictions on it these days.



Seattle Pioneer
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"Public employees these days are privileged to have ANY pension plan, let alone ones with abusive provisions that unreasonably pump up benefits."

I've been a Federal employee for 31 years, paying approx. 8% of every paycheck into the Civil Service Returement System (CSRS.) I am not aware of any changes/increases to the basic CSRS benefits occuring any time during that 31 year period.
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You know that before the 19th century, many countries had debtors prisons, going back to ancient Greece, right?

They didn't exist because no one had debt.

Ishtar

Well, in England (and not sure where else) they took the debtors, put them on ships, and sent them to America / Australia.

joycets
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A rather large number of those people getting those tax refunds are getting them not because they overpaid their taxes, but because they are getting a welfare benefit through the Earned Income Tax Credit.

SP

SP, I think I won't be getting my Earned Income Tax Credit any more because next time we do Taxes I'll be completely on my state pension instead of the little bit of money I was earning.

joycets
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PS (to SP):
Owned houses since 1980, Never had a use for the mortgage interest deduction because we never bought that much house. Sold one at a loss but glad to be out of it.

joycets
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