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* From Bloomberg…
U.S. states and municipalities struggling with mounting budget deficits “are not in the same precarious financial condition as Greece,” Samson Capital Advisors said.
The cost of protecting U.S. municipal bonds surged this year as investors bought insurance on U.S. state obligations after global stocks tumbled and Europe’s debt crisis worsened. New Jersey Governor Chris Christie told members of the Manhattan Institute on May 25 that the state is “careening our way toward becoming Greece.” Even so, states aren’t on the verge of default and such comparisons distract from more serious issues, Samson Capital said in a July 8 report.
“The statement that any U.S. state is the next Greece, meaning a near default on their bonds, is not based on fact,” said Judy Wesalo Temel, a principal and director of credit research at Samson, which manages $7 billion. “Comparing the Greek debt crisis to state and local governments is not valid and is distracting from the real concerns about budgets.”
The median debt to gross domestic product of U.S. states is 2 percent, compared with Greece’s 113 percent, according to last week’s report by Samson Capital, a New York-based fixed income investment manager.
But all is, of course, not well in Illinois. From the Samson Capital report…
One of the most important investment themes in today’s marketplace will be selecting the stable states,
sectors and credits, since the fiscal challenges vary greatly across US state and local governments. For example, Illinois is now in the spotlight as it has done little to solve a significant budget gap and has the worst underfunded pension problem. Illinois joins California as one of two A-rated credits among Moody’s state GO ratings. While California remains challenged, it does not appear at this point to require the same kind of short-term funding that raised concerns last year.
Our pension contributions as a percentage of our state budget are far higher than the average. But this hyperbole about Greece is goofy, and I’m glad at least somebody is sane enough to back me up. Mark Kirk is a different story…
In a speech to members of suburban Chambers of Commerce [yesterday], Congressman Mark Kirk warned that Illinois is rapidly falling into the same financial situation as Greece.
The serial exaggerator strikes again.
* Meanwhile…
Did you know that a commission named by Gov. Pat Quinn wants to raise the retirement age for state workers to a minimum of 72?
Yes, right there on page 96 of its recent report, Mr. Quinn’s Economic Recovery Commission says that — along with “aggressively” reviewing Medicaid spending, raising the income tax and widening the sales tax base — retirement ought to come at age 72.
I got kind of a chuckle out of the proposal, which somehow failed to make it into Mr. Quinn’s press release on the commission’s final report. But that’s what happens when you ask a bunch of non-Springfield types to tell you what they think.
Nice catch by Greg, especially the part about how Quinn didn’t even mention the idea in his press release. No way does he want to talk about stuff like that. I’m curious what you think of the idea, however. Should the state employee retirement age be raised to 72?
* Related and a state roundup…
* News-Gazette: Hynes reports state budget woes
* Kadner: In a state of crisis, It’s all about politics
* Asbestos removal projects slated to start in Capitol
* Officials hail Northern Illinois Food Bank expansion
* Gov. Quinn expands duties of livestock advisory board
* New Ill. laws aimed at dishonest contractors
posted by Rich Miller
Tuesday, Jul 13, 10 @ 11:43 am
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Kirk should be careful, if Illinois truly was to be the next Greece, think of the boost it would give Giannoulias in the polls.
Oooo-Pah!
Comment by 47th Ward Tuesday, Jul 13, 10 @ 11:52 am
Should the state employee retirement age be raised to 72?
Former President Bill Clinton is right, in my opinion, on this question. Clinton correctly pointed out that some people working physically cannot be expected to work past 65. Others who perform non-manual labor, can. Having a blanket age limit for all jobs won’t work for all of us.
So, when folks talk about how they could do their jobs until age 72, explore what kind of a job they have. My own father didn’t live long enough to even make it to retirement age, and I will consider myself fortunate to do so as well.
I can’t imagine being stuck at home every day. Personality-wise, retirement will kill me. So even after my career ends, I’m going to be earning money somehow and ensuring that I am not at home. But that is not for everyone.
I wish my dad could have retired at age 50, so that he could have done what he wished to do away from the factory floor. He worked hard and loved it, but it wore him out.
A one size all never fits all.
Comment by VanillaMan Tuesday, Jul 13, 10 @ 11:54 am
Retirement at 72 is unrealistic for far too many people. Can you imagine at 71 year old prison guard?
Comment by Aldyth Tuesday, Jul 13, 10 @ 12:03 pm
We’re not Greece, Part 429
“careening our way toward becoming Greece.”
In a speech to members of suburban Chambers of Commerce [yesterday], Congressman Mark Kirk warned that Illinois is rapidly falling into the same financial situation as Greece.
It isn’t unusual for us to use a dramatic metaphor to make a point. When someone says they are willing to “die for” something, they really are saying they will be willing to die. We do this to dramatize a comment we hope other would remember.
Since Greece’s problem, Greece’s image has become a metaphor, just as Illinois has become a metaphor for corrupted government around the world.
