LinkSwarm for January 6, 2017

January 6th, 2017

The James Quintero interview on Texas municipal pensions generated a lot of interest, including a piece on Zero Hedge. I mention it here because, being Zero Hedge, the firehose nudged it to page 2 before I could even take a look at it.

  • It turns out that the FBI never examined the “hacked” DNC servers”. Indeed, the DNC denied the FBI permission to examine the server. “The bureau tells Buzzfeed News that the Democrats’ organization reportedly ‘rebuffed’ multiple requests for physical access to the hacked servers, forcing investigators to depend on the findings of the third-party security firm CrowdStrike (which the DNC contacted after the hack).” (“Your honor, instead of the FBI crime lab testing the alleged cocaine sample, we had Morty’s Fly-By-Night Chemical Analysis and Pet Grooming Company do the analysis. I’m sure you’ll find that’s good enough…”) So how can FBI actually tell the Russians hacked them? Did they even try to get a warrant for the DNC servers? Since that’s one of the first things you would do if you really thought the Russians were behind the hack, and the hack had (by Obama Administration testimony) national security implications. This suggests that the DNC is: A.) Lying about Russian involvement, or B.) Is telling the truth about it, but has material far more illegal and/or damaging than what has already been released. Why should we give more credence to allegations that the FBI hasn’t even taken the most basic steps of criminal investigation to prove?
  • President-elect Donald Trump has told the Department of Homeland Security to start getting ready to build the border wall. Remember, the construction of 700 miles of border wall is already authorized by the Secure Fence Act of 2006. All it takes is Presidential will to have work started on it. (Hat tip: Director Blue.)
  • “For Me, Obamacare Means Paying All Your Own Bills And Never Getting The Doctor You Need.” (Hat tip: Director Blue.)
  • A look back at all those Obama Administration scandals that Valerie Jarrett can’t remember. (Hat tip: Director Blue.)
  • Liberal strategy for 2016 election: “1) Make sure the GOP nominates Trump 2) ??? 3) Victory!”
  • John Podesta’s password was ‘password.'” What a tragedy it is that we kept the Democratic Party’s best and brightest out of the White House… (Hat tip: Borepatch.)
  • Reporters who colluded with the Clinton campaign? Not only did they not get fired, some got better jobs. (Hat tip: Stephen Green at Instapundit.)
  • “If you thought 2016 was packed full of liberal foolishness, just wait until you get a load of 2017. As 2016 ends, progressives enter the new year terrified that Donald Trump will continue to run circles around them, and their epic meltdown is only going to get more epically meltdownier. They’ve been shrill, stupid, and annoying for the last two months, but brace yourself for the next 12. Fear is going to make them go nuts – not the fear that Trump will be a failure, but the gut-wrenching, mind-numbing fear that Donald Trump will be a success.”
  • Which is why Democrats are still in denial. “Republicans control the House, the Senate, 34 governor’s mansions, and 4,100 seats in state legislatures. But Democrats act like they run Washington.” (Hat tip: Stephen Green at Instapundit.)
  • Global warming critic at Georgia Tech resigns tenured position because “growing disenchantment with universities, the academic field of climate science and scientists.”

    The reward system that is in place for university faculty members is becoming increasingly counterproductive to actually educating students to be able to think and cope in the real world, and in expanding the frontiers of knowledge in a meaningful way (at least in certain fields that are publicly relevant such as climate change).

    Snip.

    A deciding factor was that I no longer know what to say to students and postdocs regarding how to navigate the CRAZINESS in the field of climate science. Research and other professional activities are professionally rewarded only if they are channeled in certain directions approved by a politicized academic establishment — funding, ease of getting your papers published, getting hired in prestigious positions, appointments to prestigious committees and boards, professional recognition, etc.

    How young scientists are to navigate all this is beyond me, and it often becomes a battle of scientific integrity versus career suicide (I have worked through these issues with a number of skeptical young scientists).

    (Hat tip: Ace of Spades HQ.)

  • Philadelphia’s new soda tax means that sometimes the price of the tax is more than the soda itself.
  • How the Washington Post pushed a fake “Russians hacked the power grid” story, then silently walked the whole thing back via silent edits. And the media wonder why the public no longer trusts them…
  • And speaking of the Washington Post being staffed with untrustworthy idiots, check out this cover plumping a “women’s rights” march:

  • And speaking of Fake News, the four different types of fake news.
  • Nothing says “delusions of grandeur” quite like New York Governor Andrew Cuomo booking 200 hotel rooms for a Hillary Clinton inauguration for theoretical supporters of his own future presidential run.
  • Speaking of Cuomo, he just commuted the sentence of left-wing cop killer Judith Clark. Clark participated in a Weather Underground robbery where three people, including police officers Waverly Brown and Edward O’Grady, were murdered. Maybe we should start calling him “Cop Killer Cuomo.” Evidently black lives, like that of Brown, don’t matter when they’re cops murdered by white leftwing radicals… (Hat tip: Director Blue.)
  • This just in: Reporting on firearms still sucks.
  • Feminists have very little in common with the women they claim to represent: “Few feminists seem to be married with children, and comparatively few are heterosexual.” (Hat tip: The Other McCain.)
  • Evidently Cuba is just as much a tourist paradise as it is a worker’s paradise. (Hat tip: Instapundit.)
  • Smugglers work across the Texas border to sell their addictive products. Only this time, it’s selling black market Krispy Kreme donuts from El Paso in Juarez… (Hat tip: Dwight.)
  • The time when James “Mad Dog” Mattis skipped dinner so a hungry soldier could eat. (Hat tip: Dwight.)
  • Armed Texas grandma runs off would-be attacker. (Hat tip: Stephen Green at Instapundit.)
  • Sears to sell Craftsman, close 150 stores. In other news, Sears still had stores to close.
  • Skynet conquers Go.
  • World’s largest dog. (Hat tip: Ace of Spades HQ.)
  • Obama Administration Awards Obama Department of Defense Medal for Distinguished Public Service

    January 5th, 2017

    Un. Freaking. Believable:

    On Wednesday, President Obama added another prestigious medal to his Nobel Prize collection when he had Defense Secretary Ash Carter award him with the Department of Defense Medal for Distinguished Public Service.

