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Allan C. Brownfeld

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby (Council for Inter-American Security). He has been a staff aide to a U.S. Vice President, Members of Congress, and the U.S. Senate Internal Security Subcommittee. He is associate editor of The Lincoln Review and a contributing editor to such publications as Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

A Growing and Largely Ignored Crisis: Public Pension Funds Are Running Out of Money

There is now a $1 trillion gap as of fiscal 2008 between what states had promised to public employees in retiree pensions, health care, and other benefits and the money they currently have to pay for it, according to a Pew Center on the States study. Some economists say that Pew is too conservative and that the problem is two or three times as large.

Roger Lowenstein, an outside director of the Sequoia Fund and author of While America Aged, points out that:

For years, localities and states have been skimping on what they owe. Public pension funds are now massively short of the money to pay future claims -- depending on how their liabilities are valued, the deficit ranges from $1 trillion to $3 trillion. Pension funds subsist on three revenue streams: contributions from the employer; contributions from the employees; and investment earnings. But public employees have often contributed less than the actuarially determined share, in effect borrowing against retirement plans to avoid having to cut budgets or raise taxes.

Pension funds, Lowenstein notes, also assumed that they could count on high annual returns, typically 8 percent, on their investments.

In the past, many funds did earn that much, but not lately. Thanks to high assumed returns, governments projected that they could afford to both ratchet up benefits and minimize contributions. Except, of course, returns were not guaranteed. Optimistic benchmarks, actually heightened the risk because they forced fund managers to overreach.

Consider the case of Massachusetts. The target of its pension board was 8.25 percent. "That was the starting point for all of our investment decisions," says Michael Travaglini, until recently its executive director. "There was no way a conservative strategy is going to meet that."

Lowenstein notes:

Travaglini put a third of the state's money into hedge funds, private equity, real estate, and timber. In 2008, assets fell 29 percent. New York State's fund, which is run by the comptroller, Thomas DiNapoli, a former state assemblyman with no previous investment experience, lost $40 billion in 2008.

In October, a report issued by the Empire Center for New York State Policy, a research organization that studies fiscal policy, reports that the cities, counties, and authorities of New York have promised more than $200 billion worth of health benefits to their retirees while setting aside almost nothing, putting the pubic work force on a collision course with the taxpayers who are expected to foot the bill.

Lowenstein notes:

The Teacher's Retirement System of Illinois lost 22 percent in the 2009 fiscal year. Alexandra Harris, a graduate journalism student at Northwestern University who investigated the pension fund, reported that it invested in credit-default swaps on A.I.G., the State of California, Germany, Brazil, and "a ton" of subprime mortgage securities.

According to Joshua Rauh of the Kellogg School of Management at Northwestern, assuming states make contributions at recent rates and assuming they do earn 8 percent, 20 state funds will run out of cash by 2025. Illinois, the first, will run dry by 2018.

In a new report issued by Professor Rauh and Robert Novy-Marx, a University of Rochester professor, five major cities -- Boston, Chicago, Cincinnati, Jacksonville, and St. Paul -- are said to have pension assets that can pay for promised benefits only through 2020. Philadelphia, according to the report, has assets on hand that can only pay for promised benefits through 2015.

Professor Rauh declares that:

We need fundamental reform of the ways employees in the public sector are compensated. It is not feasible to make promises of risk-free pensions when in the private sector (nearly) everyone has to share some of the risk.

In Roger Lowenstein's view, states need to cut pension benefits:

About half have made modest trims, but only for future workers. Reforming pensions is painfully slow, because pensions of existing workers are legally protected. But public employees benefit from a unique notion that, once they have worked a single day, their pension arrangement going forward can never be altered. No other American enjoy such protections. Private companies often negotiate (or force upon their workers) pension adjustments. But in the world of public employment, even discussion of cuts is taboo.

The market forced private employers like General Motors to restructure retirement plans or suffer bankruptcy. Government's greater ability to borrow enables it to defer hard choices but, as Greece discovered, not even governments can borrow forever. The days when state officials may shield their workers while subjecting all other constituents to hardship are fast at an end.

Recently, some states have begun to test the legal boundary. Minnesota and Colorado cut cost-of-living adjustments for existing workers' pensions. Each now faces a lawsuit.