“We are becoming another Illinois!”
“He is so corrupt, he should run Chicago.”
When speaker say this, they aren’t wrong dramatically, just factually. But the statement shouldn’t be read as a fact unless it is presented as a fact.
Neither Kirk nor Christie is putting their Greek statements in that way. It may be irritating that we have two state leaders dramatically using Greece as a metaphor for their state’s fiscal plight, but they are not wrong. Some may say that this kind of talk hurts economically, but how is this kind of statement any different from other typically exaggerated metaphors being used by state leaders?
Are we moving in towards a situation like Greece? Yes! That is correctly describing the movement. Will we become Greece if we do nothing? No. And neither gentlemen is making that claim. They are alluding that if they are not empowered politically to address fiscal issues, their states may become another Greece. Unlikely, but may covers up a lot here.
Is it exaggerating? As with most dramatic metaphors it is. And it is intentional.
Comment by VanillaMan Tuesday, Jul 13, 10 @ 12:10 pm
Pat Quinn’s retirement age will be 62 which he will reach in December. He will then be able to mumble to himself alone on his porch wondering how he blew his lifetime opportunity.
Comment by Fed up Tuesday, Jul 13, 10 @ 12:14 pm
Age 72?
That would be extremely unfair to state retirees like Kurt Granberg.
Comment by Vole Tuesday, Jul 13, 10 @ 12:29 pm
I’m strongly opposed to extending the retirement age.
I have been around a number of state employees who are older than 65. In the vast majority of cases they are not very productive and very resistant to change. Additionally, managers have a hard time disciplining them and holding them accountable out of respect for their age, because “they are close to retiring,” and the difficulty of battling civil service/union protections (especially with the threat of age discrimination thrown in).
Comment by Objective Dem Tuesday, Jul 13, 10 @ 12:31 pm
Our retirement age of 67 for new state employees is already the highest in the nation. But it’s equal to the retirement age for Social Security for that age group. There’s no reason to make state employees work half a decade longer than everyone else.
Comment by Reformer Tuesday, Jul 13, 10 @ 12:33 pm
I never ceases to amaze and seriously irritate me that our supposed leaders come up with ideas that play well to the uninformed, but in reality do nothing to solve the problem at hand.
So our intellectual giant of a Governor is going to save money by forcing State workers to work longer at their jobs. So a worker who might have retired at 62 will have to remain working for 10 more years. In that 10 years they will probably receive a percentage raise for each year worked based on a salary that is probably at the top of their range due to the fact that they have reached the age of normal retirement. They will then retire, if they are still living, at 72 with a higher pension than if they left service 10 years earlier. Also this person has held a job that could have been given 10 years earlier to a younger worker at a lower salary. This creates jobs and it reduces the cost of that position. Added to that a younger worker will probably be more capable at a job than a worker over 65 who is being forced to stay at work. Nothing in this proposal shows money saved. It is all about votes not reality.
Also I don’t know if we want all of our GA members hanging around, if they get re-elected, until 72. I think there is too much dementia in those chambers already.
Comment by Irish Tuesday, Jul 13, 10 @ 12:48 pm
So our intellectual giant of a Governor is going to save money by forcing State workers to work longer at their jobs.
Ummm… speaking of “intellectual giants” - you do know that Quinn didn’t make the suggestion, right? And that, instead, it was a commission that Quinn appointed people to, right?
Comment by dave Tuesday, Jul 13, 10 @ 1:14 pm
I am a strong proponent of pension reform and think the retirement age needs to be raised at all levels (Social Security, Pensions, etc) but 72 is just plain ridiculous. Why not propose a realistic number?
Comment by Ahoy Tuesday, Jul 13, 10 @ 1:36 pm
Greece couldn’t borrow on the markets and didn’t dare print more money.
Illinois can borrow on the market and has the ways and means to solve it’s budget problems, but not the will.
So, there’s a bit of a difference.
Comment by wordslinger Tuesday, Jul 13, 10 @ 1:41 pm
Rich — Samson Capital has nearly all of its clients invested in state and muni bonds. What else would they say??
Again exposing that you really are not an journalist… you are just an apologist for higher taxes, government spending and more debt. This pleases your audience of state workers and lobbyists, but please spare us of the pretense that you are an independent and objective reporter. Puh-leez!!!
Comment by budget boy Tuesday, Jul 13, 10 @ 1:45 pm
“So our intellectual giant of a Governor is going to save money by forcing State workers to work longer at their jobs.”
Yeah, that was a recommendation from an independent commission, not from the governor. I guess no one can accuse Quinn of telling his commissioners what to say.
Comment by soccermom Tuesday, Jul 13, 10 @ 2:03 pm
What state employee would possibly wait until 72? The ones I know took buy outs in their early 50s. Something is wrong with that, too.
Comment by Yukon Tuesday, Jul 13, 10 @ 2:10 pm
BB, I didn’t know that LG LLP employed budget experts. News to me.