    Secretary Carter awarded his boss with the medal on January 4 during the Armed Forces Full Honor Farewell Review for the President held at Conmy Hall, Joint Base Myer-Henderson Hall in Virginia.

    Carter insisted that the medal was a token of appreciation for Obama’s service as commander in chief, the Associated Press reported.

    There are two possibilities: Either Obama ordered them to do this, because he has the biggest ego in the world, or the DoD came up with this on their own, and Obama didn’t have the good sense to decline the obvious wrongheaded flattery, because he has the biggest ego in the world.

    If The Onion had published this as a parody, people would complain it was too unsubtle. I’m sure he feels the “World’s Greatest Boss” mug he ordered his staff to buy him was also richly earned.

    For people who think that Donald Trump has the biggest ego in the world: Have you seen who he’s replacing?

    (Hat tip: BigGator5’s Twitter feed.)

    (PS: And yes, George W. Bush should have had the good sense to turn it down as well. A Distinguished Public Service Medal shouldn’t be handed out like a retirement watch…)

    MD Anderson Announces Layoffs

    January 5th, 2017

    Well, this is a bad economic indicator for the Houston area:

    Financially ailing MD Anderson Cancer Center will announce today it will cut its workforce by 5 percent through layoffs and retirements.

    Dan Fontaine, Anderson’s chief financial officer, confirmed Thursday morning a little less than 1,000 of the staff of 2o,000 [sic] will be leaving the world-renowned cancer hospital. Some of those people are expected to volunteer to retire, he said.

    Dr. Ronald DePinho, president of the cancer center, Fontaine and other officials set a press conference today to announce the workforce reduction.

    Anderson officials said before Christmas they were considering staff cutbacks as the Houston cancer hospital tries to shore up its finances. During the September-through-November quarter, Anderson posted $110 million in operating losses.

    Officials said in the advisory MD Anderson’s long-term financial health remains strong. Last month, officials said the operating budget is an important indicator of the cancer hospital’s ability to be self-sufficient, but it doesn’t take into account other revenue streams like state funding, charitable gifts and investement [sic] income. At that time, officials said Anderson has $2.8 billion in cash on reserve.

    Snip.

    Other factors also are at play, Fontaine said, including patients’ higher insurance deductibles and a shrinking number of insurers willing to pay for MD Anderson’s expensive cancer treatments.

    Belt-tightening measures already are paying off, he said, noting that the $9 million operating loss in November was far smaller than the $102 million in losses recorded in September and October. Those losses followed seven months of operating losses to end fiscal 2016.

    MD Anderson is one of the premier cancer centers in the world, and my father received treatment there during his terminal illness. I wonder if the relentless cost-cutting required by ObamaCare was a contributing factor, as MD Anderson has been dropped by all ObamaCare plans.

    Also, the folks at the Houston Chronicle should have their proofreaders do a better once-over for breaking stories. Those two typos I’ve noted [sic] for should have been caught…

    Clinton Corruption Update for January 4, 2017

    January 4th, 2017

    Sure, the election is over, but Hillary Clinton’s crooked deeds weren’t magically washed away when she was defeated, and no one involved in the many corrupt organizations doing her bidding (the Clinton Foundation, the Clinton Global Initiative, the DNC, the New York Times, etc.) has been brought to justice for their corruption.

    So let’s take a look at developments in the Clinton Corruption story since the election:

  • First, the Preet Bharara investigation of the Clinton Foundation is still ongoing.
  • Is the Clinton Foundation having trouble raising money?
  • More on the same subject.
  • Heh:

    As someone who had his assertions (that the Clintons enriched themselves around the Clinton Foundation) called “outrageous” by a liberal pundit on a CNN panel, I have a challenge for CNN and that liberal pundit, Bill Press. I will give $1000 to the Clinton Foundation for every million dollars raised beyond their last official filing of $330 million in donations that year, if he will give to my foundation $1,000 for every million dollars less than $330 million the Clintons raise in future years.

  • With the MSM pushing (then backing away from) the “Russia hacked all the things!” talking point, it’s important to remember that Hillary had friendly (and profitable) dealings with Putin and his cronies.
  • Speaking of the Russians, James Freeman has more (WSJ hoops apply) on the Clinton/Putin/Podesta connection:

    Hillary Clinton campaign chairman John Podesta has responded to the WikiLeaks publication of his private emails by suggesting they were stolen by the Russians to elect Donald Trump. What he doesn’t like to talk about is the business he’s done with a Kremlin-backed investment firm and the lengths he’s gone to avoid scrutiny of this relationship.

    “Clinton Cash” author Peter Schweizer and the Trump campaign have been urging the media to pay attention to Mr. Podesta’s Russian connection and perhaps they should. The story begins in 2011 when the solar energy startup Joule Unlimited announced that Mr. Podesta had been elected to its board of directors. In a company press release, Joule’s CEO at the time lauded Mr. Podesta’s “extensive experience within the US government and internationally as well.” No one claimed Mr. Podesta was a scientific expert, but the company’s founder expressed the hope that their new associate “can help Joule build the lasting relationships needed for long-term success.”

    A former White House chief of staff for President Bill Clinton, Mr. Podesta at the time was running the Center for American Progress, which supported the Obama administration’s “Russian reset.” Mr. Podesta personally lauded the effort to “build a more constructive relationship” with Russia at a 2009 event hosted by his think tank.