In Colorado, in what many have called an act of political courage, a bipartisan coalition of state legislators passed a pension overhaul bill. Among other things, the bill reduced the raise that people who are already retired get in their pension checks each year. "We have to take this on, if there is any way of bringing fiscal sanity to our children," said former Governor Richard Lamm, a Democrat. "The New Deal is demographically obsolete. You can't fund the dream of the 1960s on the economy of 2010."

In Colorado, the average public retiree stops working at 58 and receives a check of $2,883 each month. Many of them also got a 3.5 percent annual raise, no matter what inflation was, until the rules changed this year.

Discussing the Colorado case in The New York Times, Ron Lieber notes that:

Private sector retirees who want their own monthly $2,883 check for life, complete with inflation adjustments, would need an immediate fixed annuity if they don't have a pension. A 58-year-old male shopping for one from an A-rated insurance company would have to hand over a minimum of $860,000, according of Craig Hemke of A woman would need at least $928,000 because of her longer life expectancy. Who among aspiring retirees has a nest egg that size, let alone people with the same moderate earning history as many state employees? And who wants to pay to top off someone else's pile of money via increased income taxes or a radical decline in state services?

"We have to do what unions call givebacks," said Mr. Lamm, the former Colorado governor. "That's the only way to sanity. Any other alternative, therein lie dragons."

Americans were quite properly shocked when it was revealed that the Los Angeles blue-collar suburb of Bell, California, was paying its city manager Robert Rizzo $787,637 a year -- with 12 percent annual pay increases. In July, Rizzo, along with Police Chief Randy Adams and Assistant City Manager Angela Spaccia resigned. The combined annual salary of these employees was $1,620,925 in a city where one of every six residents lives in poverty. The city's debt quadrupled between 2004 and 2009.

The Washington Examiner states that:

The likely reason why Rizzo, Adams, and Spaccia resigned so readily is that they are eligible for public pensions. Under current formulations, Adams will make $411,000 annually in retirement and Spaccia could make as much as $250,000, when she's eligible for retirement in four years at age 55. . . . California is but one of many states on the brink of fiscal ruin largely due to outrageous public employee benefits.

While the Bell, California, example may be extreme, the crisis in public employee pension funds across the country is very real -- and must be confronted to avoid massive bankruptcies in the future.

Racial Achievement Gap Is Alarming and Focuses Renewed Attention on the "Culture of Poverty"

An achievement gap separating black from white students has long been documented. But a new report focusing on black males suggests that the picture is bleaker than generally known.

Only 12 percent of black fourth-grade boys are proficient in reading, compared with 38 percent of white boys, and only 12 percent of black eight-grade boys are proficient in math, compared with 44 percent of white boys.

Poverty alone does not seem to explain the differences. Poor white boys do just as well as black boys who do not live in poverty, measured by whether they qualify for subsidized school lunches.

This data comes from national math and reading tests, known as the National Assessment for Educational Progress, which are given to students in fourth and eight grades, most recently in 2009. The report, "A Call for Change," was released in November by the Council of the Great City Schools, an advocacy group for urban public schools.

"What this clearly shows is that black males who are not eligible for free and reduced-price lunch are doing no better than white males who are poor," said Michael Casserly, executive director of the council.

The report shows that black boys on average fall behind from the earliest years. Black mothers have a higher infant mortality rate and black children are twice as likely as whites to live in a home where no parent has a job. In high school, black boys drop out at nearly twice the rate of white boys, and their SAT scores are on average 104 points lower. In college, black men represented just 5 percent of students in 2008.

The search for explanations is looking at causes besides poverty. "There's accumulating evidence that there are racial differences in what kids experience before the first day of kindergarten," said Ronald Ferguson, director of the Achievement Gap Initiative at Harvard. He said:

They have to do with a lot of sociological and historical forces. In order to address those, we have to be able to have conversations that people are unwilling to have.

Those include "conversations about early childhood parenting practices," Dr. Ferguson said.

The activities that parents conduct with their 2, 3, and 4 year-olds. How much we talk to them, the ways we talk to them, the ways we enforce discipline, the ways we encourage them to think and develop a sense of autonomy.

The New York Times reports that:

For more than 40 years, social scientists investigating the causes of poverty have tended to treat cultural explanations like Lord Voldemort: That Which Must Not Be Named. The reticence was a legacy of the ugly battles that erupted after Daniel Patrick Moynihan, then an assistant labor secretary in the Johnson administration introduced the idea of a "culture of poverty" to the public in a startling 1965 report. . . . His description of the black family as caught in an inescapable "tangle of pathology" of unmarried mothers and welfare dependency was seen as attributing self-perpetuating moral deficiencies to black people, as if blaming them for their own misfortune.

