Living in California, I have an advantage…a crystal ball of sorts…in seeing the direction this ship called The U.S.A. is headed.
Let me look into my crystal ball, and tell the future for you.
California has the highest income tax rate of all the 50 states.
California is also the largest employer in the state. Yes, the state government employs more people than any private or publicly traded business in the Golden State.
California has two cities so far that have declared bankruptcy. The main obligations the cities of Stockton and San Bernadino are failing to meet are government employee pension and benefits programs.
Unfortunately, there are not enough people paying California’s highest tax rates to supply the union negotiated contracts for public employees to receive their guaranteed retirement benefits.
Let me be more specific.
Every union represented employee of the State of California, and every union represented employee of each city in California receives a guaranteed lifelong retirement pension if he/she completes the contract negotiated time filling the chair in the job, no matter how well he/she performed it.
This pension is not tied to any Mutual Fund or Stock Market Investment.
It is 100% GUARANTEED.
Don’t you wish your IRA or 401K didn’t fluctuate with the market?
Consequently, CalPERS (Public Employee Retirement System) is $87Billion (yes that’s with a “B”) underfunded, because the funds collected and invested are nowhere near the $225Billion guaranteed in the union contracts.
Some teachers in my local school district are a perfect example.
- One Kindergarten teacher receives over $80,000 in pension PLUS over $25,000 in fully paid medical, dental and vision benefits each year.
- Two other married retired school teachers received over $170,000 a year in their combined pension. Unfortunately, the wife recently passed away, but her husband continues to receive her full share of the pension – still $170,000 a year total.
Gee, I wonder why the husband is currently looking for some tax breaks, because he now is in the upper-middle class – the very socio-economic class his angry, anti-CEO union reps have fought against.
This pensioner is now trying to find ways around the very taxes that continue to pay his pension.
Taxes in the state of California have had to increase to try and catch up to the bleeding that is uncontrolled spending.
Consequently, large and small businesses are leaving the Golden State in droves – actually they are being enticed to move by other states like Texas and Arizona.
How does this relate to my crystal ball, you ask?
California is the golden canary in the economic underground mine shaft, and that canary is suffocating, because the mine is quickly spreading the toxic fumes of government overspending dictated by lobbyists and unions.
The Federal Government is going the way of California.
The foggy mist in my crystal ball whispers the following in my year:
- The Federal Income Tax Rates must increase for everyone (not just those making over $250,000/year) in order to keep up with the raising of our debt limit.
- The Federal Government will become the largest employer in the country. How many jobs did Obamacare create in order to double my personal healthcare insurance? Yes, my coverage stayed the same, but doubled in premiums and yearly cap, but my Federal Government can give me a handout to bring them back down to the same affordable level prior to The Affordable Care Act. (Thanks for your willingness to help me pay for my healthcare increases with your taxes.)
- Taxes will continue to increase, but won’t be able to keep pace with spending and pensions.
- Large and small businesses will flee to other countries (wait, isn’t that already happening?) Can you say “苹果”? That’s “Apple” in Chinese.
- The U.S.A. will go the way of the Roman Empire, and implode under it’s own weight.
I know I sound as doomsday as Professor Trelawney, but I don’t just whine. There are a few ideas I have to pump fresh air down this mine shaft, and they are all centered around what I learned raising my kids – People rise to whatever expectations you set, and are more confident when they are more self-reliant:
- Ban all unions from any public employment organization. We have a choice to shop at companies whose union employees contribute to their products. We don’t have a choice to pay the taxes that support the salaries, and union dues that give a guaranteed pension even beyond death to someone who also can’t be fired for poor performance.
- Ban all lobbyists (retired politicians will then be forced to get real jobs at normal salaries.)
- Transfer all government pension plans to IRA’s, 401K’s or Social Security like every other American.
- Transfer all medical, dental and vision plans held by government employees to the same private payer insurance plans held by every other American before Obamacare became the “UnAffordable Care Act.”
- Fundamentally change the welfare and disability systems to include temporary benefits that are paid during an equally paid re-training program to get individuals with able bodies and minds to work, and on the road to self sufficiency. Every part of the government that relates to government assistance, welfare and disability must talk to every other part, so they all work toward the same good for people in need.
- Workers whose unions have negotiated them out of a job, and sent their jobs oversees can ask those unions for some of their dues back for re-training.
- No government employee, from the President on down to the last Federal/State Project Manager has a guaranteed pension. I’m sure a good book deal can be had, but I would self-publish if I were you.
- Politicians are required to have worked a “real job” in the private sector for a minimum of 10 years prior to holding any public office. Hopefully, this will give them some idea what kind of life their constituents live.
When the State of California goes bankrupt, I’ll know the nation is not far behind, but I won’t say I told you so.
I’ll just start learning Chinese.
Mary Kathryn Johnson
Author ~ Entrepreneur ~ Mom