    Mr. Podesta certainly seems to have made the effort to build a business relationship. About eight months after Mr. Podesta joined Joule in 2011, an investment fund backed by the Russian government, Rusnano, announced plans to invest about $35 million in the company. Several months later, Joule announced that Rusnano Chairman Anatoly Chubais was joining its board of directors. Around the same time, Mr. Podesta joined Secretary of State Hillary Clinton’s Foreign Affairs Policy Board.
    Morning Editorial Report.

    Read the whole thing for details of the shell game Podesta used to pretend he wasn’t involved with Joule when he worked for the Obama White House, then the Clinton campaign.

  • And while on the subject of Podesta’s ties to Russia, don’t forget that he was also a registered lobbyist for Vladimir Putin’s Sberbank
  • I missed this from mid-2016: How Hillary Clinton Mainstreamed Al-Qaeda Fundraiser Abdurahman Alamoudi:

    Right now, prisoner #47042-083, Abdurahman Alamoudi, sits in his cell in a federal prison in Ashland, Kentucky.

    It’s a long way down from being one of Hillary Clinton’s favorite colleagues. Alamoudi organized White House events during the Bill Clinton administration. Under Hillary’s supervision, he held official positions: Alamoudi was strategically placed at the White House, the Pentagon, and the State Department.

    That is, until he was arrested and convicted in a bizarre Libyan intelligence/al-Qaeda assassination plot to kill the Saudi crown prince.

    Later, he was identified by the Treasury Department as an Al-Qaeda fundraiser who had operated inside the United States.

  • Judicial Watch wins yet another appeal over Hillary’s missing emails:

    The U.S. Court of Appeals for the District of Columbia Circuit made a ruling this week in a JW case that would require Secretary of State John Kerry to seek the help of the attorney general in recovering additional Hillary Clinton emails. This means that Clinton email issue will be squarely before the Trump administration, as I highlight in our statement to the press:

    Today’s appeals court ruling rejects the Obama State Department’s excuses justifying its failure to ask the attorney general, as the law requires, to pursue the recovery of the Clinton emails. This ruling means that the Trump Justice Department will have to decide if it wants to finally enforce the rule of law and try to retrieve all the emails Clinton and her aides unlawfully took with them when they left the State Department.

    The appellate ruling reverses a decision in which the District Court declared “moot” a Judicial Watch’s lawsuit challenging the failure of Secretary of State John Kerry to comply with the Federal Records Act (FRA) in seeking to recover the emails of former Secretary of State Hillary Clinton and other high level State Department officials who used non-“state.gov” email accounts to conduct official business (Judicial Watch, Inc. v. John F. Kerry (No. 16-5015)).

    According to the FRA, if an agency head becomes aware of “any actual, impending, or threatened unlawful removal . . . or destruction of [agency] records,” he or she “shall notify the Archivist . . . and with the assistance of the Archivist shall initiate action through the Attorney General for the recovery of [those] records.” Kerry refused to do this, and we sued. The lower court decided Kerry had done enough. The appeals court panel disagreed:

    Given the speed the federal judiciary works at, the chances the Obama Administration will be able to bury the case before the Trump Administration takes over would appear to be dim…

  • How Clinton staffers Jennifer Palmieri and Jake Sullivan were hip deep in the electoral college shenanigans.
  • Corruption has consequences.”
  • For the historical record: the full FBI warrant on Anthony Weiner’s laptop.
  • “Julian Assange accuses ‘corrupt’ US media of ‘COLLUDING’ with Clinton against Trump.” Is there anyone except Democratic Party toadies that don’t believe the media colluded with Clinton against Trump?
  • Paul Ryan Reelected Speaker

    January 3rd, 2017

    Rep. Paul Ryan has been reelected Speaker of the House:

    As expected, Republican Paul D. Ryan of Wisconsin on Tuesday was elected speaker of the House for the 2017-2018 congressional term. The final vote was 239-189, with five lawmakers not voting for either Ryan or Democratic Leader Nancy Pelosi of California.

    There were issues with Ryan’s speakership (as there were with all his Republican predecessors), but with Republicans in control of all three branches of government, Ryan should be able to implement vastly more of the Republican agenda than they did under Obama. Ryan needs to enable Trump when he’s acting to implement conservative policies, and provide a check on him when he isn’t.

    First order of business: Repealing ObamaCare. Second order: Junking as much of the remaining cruft of the Obama Administration as possible. Third order: Securing the border and staying the hell away from the siren song of “comprehensive immigration reform” that so many establishment Republicans still harbor a suicidal longing for.

    There’s a hundred other things that need attending to (including doing something about the budget deficit), but the damage of the Obama years will not be undone overnight…

    Interview with TPPF’s James Quintero on the Texas Municipal Pension Debt Crisis

    January 2nd, 2017

    James Quintero, the Director of the Center for Local Governance at the Texas Public Policy Foundation, was kind enough to provide some detailed answers to questions I sent him about the municipal pension crisis in Dallas and other large Texas cities. My questions are in italics.


    The Dallas police/fireman’s pension fund issue is generally described as stemming from the fund manager’s risky real estate speculation. Are there any additional structural problems that helped hasten that fund’s crisis?

    When it comes to Texas’ public retirement systems, one of my greatest concerns is that there are other ticking time-bombs, like the DPFP, out there getting ready to explode. It’s not just Dallas’ pension plan that’s taken on excessive risk to chase high yield in a low-yield environment.

    Setting aside the issue of risk for a moment, the DPFP, like most other public retirement systems around the state, suffers from a fundamental design flaw. That is, it’s based on the defined benefit (DB) system, which guarantees retirees a lifetime of monthly income irrespective of whether the pension fund has the money to make good on its promises or not. This kind of system is akin to an entitlement program, warts and all, and is very much at the heart of pension crises brewing in Texas and across the country.