Comment by Rich Miller Tuesday, Jul 13, 10 @ 2:18 pm
Rich linked to a great idea to resolve this mess; allow the States to borrow from the Fed treasury, off setting future fed dollars to the states.
Comment by Ghost Tuesday, Jul 13, 10 @ 2:18 pm
I just checked the partner roster there and nothing shows up, either. Huh.
Comment by Rich Miller Tuesday, Jul 13, 10 @ 2:21 pm
Also, bb, it would be nice if you could poke holes in their report, instead of just tossing around disparagement. I read it. Looks pretty solid. Did you? Maybe you’re too busy at the firm.
Comment by Rich Miller Tuesday, Jul 13, 10 @ 2:30 pm
of course Illinois’ “debt-to-gdp” ratio is far less than Greece’s…but really you need to add in the federal debt-to-gdp as well. Citizens of Greece would only pay takes to Greece, and the full amount of those taxes can go towards supporting that country’s spending and debt service. In Illinois, residents also must pay taxes to the US Federal government, reducing the amount of taxation the state is likely to be able to impose on its residents.
Comment by inpatient in il Tuesday, Jul 13, 10 @ 2:31 pm
III, you’ve just pinpointed why this comparison exercise is absurd, whether you realize it or not.
Comment by Rich Miller Tuesday, Jul 13, 10 @ 2:52 pm
Rich,
You may be too hard on budget boy. Based on the post I think he was serious about being a “boy.” The level of argument was definitely not at the level of a high school graduate. And when was the last time you met someone over the age of 14 who ends a statement with “Puh-leez!!!” Maybe it is bring your kid to work day at the firm.
Comment by Objective Dem Tuesday, Jul 13, 10 @ 3:02 pm
72 doesn’t seem entirely reasonable. I think most workers (public or private) want to be long retired before then.
Comment by Levois Tuesday, Jul 13, 10 @ 3:07 pm
OK, we’re not Greece. Welcome to Portugal.
Raising the retirement age could be part of a pension solution, but let’s use some sense. 72 is ridiculous; people can (or will) only adapt to so much change. They also lose some physical abilities, not to mention enthusiasm. So this could give you a workforce with a lot of health problems that isn’t very up to date and doesn’t have a lot of energy. Also one that few young people would want to join except out of desperation.
Some practical ideas:
comprehensive reform of all the pension systems; no early outs, period;
benefits based on high 5 years, no spikes, no overtime;
roll back sweeteners on all systems to their status 10 years ago;
all municipal employees should have to be covered by SOMETHING, even if it’s only Social Security (some have no coverage at all;
eliminate separate systems for anyone elected - Social Security plus a deferred comp plan ought to do them.
Comment by Excessively Rabid Tuesday, Jul 13, 10 @ 3:20 pm
@word,
=Illinois can borrow on the market and has the ways and means to solve it’s budget problems, but not the will.=
So, word, since we all know the will ain’t ever gonna show up, just how is our situation all that different….
Comment by dupage dan Tuesday, Jul 13, 10 @ 3:42 pm
I didn’t respond to the question so I should add my 0.02. No way - No how. I seem to be getting grumpier as I age. That don’t recommend me for long service with the state. Just sayin’
Comment by dupage dan Tuesday, Jul 13, 10 @ 3:44 pm
Another point - since pension is paid based on the salary of the individual for the last 6 months of service, wouldn’t making me continue to work until I am 72 y/o (an additional decade) result in my getting a higher pension than I would if I retired when I reach the magic number 85 (age plus years of service). Since we all know that the state won’t keep their end of the pension bargain that’ll only make their problem even worse.
Can you imagine what it will be like trying to get a driver license if they change that retirement age? Oy.
Comment by dupage dan Tuesday, Jul 13, 10 @ 3:48 pm
DD, like many, my guess has been for some time that enough votes for tax increases will appear after the election. Any governor will take the money, believe me. Until then, you muddle through.
Comment by wordslinger Tuesday, Jul 13, 10 @ 4:02 pm
trouble is, word, the state has been muddling thru for decades dems and GOP alike. What is the tipping point? These fools on both sides have been kicking this can for so long they don’t actually deal with the whole issue. I don’t have much confidence that the GA will vote for new tax increases to fill up the pension fund. The folk in their districts would not like that very much, I think. Too many structural issues, so few cojones.
Comment by dupage dan Tuesday, Jul 13, 10 @ 4:36 pm
64 or 65 is the correct retirement age.
Comment by downstate hack Tuesday, Jul 13, 10 @ 5:28 pm
State government will have a massive loss of knowledge and ability as every state emp. that can retire will retire prior to the implementation of many of the proposed changes
Comment by um Wednesday, Jul 14, 10 @ 8:34 am
CNN said the G-word
http://money.cnn.com/2010/07/13/news/economy/illinois_debt/index.htm
Comment by Vinron Thursday, Jul 15, 10 @ 10:50 am