Now, after decades of silence, even liberal scholars who were harshly critical of Moynihan's thesis are conceding that culture and persistent poverty are enmeshed.

"We've finally reached the state where people aren't afraid of being politically incorrect," said Douglas S. Massey, a sociologist at Princeton who has argued that Moynihan was unfairly maligned.

In September, Princeton and the Brookings Institution released a collection of papers on unmarried parents, a subject, it noted, that became off limits after the Moynihan report. At the recent annual meeting of the American Sociological Association, attendees discussed the resurgence of scholarship on culture.

In recent years, prominent black Americans have begun to speak out on the subject. In 2004 the comedian Bill Cosby made headlines when he criticized poor blacks for "not parenting" and dropping out of school. President Obama, who was abandoned by his father, has repeatedly talked about "responsible fatherhood."

None of this is new. Repeated studies have shown that the decline of the black family and the decline in graduation rates, student achievement, and employment is clear. A 2002 report from the Institute for American Values, a non-partisan group that studies families, concluded that "marriage is an issue of paramount importance if we wish to help the most vulnerable members of our society: the poor, minorities, and children."

The statistical evidence for that claim is strong. Research shows that most black children, 68 percent, were born to unwed mothers. Those numbers have real consequences. For example, 35 percent of black women who had a child out of wedlock live in poverty. Only 17 percent of married black women overall are in poverty. In a 2005 report, the institute concluded:

Economically, marriage for black Americans is a wealth-creating and poverty-reducing institution. The marital status of African American parents is one of the most powerful determinants of the economic status of African-American families.

Over the past fifty years, the percentage of black families headed by married couples declined from 78 percent to 34 percent. In the thirty years from 1950 to 1980, households headed by black women who never married jumped from 3.8 per thousand to 69.7 per thousand. In 1940, 75 percent of black children lived with parents. By 1990 only 33 percent of black children lived with a mother and father.

"For policymakers who care about black America, marriage matters," wrote the authors of the report, a group of black scholars. They called marriage in black America an important strategy for "improving the well-being of African Americans and for strengthening civil society."

The latest study of the achievement gap separating black and white students should focus attention on the real causes for this problem. Unless a problem is diagnosed properly, it will never be solved. For too long, all discussions of the "culture of poverty" have been silenced with the false charge of "blaming the victim."

In America today, any individual, regardless of race or background, can go as far as his or her abilities will allow. But when doors are opened to all, it still requires hard work and determination to take advantage of these opportunities. Without strong and intact families, these qualities seem to be in short supply. How to rebuild such families should be the focus of increasing attention.

NPR and Juan Williams: the Peril of Speaking Honestly in an Era of Political Correctness

Juan Williams, a respected journalist and ten-year veteran of National Public Radio (NPR) was fired in October as a top news analyst for remarks he made about Muslims during an appearance on Fox News.

In a segment with Fox News talk-show host Bill O'Reilly, Williams acknowledged feeling "nervous" in the wake of the September 11 attacks when he sees Muslims board a plane on which he is traveling.

He said:

Look, Bill, I'm not a bigot. You know the kind of books I've written about the civil rights movement in this country. But when I get on the plane, I got to tell you, if I see people who are in Muslim garb and I think, you know, they are identifying themselves first and foremost as Muslims, I get worried. I get nervous.

Later, in the same segment, Williams challenged O'Reilly's suggestion that "the Muslims attacked us on 9/11," saying it was wrong to generalize about Muslims in this way just as it was to generalize about Christians, such as Oklahoma City bomber Timothy McVeigh, who have committed acts of terrorism. "There are good Muslims," Williams said later, making a distinction from "extremists."

A former Washington Post reporter and columnist, Williams began his tenure with Fox News in 1997, predating his hiring by NPR three years later. While at NPR, he has hosted the daily program "Talk of the Nation," and commented on its news program, "Morning Edition" and "All Things Considered."

In an interview shortly after being fired, Williams declared:

As a journalist, it's unsupportable that your employer would fire you for stating your honest feelings in an appropriate setting. . . . I think that I am open to being misinterpreted only if you snip one line out of what I said. But I would never guess that people who are professional journalists would just take one line and make me look bigoted so they can use it as an excuse to get rid of me.