    One of the biggest problems with DB plans is that they rely on a lot of fuzzy math to make them work, or at least give the appearance of working. Take the issue of investment returns, for example. Many systems assume an overly optimistic rate of return when estimating a fund’s future earnings. Baking in these rosy projections is, among other things, a way to understate a plan’s pension debt. In an October 2016 study that I co-authored with the Mercatus Center’s Marc Joffe, I wrote the following to illustrate this very point:

    For example, the Houston Firefighters’ Relief and Retirement Fund (HFRRF) calculates its pension liability using a long-term expected rate of return on pension plan investments of 8.5%. During fiscal year 2015, the plan’s investments returned just 1.53%. Over a 7- and 10-year period the rates of return were 6.4% and 7.9%, respectively. Not achieving these investment returns year-after-year can have a dramatic fiscal impact.

    Even a small change in the actuarial assumptions can have major consequences for the fiscal health of a pension fund. According the HFRRF’s 2015 Comprehensive Annual Financial Report, a 1% decrease in the current assumed rate of return (8.5%) would almost double the fund’s pension liabilities, from $577.7 million to $989.5 million.

    So while risky real estate deals were certainly a catalyst in the current unraveling of the DPFP, I suspect that its refusal to move away from the defined benefit model and into a more sustainable alternative—much like the private sector has already done—would have ultimately led us to this same point of fiscal crisis.

    To what legal extent (if any) is Dallas police/fireman’s pension fund backstopped by the City of Dallas and/or Dallas County?

    Let me preface this by saying that I’m not a lawyer nor do I ever intend to be one. However, Article XVI, Section 66 of the Texas Constitution plainly states that non-statewide retirement systems, like DPFP, and political subdivisions, like the city of Dallas, “are jointly responsible for ensuring that benefits under this section are not reduced or otherwise impaired” for vested employees. Given that, it’s hard to see how the city of Dallas—or better yet, the Dallas taxpayer—isn’t obligated in some major way when their local retirement system reaches the point of no return, which may be a lot closer than people think given all the lump-sum withdrawals of late.

    Likewise, does the state of Texas have any statutory backstop to the Dallas police/fireman’s pension fund, or any other local pension funds?

    For non-statewide plans, I don’t believe so. Again, I’m not a lawyer, but the Texas Attorney General wrote something fairly interesting recently touching on aspects of this question.

    In September 2016, House Chairman Jim Murphy asked the AG to opine on “whether the State is required to assume liability when a local retirement system created pursuant to title 109 of the Texas Civil Statutes is unable to meet its financial obligations.” Title 109 refers to 13 local retirement systems in 7 major metropolitans that are a small-but-important group of plans that have embedded some of their provisions in state law (i.e. benefits, contribution rates, and composition of their boards) I’ve written a lot about this problem in the past (read more about it here).

    In response to Chairman Murphy’s question, the AG had this to say:

    In no instance does the constitution or the Legislature make the State liable for any shortfalls of a municipal retirement system regarding the system’s financial obligations under title 109. The Texas Constitution would in fact prohibit the State from assuming such liability without express authorization.

    …a court would likely conclude that the State is not required to assume liability when a municipal retirement system created under title 109 is unable to meet its financial obligations.

    So at least in the AG’s opinion, state taxpayers wouldn’t be required by law to bail out this subset of local retirement systems. But of course, the political calculus may be different than what’s required by law.

    Compared to the Dallas situation, how badly off are the Houston, Austin and San Antonio public employee pension funds?

    If you’re a taxpayer or property owner in one of Texas’ major cities, I’d be concerned. Moody’s, one of the largest credit rating agencies in the U.S., recently found that: “Rapid growth in unfunded liabilities over the past 10 years has transformed local governments’ balance sheet burdens to historically high levels,” and that Austin, Dallas, Houston, and San Antonio had a combined $22.6 billion in pension debt—and it’s growing worse!

    Using the Pension Review Board’s latest Actuarial Valuations Report for November 2016, we can parse the systems within each municipality to get a little bit better sense of where the trouble lies. Pension debt for the retirement systems in the big 4 looks like this:

  • Austin Employees’ Retirement System: $1.1 billion, Austin Police Retirement System: $346 M, and Austin Fire Fighters Relief and Retirement Fund: $93 M;
  • Dallas Employees’ Retirement Fund: $809 M, Dallas Police and Fire Pension System—Combined Plan: $3.3 B, and Dallas Police and Fire Pension System—Supplemental: $23 M;
  • Houston Municipal Employees Pension System: $2.2 B, Houston Firefighters’ Relief and Retirement Fund: $467 M, and Houston Police Officer’s Pension System: $1.2 B; and
  • San Antonio Fire and Police Pension Fund: $360 M.
  • Of course, it’s important to keep in mind that the figures use some of the same fuzzy math as described above, so the actual extent of the problem may be worse than the PRB’s latest figures indicate.

    What similarities, if any, are there to current Texas municipal pension issues and those that forced California cities like San Bernardino, Stockton and Vallejo into bankruptcy? What differences?

    The common element in most, if not all, of these systemic failures is the defined benefit pension plan. Because of the political element as well as the inclusion of inaccurate investment assumptions in the DB model, these plans are almost destined to fail, threatening the taxpayers who support it and the retirees who rely on it. And sadly, that’s what we’re witnessing now across the nation.

    As far as the differences go, California’s municipal bankruptcies as well as Detroit’s were preceded by decades of poor fiscal policy and gross mismanagement. I don’t see that same thing here in Texas, but it’s also important that we don’t let it happen too.

    California pensions were notoriously generous (20 years and out, spiking, etc.). Do any Texas state or local pensions strike you as unrealistically generous?

    Any plan that’s making pension promises but has no plan on how to make good on those promises is being unrealistically generous. And unfortunately for taxpayers and retirees alike, a fair number of plans can be categorized as such.

    The Pension Review Board’s Actuarial Valuations Report for November 2016 reveals that of Texas’ 92 state and local retirement system, only 4 of them are fully-funded. At the other extreme, a whopping 19 of the 92 plans have amortization periods of more than 40 years. Six of those 19 plans have infinite amortization periods, which effectively means that they have no plan to keep their promises but are instead planning to fail.

