Ignorance is not bliss, it’s just ignorant
Tuesday, Mar 3, 2020 - Posted by Rich Miller
* The Southern Illinoisan interviews Rep. Dave Severin (R-Benton) and his GOP primary opponent Tim Arview…
The two also have different takes on Illinois’ pension woes, caused by years of lawmakers and governors agreeing to skimp on their funding obligations. Severin said that he uses his position to advocate for the state making its required payments in annual budgets. But he said that he would not make further adjustments to benefits. He opposes a proposal to place a constitutional amendment on the ballot to tie annual cost-of-living adjustments, or COLA — currently a fixed, compounded 3% annually — to inflation.
Arview, on the other hand, said he would support efforts to tie the COLA to inflation. He also suggested the state pass legislation creating a new benefits structure for incoming employees. Arview was not familiar with legislation the General Assembly passed to do that a decade ago, creating a second tier effective for new employees hired after 2010. Given that information, Arview said he would create a third tier and cut their benefits by 2% compared to the second tier employees.
And then Arview went on to opine on his brand new idea he just came up with after being informed that he was uninformed.
*facepalm*
* Meanwhile, this is hot off the presses from the National Institute on Retirement Security…
As many small towns and rural communities across America face shrinking populations and slowing economic growth, a new report finds that one positive economic contributor to these areas is the flow of benefit dollars from public pension plans. In 2018, public pension benefit dollars represented between one and three percent of gross domestic product (GDP) on average among the 1,401 counties in 19 states studied. […]
This new report finds that public pension benefit dollars also account for significant amounts of total personal income in counties across the nineteen states studied. For all 1,401 counties in this study, pension benefit dollars represent an average of 1.37 percent of total personal income, while some counties experience more than six percent of total personal income derived from pension dollars.
The report’s key findings are as follows:
* Public pension benefit dollars represent between one and three percent of GDP on average in the 1,401 counties studied.
* Rural counties and counties with state capitals have the highest percentages of populations receiving public pension benefits.
* Small town counties experience a greater relative impact both in terms of GDP and total personal income from public pension benefit dollars than rural or metropolitan counties.
* Rural counties experience more of an impact in terms of personal income than metropolitan counties, whereas metropolitan counties experience more of an impact in terms of GDP than rural counties.
* Counties with state capitals are outliers from other metropolitan counties, likely because there is a greater density of public employees in these counties, most of whom remain in these counties in retirement.
* On average, rural counties have lost population while small town counties and metropolitan counties have gained population in the period between 2000 and 2018, but the connection between population change and the relative impact of public pension benefit dollars is weak.
The study is here.
* A couple of counties in Rep. Severin’s district with the percent of GDP represented by public pension benefit dollars…
Franklin 3.19 percent
Williamson 3.1 percent
…Adding… Meant to add this Tribune headline…
Gov. J.B. Pritzker’s graduated income tax plan won’t fix Illinois’ pension problems, ratings agency says
Nobody, but nobody ever implied that the proposal would “fix” the problems.
The headline reminds me of the stories about how cannabis revenues wouldn’t cure the state’s many fiscal ills. Um, there is no single, easy cure. Those who think there is such a thing should probably get their heads checked.
- Nick - Tuesday, Mar 3, 20 @ 9:47 am:
You just gotta love the tribune.
Never miss an opportunity to spin something even if what Fitch was basically saying was we need more revenue.
- Oswego Willy - Tuesday, Mar 3, 20 @ 9:53 am:
=== And then Arview went on to opine on his brand new idea he just came up with after being informed that he was uninformed.
*facepalm*===
The scary part about the utter ignorance, to an issue anyone who is running for the General Assembly should know, is the “casual” manner to… “well, let’s make a third tier”.
If ya have no idea you’re “idea” was implemented a decade ago, how the heck can you feel the need to them say “let’s have a third”.
It’s the patron at the end of the bar, yelling at the tee-vee and everyone else how “easy” things are to correct “if it were me” leading. The difference is voters have the patron at the end of the bar in the ballot.
To the pensions saving rural communities,
The same folks who “misunderstand” this can also be the same people who are angered by the costs of higher education and that “state university just sucking up dollars for nuttin’ and stuff”. Yeah, those universities, those pensions are making rural Illinois tick. Those legislators in central and southern Illinois not grasping the necessity of what it means to get state dollars thru pensions or universities may need to spend more time educating themselves so they stop “misinforming” the rabid who think the state is o my helping She-Cau-Go all the time.