Williams was not only fired by NPR, but his mental stability was also questioned. NPR chief executive Vivian Schiller told an audience at the Atlanta Press Club that Williams should have kept his feelings about Muslims between himself and "his psychiatrist or his publicist."

The outcry against Williams' firing has been widespread. Conservatives, of course, were particularly vocal. Leading Republicans, including former Arkansas Governor Mike Huckabee, former Alaska Governor Sarah Palin, political strategist Karl Rove, and House Minority Leader John Boehner of Ohio, released statements attacking the move and questioning why taxpayers should help fund NPR's budget. This, of course, was to be expected.

Many others have also criticized NPR's action. The Washington Post reported that, "Even NPR's own staff expressed exasperation at the decision during a meeting . . . with NPR president Vivian Schiller." Editorially, The Post declared that, "In firing Juan Williams, NPR discourages honest conversation."

In The Post's view:

In a democracy, the media must foster a free and robust political debate, even if such debate may, at times, offend some people. . . . What was Mr. William's sin? He admitted, with apparent chagrin, that he has engaged in a kind of racial profiling in the years since the September 11 attacks. . . . In making this confession, Mr. Williams undoubtedly spoke for many Americans who are wrestling with similar feelings. His words could be offensive to some, if construed as an endorsement of negative stereotyping. But the full broadcast makes clear that Mr. Williams intended the opposite. To be sure, he struggled to get his point across, because host Bill O'Reilly kept interrupting him. But Mr. Williams did manage to observe that "We don't want in America people to have their rights violated, to be attacked on the street because they hear rhetoric from Bill O'Reilly and they act crazy."

The Post concludes:

In short, Mr. Williams was attempting to do exactly what a responsible commentator should do: speak honestly without being inflammatory. His reward was to lose his job, just as Agriculture Department employee Shirley Sherrod lost hers over purportedly racist remarks that turned out to be anything but. NPR management appears to have learned nothing from that rush to judgment. "Political correctness can lead to some kind of paralysis where you don't address reality," Mr. Williams told Mr. O'Reilly. NPR, alas, has proved his point.

T.V. political satirist Jon Stewart criticized the firing of Juan Williams as well as the extremes to which "political correctness" frames what is permissible speech. When CNN commentator Rick Sanchez, complained of Stewart's mocking him on "The Daily Show" he complained of his treatment as a member of a minority group, being a Cuban-American. He was then told by his interviewer that Stewart, being Jewish, was also a member of a minority. Sanchez responded by pointing out that most of those in leadership positions at CNN and other networks were "just like Stewart." He was then fired. Jon Stewart also spoke out against the firing of Sanchez as an example of the extremes to which political correctness have taken us.

Interestingly, there are examples of editing free speech coming from liberals as well. The recipient of this year's Mark Twain Prize for American Humor was Tina Fey. In its broadcast from the Kennedy Center's award ceremony, PBS edited Fey's acceptance speech, in which she mock-praised "conservative women" like Sarah Palin, whom Fey has impersonated on "Saturday Night Live." Fey said that the rise of conservative women in politics is good for all women "unless you don't want to pay for your own rape kit. . . . Unless you're a lesbian who wants to get married to your partner of 20 years. . . Unless you believe in evolution."

That, however, was not what viewers heard when PBS broadcast an edited version of Fey's speech. The part about the rape kits and evolution was gone, leaving only Fey's more harmonious and blander comments about Palin and politics. Was PBS shielding its viewers from Fey's more pointed remarks?

It is unfortunate that our society has fewer and fewer newspapers. It is unfortunate that cable news provides less news and more overheated opinion, both on the right and left. What a free society desperately needs is free and open discussion -- with a variety of viewpoints being heard. Juan Williams has always provided a thoughtful voice, whether or not one agrees with his views. To fire him as NPR has done sends a chilling message to the nation about free speech. Juan Williams, of course, has a new contract with Fox and is doing very well indeed. It is the rest of us who are the losers. *

"No taxes can be devised which are not more or less inconvenient and unpleasant." --George Washington

Read 2308 times Last modified on Saturday, 05 December 2015 10:30
Allan C. Brownfeld

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby(Council for Inter-American Security). He has been a staff aide to a U.S. vice president, members of Congress, and the U.S. Senate Internal Security Subcommittee. He is associate editor of The Lincoln Review, and a contributing editor to Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

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