    As far as specific plans go, there’s no question that the Dallas Police and Fire Pension System is the posterchild for the overly generous. The Dallas Morning News recently covered the surreal levels of deferred compensation offered, finding that:

    The lump-sum withdrawals come from the Deferred Retirement Option Plan, known as DROP. The plan allows veteran officers and firefighters to essentially retire in the eyes of the system and stay on the job.

    Their benefit checks then accrue in DROP accounts. For years, the fund guaranteed interest rates of at least 8 percent. DROP made hundreds of retired officers and firefighters millionaires. And once they stopped deferring the money, they received their monthly benefit checks in addition to their DROP balance. [emphasis mine]

    It’s probably fair to say that any public program that makes millionaires out of its participants is probably being too generous with its benefits.

    There seem to be only two recent local government bankruptcies in Texas, neither of which were by cities: Hardeman County Hospital District Bankruptcy and Grimes County MUD #1. Did either of these involve pension debt issues?

    I’m not familiar with those instances, but when it comes to the issue of soaring pension obligations, I can tell you that the system as a whole is moving in bad direction.

    In November 2016, Texas’ 92 state and local retirement systems had racked up over $63 billion dollars of unfunded liabilities, with more than half owed by the Teacher Retirement System. That’s a staggering amount of pension debt that’s not only big but growing fast. And worse yet, that’s in addition to Texas’ already supersized local government debt-load.

    How we’re going to make good on all of these unfunded pension promises is anyone’s guess. But I imagine that it’ll involve some combination of much higher taxes, benefit reductions, and fewer city services.

    What limits or constraints does Texas place on Chapter 9 bankruptcy?

    The Pew Charitable Trusts’ Stateline has some good information on this, at least as far as municipal bankruptcy is concerned. A November 2011 report, Municipal Bankruptcy Explained: What it Means to File for Chapter 9, had this to say about the process:

    Who can file for Chapter 9? Only municipalities — not states — can file for Chapter 9. To be legally eligible, municipalities must be insolvent, have made a good-faith attempt to negotiate a settlement with their creditors and be willing to devise a plan to resolve their debts. 

They also need permission from their state government. Fifteen states have laws granting their municipalities the right to file for Chapter 9 protection on their own, according to James Spiotto, a bankruptcy specialist with the Chicago law firm of Chapman and Cutler. Those states are Alabama, Arizona, Arkansas, California, Idaho, Kentucky, Minnesota, Missouri, Montana, Nebraska, New York, Oklahoma, South Carolina, Texas and Washington. 

    Hopefully this is a process that can be avoided entirely, but given the fiscal condition of the DPFP and potentially a few other systems, I’m not sure that’ll be the case.

    Next to Dallas, which municipal pensions would you say are in the worst shape?

    I’m most concerned about the local retirement systems in Title 109. The reason, again, is that these 13 local retirement systems are effectively locked into state law and there’s little that taxpayers or retirees in those communities can do to affect good government changes without first going to Austin. These systems have basically taken a bad situation and made it worse by fossilizing everything that counts.

    In the Texas Public Policy Foundation’s 2017-18 Legislator’s Guide to the Issues, I cover this issue in a little more detail. In the article (see pgs. 122 – 124), I write of these plans’ fiscal issues which can be seen below, albeit with slightly older data.

    texaspensiondebtchart

    (Funded ratios marked in red denote systems that are below the 80% threshold, signifying a plan that may be considered actuarially unsound. Source: Texas Bond Review Board.)

    The fact that these systems either are in or are headed for fiscal muck is a big reason why the Texas Public Policy Foundation is helping to educate and engage on legislation that would restore local control of these state-governed pension plans. People on the ground-level should have some say over their local plans, and that’s what we’ll be fighting for next session. Encouragingly, a bill’s already been filed in the Senate (see SB 152) and there should be legislation filed shortly in the House to do just that.

    Should Texas government agencies switched over to defined contribution (i.e. 401K) plans over standard pension plan, and if so, how might this realistically be accomplished without endangering existing retirees?

    ABSOLUTELY. Ending the defined benefit model and transitioning new employees into something more sustainable and affordable, like a defined contribution system, is one of the best things that the state legislature can do. This is something I’ve long been an advocate of.

    In fact, in early 2011, I played a very minor role in the publication of some major research spearheaded by Dr. Arthur Laffer, President Ronald Reagan’s chief economist, that advanced this same reform idea (see Reforming Texas’ State & Local Pension Systems for the 21st Century). I’ve also written a lot about the need to make the DC-switch, making the case recently in Forbes that:

    DC-style plans resemble 401(k)s in the private sector and the optional retirement programs (ORP) available for higher education employees in Texas. These DC-style plans put the power of an individual’s future in their own hands instead of depending on the good fortune of government-directed DB-style plans. DC-style plans are portable and sustainable over the long term as they are based on the contributions of retirees and a defined government match.

    With DC-style plans, retirees will finally have the opportunity to determine how much risk they are willing to take. They also reduce the risk that the government will default on their retirement or fund those losses with dollars from taxpayers who never intended to use these pensions. By giving retirees more freedom on how to best provide for their family, they will be in a much better position to prosper.

    Because of their efficiency, simplicity and fully funded nature, the private sector moved primarily to DC-style plans long ago. For the sake of taxpayers and retirees dependent on government pensions, it’s time for all governments to move to these types of plans as well.

    As far as dealing with transition costs, some much smarter people than I have written on this issue and found that it’s not as big of a challenge as it’s made out to be. Dr. Josh McGee, a vice president with the Laura and John Arnold Foundation, a senior fellow with the Manhattan Institute, and Chairman of the Pension Review Board, had this to say about the matter:

    Moving to a new system would have little to no effect on the current system. State and local pensions are pre-funded systems, and unlike Social Security, the contributions of workers today do not subsidize today’s retirees. Future normal cost contributions are used to fund new benefit accruals that workers earn on a go-forward basis and are not used to close funding gaps. Therefore, it matters little whether the normal cost payments are used to fund new benefits under the current system or a new system.