- BC - Tuesday, Mar 3, 20 @ 9:57 am:
Arview is not the only one. I’m endlessly surprised by how many people I come across who are relatively well informed about politics and public policy who don’t know about Tier 2 or that restricting COLA’s was already tried and thrown out by the courts.
I think they are being fooled by blissfully ignorant editorial writers and think tankers.
- Charlie Brown - Tuesday, Mar 3, 20 @ 10:01 am:
Something tells me we ought to brace ourselves for about five years of juvenile straw man arguments unworthy of even a drunken, college dorm debate from Chicago Tribune editorial board.
Remember when the Tribune editorial board could influence not just suburban Republicans but also Chicago Democrats with their thoughtful, moral voice?
Now it’s just McQueary, Kass, Maze and Proft talking to each other.
- Ducky LaMoore - Tuesday, Mar 3, 20 @ 10:03 am:
People forget so quickly that solutions have been tried and that tier 2 is reality. How many times do we have to have the same meaningless discussion? At least 4 times a month until death, then the discussion will continue without me.
- LTSW - Tuesday, Mar 3, 20 @ 10:04 am:
Wonder if Arview knows that teachers don’t get social security.
- cover - Tuesday, Mar 3, 20 @ 10:05 am:
= I think they are being fooled by blissfully ignorant editorial writers and think tankers. =
It’s happening again today - this story just popped up in the Scribble Feed:
“A GM-Style Restructuring for Illinois”
- JoanP - Tuesday, Mar 3, 20 @ 10:10 am:
=Arview was not familiar with legislation the General Assembly passed to do that a decade ago=
“Do your homework.”
Honestly, it’s one thing if John Q. Public doesn’t know. But when you’re running for office, that’s another.
- Demoralized - Tuesday, Mar 3, 20 @ 10:16 am:
I will also note that we had a pension buyout program that passed as well.
- Anyone Remember - Tuesday, Mar 3, 20 @ 10:26 am:
Avery Bourne’s primary opponent is cut from the same cloth as Arview. SJR had a great story about he who shall not be named Sunday.
- Last Bull Moose - Tuesday, Mar 3, 20 @ 10:54 am:
I am appalled by the depth and pervasiveness of ignorance. Somehow we are failing to educate ourselves.
Pensions may be specialized knowledge. But the ignorance about politics, economics, and propaganda can and must be corrected.
- Ano - Tuesday, Mar 3, 20 @ 10:58 am:
==wonder if Arview knows teachers don’t get social security==
So much more than that. Most teachers work at jobs to supplement their earnings and those jobs pay into SSI. Even if you earn your 40 quarters, your benefit is adjusted to such a low amount (100 to less than 100/month) that youre tempted to tell them to keep it. Windfall Elimination Provision and Government Offset Provision.
So it’s actually worse than not getting SSI
- Grandson of Man - Tuesday, Mar 3, 20 @ 11:01 am:
The Trib headline is intentionally misleading. Of course a graduated income tax won’t “fix” decades’ worth of pension debt, but as the Fitch report states, it would bring more stability. Fitch paints a worse picture of what could happen if we don’t get more revenue. We need more fiscal stability.
The ILGOP is so on the wrong side of the graduated income tax issue, by its own purported philosophy of fiscal responsibility and tax cuts. We would have more money to pay bills and give a lot of people a tax cut, small as it may be. The Fair Tax would still be better than everyone paying the current rate, for many people, for state budgets, debt payment, etc.
- All This - Tuesday, Mar 3, 20 @ 11:03 am:
Something the “stiff the pensioners” crowd forget, they will hurt rural downstate people, and more importantly some very vulnerable people.
- City Zen - Tuesday, Mar 3, 20 @ 11:11 am:
Strange that the phrase “opportunity cost” doesn’t appear anywhere in the report. Or maybe not so strange.
- Whatever - Tuesday, Mar 3, 20 @ 11:31 am:
Now if Arview had proposed to eliminate fraud and waste from our pension systems, we could call bingo.
- Blue Dog Dem - Tuesday, Mar 3, 20 @ 11:36 am:
Ignorance is bliss. There is no one cure all.. agreed. Illinois’solution to all is increase revenue and increase spending by a greater amount. That my friends is ignorance.
- Blue Dog Dem - Tuesday, Mar 3, 20 @ 11:58 am:
I wonder what percentage of GDP would be if some southern illinois teachers were drawing Social Security coupled with a decent 401k plan would equate to. I bet it wouldnt be much different.
- JS Mill - Tuesday, Mar 3, 20 @ 12:13 pm:
=I bet it wouldnt be much different.=
If you use the right make believe numbers I am sure that you can come up with something even better.