    (Source: The transition cost mirage—false arguments distract from real pension reform debates.)

    Another pension expert, Dr. Andrew Biggs with the American Enterprise Institute, published research that found that:

    In this study, I show that if a pension plan were closed to new hires, over time the duration of liabilities would shorten, and the portfolio used to fund those liabilities would become more conservative. However, the effects of these transition costs are so small as to be barely perceptible.

    (Source: Are there transition costs to closing a public-employee retirement plan?)

    I’m confident that with the right plan in place, Texas’ state and local retirement systems can make the switch to defined contribution and we’ll be all the better for it.


    Thanks to James Quintero for providing such a detailed analysis!

    And since we’re on the topic, here’s a roundup of news on the Dallas Police and Fireman’s pension fund crisis:

  • The Texas Rangers have launched a criminal probe into the shortfall.
  • City Journal offers details on the unreasonable generosity of the Dallas plan (which covers some of the same DROP issues Quintero mentions):

    Dallas created the police and fire plan in 1916. The system’s trustees eventually persuaded the state legislature to allow employees and pensioners to run the plan. Not surprisingly, the members have done so for their own benefit and sent the tab for unfunded promises—now estimated at perhaps $5 billion—to taxpayers. Among the features of the system is an annual, 4 percent cost-of-living adjustment that far exceeds the actual increase in inflation since 1989, when it was instituted. A Dallas employee with a $2,000 monthly pension in 1989 would receive $3,900 today if the system’s annual increases were pegged to the consumer price index. Under the generous Dallas formula, however, that same monthly pension could be worth more than $5,000. No wonder the ship is sinking.

    The system also features a lavish deferment option that lets employees collect pensions even as they continue to work and earn a salary. Moreover, the retirement money gets deposited into an account that earns guaranteed interest. Governments originally began creating these so-called DROP plans as an incentive to encourage experienced employees to keep working past retirement age, which in job categories like public safety can be as young as 50. In Dallas, the pension system gives workers in the DROP plan an 8 percent interest rate on their cash, at a time when yields on ten-year U.S. Treasury notes, a standard for guaranteed returns, are stuck at less than 2 percent. According to the city, some 500 employees working past retirement age have accumulated more than $1 million in these accounts—on top of the pensions that they will receive once they officially stop working.

  • The Dallas Morning News says that there’s plenty of blame to go around:

    Over the years, the Dallas Police and Fire Pension System fund has amassed $2 billion to $5 billion in unfunded liabilities, the result of bad real estate investments and blatant self-enrichment from prior management. Coupled with a possible setback in ongoing litigation over public safety salaries, Dallas is in the most financially precarious position in its history.

    City officials are openly uttering the word bankruptcy, not just of the pension fund but the city itself. As Mayor Mike Rawlings told the Texas Pension Review Board this month, “the city is potentially walking into the fan blades that might look like bankruptcy.”

    The state Legislature created this mess by not giving the city a meaningful voice in the fund’s operation and allowing the former board of the pension fund to unilaterally sweeten its membership’s promised benefits without concern to the overall fiscal damage being done. Now it must help the city clean up the mess.

    Dallas already provides nearly 60 percent of its budget to support public safety services and recently contributed $4.6 million to increase its share of pension contributions to 28.5 percent — the maximum allowed under state statute. However, if Dallas loses the lawsuit over salaries and no changes are made to the pension fund, the city could take an $8 billion hit. That is roughly equal to eight years of the city’s general fund budget.

  • That said, the bond market doesn’t seem to think Dallas is near bankruptcy.
  • And it’s not just Dallas:

    Austin, Dallas, Houston and San Antonio collectively face $22.6 billion worth of pension fund shortfalls, according to a new report from credit rating and financial analysis firm Moody’s. That company analyzed the nation’s most debt-burdened local governments and ranked them based on how big the looming pension shortfalls are compared to the annual revenues on which each entity operates.

    “Rapid growth in unfunded pension liabilities over the past 10 years has transformed local governments’ balance sheet burdens to historically high levels,” the report says.

    Chicago had the most dire ratio on the national list. Dallas came in second. According to the report, the North Texas city has unfunded pension liabilities totaling $7.6 billion. That’s more than five times the size of the city’s 2015 operating revenues.

    Both those cities may turn to the public to partially shore up their shortfalls. Houston Mayor Sylvester Turner wants to use $1 billion in bonds to infuse that city’s funds. Dallas police officer and firefighter pension officials also want $1 billion from City Hall, an amount officials there say is too high.

    Meanwhile, Austin ranked 14th on the Moody’s list with unfunded pension liabilities of $2.7 billion. San Antonio ranked 22nd with a $2.3 billion shortfall.

  • Winner Winner Chicken Dinner

    January 1st, 2017

    I’m proud to announce that BattleSwarm Blog has been named to The Fabulous 50 Blog List by Director Blue.

    Quote:

    Best Grassroots Blog
    Lawrence Person’s BattleSwarm: Person’s LinkSwarms extract pure wheat from chaff.”

    Thanks! And there are a lot of other great blogs in the fab 50 list worth checking out.

    Dave Barry 2016 Year in Review

    January 1st, 2017

    Another year gone, another Dave Barry year in review.

    Some of the tastier selections:

    On the Democratic side, Clinton and Sanders are also in a tight and testy battle, although Clinton slowly gains the upper hand thanks to the Democratic Party’s controversial formula for allocating “superdelegates,” which is as follows:

    ▪ 57 percent go to Clintion.
    ▪ The remaining 43 percent also go to Clinton.

    Responding to charges from the Sanders camp that the Democratic National Committee is tipping the scales in Clinton’s favor, chairperson Debbie Wasserman Schultz states that “the DNC is scrupulously neutral in the contest between Secretary Clinton and the senile Commie fart.”

    JUNE: It becomes evident that, barring some highly unlikely political development, the next president of the United States will be either Hillary Clinton or Donald Trump. Meanwhile, the nation is in the grip of a worsening heroin epidemic. Coincidence? You be the judge.

    Speaking of coincidences: Bill Clinton happens to find himself in the same airport as U.S. Attorney General Loretta Lynch, and – as any two people would do if one of them was the nation’s chief law-enforcement officer and the other was married to the subject of a federal investigation – they meet privately aboard Lynch’s Justice Department jet. When word of the meeting leaks out, Lynch assures the press that she and Bill did not discuss the FBI investigation into Hillary’s email, adding, “nor did we inhale.” For her part, Hillary continues to insist that she never emailed anything classified, and even if she did she actually didn’t, besides which so did a lot of other people such as Colin Powell and Harry Truman, and this so-called “scandal” is ancient history from literally years ago that just makes a person sigh and roll her eyes because it is preventing her from fighting for working families while at the same time being a historic woman.

    Internationally, the top story is “Brexit,” the decision by voters in the United Kingdom to leave the European Union. This comes as a big surprise to professional pollsters, who had confidently predicted the opposite result; they enjoy a hearty laugh, then head across the Atlantic to apply their talents to the forthcoming American presidential election.

    On the Democratic side, the month gets off to a rocky start when FBI Director James Comey, announcing the results of the bureau’s investigation, reveals that when Hillary Clinton was secretary of state, her official emails, some including classified material, were basically as secure from prying eyes as a neon beer sign. Nevertheless, Comey says he is recommending that no criminal charges be brought against Clinton, because, quote, “I don’t want to die.”

    With that legal hurdle cleared, relieved Democrats gather in Philadelphia for their convention, which opens, in a bid to placate Sanders delegates, with the ceremonial caning of Debbie Wasserman Schultz. This is followed by several hundred speeches praising Hillary Clinton for the many accomplishments she has achieved, as well as the achievements she has accomplished, while at the same time being, historically, a woman. In her acceptance speech, Clinton calls on Americans “to join with me in building a better world for us and for our children,” adding, “or I will crush you like an insect.”

    Meanwhile, newly released State Department emails cause some people to suggest that the reason a variety of dodgy foreign businesspeople and nations gave millions of dollars to the Clinton Foundation while Hillary Clinton was secretary of state was that they expected – get a load of this wacky right-wing conspiracy theory! – to receive special access to or favors from the U.S. government. Hillary has no choice but to roll her eyes and laugh in a violently unnatural manner at this latest attempt to use these discredited smear tactics to prevent her, a historic and lifelong woman, from fighting for working families as well as working for fighting families.

    Meanwhile the Clinton campaign is dealing with a steady stream of WikiLeaks emails suggesting that the Clinton Foundation is dedicated to humanitarian relief in the same sense that the Soprano family was dedicated to waste management. But this kind of scandal is ho-hum stuff for the Clinton campaign, whose campaign slogan has slowly morphed from “Stronger Together” into “At Least She’s Predictably Corrupt.” As the month wears on and Trump continues to flail away unconvincingly at his alleged groping victims, it appears more and more likely that Clinton has established herself, with just enough voters, as the least-loathsome choice in this hideous, issues-free nightmare of an election.

    And then, just when we thought it could not get any weirder or any worse, we are hit with the mother of all October surprises in the form of the incurable genital wart on the body politic known as Anthony Weiner. While probing Weiner’s laptop (Har!) for evidence of alleged sexting with an underage girl, the FBI reportedly discovers thousands of emails that were sent from or to Hillary Clinton’s private email server, which apparently had a higher internet profile than Taylor Swift. James Comey sends a letter informing Congress that the FBI is taking another look at the email issue. In a display of the intellectual integrity that has made our political class so respected by ordinary citizens, all the Democrats and allied pundits who praised Comey in July as a courageous public servant instantly swap positions with all the Republicans and allied pundits who said he was a cowardly hack. This new development sends the political world into Full Freakout Mode, with cable TV political analysts forced to change their underwear on an hourly basis. Meanwhile millions of critical swing voters switch from “undecided” to “suicidal.”

    Donald Trump is elected president of the United States, unless this turns out to be one of those really vivid dreams, like the one where you’re at the dentist but you’re naked and your dentist is Bette Midler and spiders keep coming out of your mouth.

    Trump’s victory stuns the nation. Not since the darkest days of the Civil War have so many Americans unfriended each other on Facebook. Some even take the extreme step of writing “open letters.” Angry, traumatized protesters cry, march, shout, smash windows, set fires – and that’s just The New York Times editorial board. Leading celebrities who vowed to leave the country if Trump won immediately start making plans to … OK, to not actually leave the country per se, but next time they definitely will and YOU’LL BE SORRY.

    In Washington, Democrats who believed in a strong president wielding power via executive orders instantly exchange these deeply held convictions with Republicans who until Election Day at roughly 10 p.m. Eastern time believed fervently in filibusters and limited government.

    On TV, the professional Explainers, having failed spectacularly to predict what just happened, pause for a period of somber and contrite self-reflection lasting close to 15 minutes before they begin the crucial work of explaining to the rest of us what will happen next.

    Joe Biden lies awake at night, staring at the ceiling.

    In the month’s biggest non-election news, the death of former Cuban leader Fidel Castro is greeted with expressions of sorrow from several dozen world leaders who never had to live under his rule, and tears of happiness from many thousands of Cubans who did.

    Read the whole thing.

    A Video on Millennials

    December 31st, 2016

    I saw this video about the RAND Corporation’s Simon Sinek talking about the problem with millennials, and thought it was interesting enough to post, but not necessarily endorse.