Reality though, is that the pension income for rural community members has a positive economic impact.
In the not to distant future rural Illinois, especially southern Illinois, will barely exist. The taxes are too high crowd will effectively starve rural communities of services that attract homebuyers.
- Michelle Flaherty - Tuesday, Mar 3, 20 @ 12:18 pm:
Blue Dog, right now’s probably not the best time to suggest tying everyone’s retirement security to the stock market.
- Blue Dog Dem - Tuesday, Mar 3, 20 @ 12:28 pm:
Waiting for RNUG input.
From my personal experience , my fixed pension from my days as a proud Member of USW isn’t as good as my SEP as a business owner. Not necessarily the same, but close.
- A Jack - Tuesday, Mar 3, 20 @ 12:33 pm:
With interest rates in free fall because of the corona virus, I hope someone is looking at refinancing some of Illinois’ debt. Illinois missed out on low interest rates during the Rauner administration, but it looks like Illinois may have another opportunity.
- City Zen - Tuesday, Mar 3, 20 @ 12:38 pm:
==what percentage of GDP would be if some southern illinois teachers were drawing Social Security coupled with a decent 401k plan==
The better question is how much GDP is decreased because money that could go to services today is being used to pay down pension debt.
These studies by the National Institute on Retirement Security are notorious for explaining only the benefits side of things and not the cost side, which is why I mentioned opportunity cost.
- A Jack - Tuesday, Mar 3, 20 @ 1:01 pm:
Another point of ignorance is that state employees already have a voluntary 401k-like plan for any tier employee. It is a 457b deferred comp plan. So any state employees that wants to dabble in the stock market, already can.
- 17% Solution - Tuesday, Mar 3, 20 @ 1:03 pm:
== The better question is how much GDP is decreased because money that could go to services today is being used to pay down pension debt.==
The money is going to pensions, i.e. the economy, not into a black hole.
- Jocko - Tuesday, Mar 3, 20 @ 1:34 pm:
==Arview went on to opine on his brand new idea==
Why research the topic when the opinion page of the Tribune will do it for you?/s
- 62656 - Tuesday, Mar 3, 20 @ 1:36 pm:
Another example of how the smaller government gets, the more the invisible hand of the market pressures people to live near large numbers of other people.
- City Zen - Tuesday, Mar 3, 20 @ 3:05 pm:
==The money is going to pensions, i.e. the economy, not into a black hole.==
It’s going into debt service. That’s a type of black hole.
Opportunity cost: If you’re firing/not hiring one current employee to pay the debt owed to five former employees, how does that impact GDP?
- Oswego Willy - Tuesday, Mar 3, 20 @ 3:09 pm:
=== It’s going into debt service.===
Do you not want the debt paid?
It’s not a black hole if we’re paying on the debt.
If you don’t want the debt serviced, then don’t complain about the debt?
- Jibba - Tuesday, Mar 3, 20 @ 3:20 pm:
“It’s going into debt service”
There is no interest owed on the pension “debt” so it is not the same thing. I might even argue that there is such a thing as a debt, or that “opportunity cost” has any real relevance where there is no actual choice in the matter. Fun with economics.
- City Zen - Tuesday, Mar 3, 20 @ 3:25 pm:
==It’s not a black hole if we’re paying on the debt.==
In this exercise, it is.
The point of the article is to show the wondrous benefits pensions have on the local economy. Unfortunately, it doesn’t take into account the cost side of the equation. Even more unfortunate, it doesn’t take into account that a large chunk of the cost side is comprised of debt.
Otherwise, I agree that servicing debt is good.
- Oswego Willy - Tuesday, Mar 3, 20 @ 3:29 pm:
=== In this exercise, it is.===
It’s not. Either you want then debt paid, or not.
===cost side of the equation===
Yeah, see, that cost, allows for the benefit.
You’re arguing in your own circle. How do I know?
=== Otherwise, I agree…===
No. You agree, you dislike it eats away your argument so you make up a way to be against yourself.
- Jibba - Tuesday, Mar 3, 20 @ 3:42 pm:
“Even more unfortunate, a large chunk of the cost side is comprised of debt”
Since you aren’t paying interest, why is is it “even more unfortunate”? The cost is the cost. You don’t have to prepay pension costs to save money (which is what we are trying to do). If you wanted to pay the pensions as you go, that is a choice you can make. We’re paying ourselves, not a rapacious banker.
- Demoralized - Tuesday, Mar 3, 20 @ 4:34 pm:
City Zen
You love to be cute with your arguments. Shouldn’t you be griping about the marriage penalty?