    Some thoughts and caveats:

    1. Categorizing the effects of both “alcohol” and “social media” to just one effect (release of dopamine) is incredibly reductive. Alcohol in particular has very complex effects on a wide variety of neurotransmitters. Analogies this crude rather undermine the points he’s trying to make.
    2. I wonder if anyone has compared the neurochemical effects of using social media to that of (to name three controls) watching TV, talking on a telephone, and playing a video game. (Indeed, I’d suggest a variety of video games, given enough time/money/etc. for the study.) Where are they similar and where do they differ?
    3. I think some of the points he’s making about millennials have some validity, but they’re pretty broad generalizations. I wonder how much is true, and how much is confirmation bias from pandering to my preconceptions.
    4. Not touched on here are what I see as significant differences in the way men and women use social media (especially Facebook).

    Worth watching, even if you don’t agree with everything.

    LinkSwarm for December 30, 2016

    December 30th, 2016

    Welcome to the last LinkSwarm of 2016! I have a lot of bigger posts gestating for next week (including a huge one on Texas’ own municipal pension crisis), so in the meantime, enjoy these:

  • Newt Gingrich on The New York Times on Trump:

    The New York Times is having a hard time understanding President-elect Donald Trump.

    Trumpism is a process and a philosophy of action and leadership so different from the normal Washington systems that the Times just seems incapable of understanding it.

    Furthermore, there is an Orwellian quality of deliberation misinformation and disinformation to the Times’ coverage.

    President-elect Trump IS different. In fact, he is unique. No other American has won the presidency without serving in elected office or being a general in the military. No other billionaire has been elected to the presidency. No one has ever used social media as effectively. No one has had the scale and frequency of rallies. No one has understood that a 20,000-person rally with every person using his or her smartphone to send out photos and videos creates an audience the size of MSNBC. No one else has been dramatically outspent in both the primaries and the general election and won.

    You would think that a person with these achievements would be worthy of a certain respect and of a curiosity about how he thinks and what he is trying to do.

    Furthermore, Trumpism IS different. It isn’t traditional conservatism. It is an entrepreneurial, pragmatic, energetic, constantly evolving and constantly learning and improving model.

    If The New York Times were a serious newspaper it would start by recognizing that Trump is a remarkable leader and that this is a new phenomenon. Then it would try to explore and understand the differences between the old order and the world Trump is trying to create. Then it could describe the context of the President-elect and educate its readers accurately in an informed, coherent manner.

    Unfortunately, The New York Times is trapped within the obsolete establishment mindset which was wrong about Trump throughout the primaries, then was wrong about Trump throughout the general election, then was wrong about who would win. This elite mindset has learned nothing. It is now enthusiastically being wrong about the transition. All of this is great practice for the paper to be wrong about the new administration.

  • Obama’s spiteful anti-Israel UN resolution has united Republicans and divided Democrats. Good job! (Hat tip: Instapundit.)
  • But for those thinking that Obama destroyed the Democratic Party singlehandedly, don’t forget that George Soros also played a big part.
  • All Democrats babbling about how Hillary won the popular vote should look at this dissection of how the Obama coalition crumbled in 2016. Which includes this gif:

  • Bribary and the border patrol. (Hat tip: Director Blue, which notes “just in time for the election.”)
  • Lunatic anti-#GamerGate tranny Brianna Wu (AKA John Walker Flynt) is running for congress from Massachusetts. Good. Every Democratic Party donor dollar that goes to that Wu is a dollar not backing a candidate that can actually win. (Background on Wu for people coming in to the story late.)
  • Nine Islamic State supporters arrested near Washington, D.C. (Hat tip: Director Blue.)
  • Interesting analysis of the media pushing the Russians did it meme. “Here’s a trick when reading New York Times articles: when they switch to passive voice, they are covering up a lie.” (Hat tip: Borepatch.)
  • And all the evidence they ignored to draw “the Russians did it!” conclusion. (Hat tip: Director Blue.)
  • Syrian migrants in Germany kick a baby. “Was that wrong? Should I not have done that?” Disclaimer: Not these guys:

    screen-shot-2016-12-29-at-9-29-36-pm

  • Lessons from 5,000 gun fights. Including “Reloads are almost vanishingly insignificant factors in gunfights” and “He who puts the first shot into meaty bits on the other guy, wins.”
  • Bloomberg-backed initiative to require all gun purchases (including private-citizen-to-private-citizen transfers) to undergo an FBI background check passes in Nevada. FBI: Nope, we’re not doing that. We’re not authorized to. (Hat tip: Director Blue.)
  • When did feminism become so anti-motherhood? It’s been a while, actually. (Hat tip: Instapundit.)
  • What Americans have spent things on over the last 75 years.
  • Thomas Sowell retires from writing columns. At 86 years of age, and after this year, who could blame him?
  • Another day, another fake hate crime, this time from Denton, Texas. (Hat tip: Instapundit.)
  • Liberal Muslim: “I voted for Trump due to ObamaCare.” Liberal college professor: “FUCK YOU, GO TO HELL.” (Hat tip: Ace of Spades HQ.) And still more details from The Other McCain.
  • The return of violent flash mobs. The is one of several similar incidents in the last week. Judging from video and mugshots, this round of violence, like the last, is disproportionately committed by black teenage males and, as in previous incidents, this fact is studiously avoided in the MSM reports on these incidents. (Hat tip: Director Blue.)
  • Gun control loses at the ballot box, as well as the box office. “For every dollar spent on advertising, Miss Sloane brought in just 21 cents in ticket sales.”
  • Italy comes out in favor of censorship. I think we know how this movie ends…
  • Oregon’s government owns your pond, comrade.
  • And speaking of Oregon, a college professor gets suspended over a Halloween costume she wore at her own private party.
  • Hit numbers for online #NeverTrump conservative publications? Not so hot.
  • Santa43.