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The Gateway (Spring Cleaning Edition)

I’ve been otherwise occupied, and it’s been nearly three weeks since I’ve cleaned out my Facebook posts---not that there are many of them. FWIW, I’m doing it for posterity, since many have probably gone stale.

The Bonus Rich and The Years in Retirement Rich: The Arrogance of Power is Unchallenged Here, But Challenged Elsewhere

Two groups of people have been getting richer: the executives who sit on each other’s boards and vote each other a rising share of private sector income, and retired public employees whose unions have cut political deals for retroactive pension increases. Everyone else is getting poorer. There is, in other words, the executive/financial class, the political/union class, and the serfs.

The pay and benefits of the serfs is determined in negotiations with people who have an interest in keeping them as low as possible, either to keep more money for themselves or to be in a better position to offer better value to their customers. Everyone wants to get more for less, whether they are shopping for labor or as consumers, but in the end these relationships are voluntary, so an equitable agreement has to be reached. But the public employee unions and executives negotiate their pay and benefits in secret with their cronies, and then pass the bill on to powerless others who are made worse off, taxpayers/public service recipients and shareholders. Here in the U.S. they continue to take more and more, and express outrage at anyone who dares to question their entitlement, even in the wake of a Great Recession that made everyone else much worse off. But things are different elsewhere. And that may be instructive.

Census Education Finance Data for FY 2011

The U.S. Census Bureau has released its public education finance data for FY 2011, and I have once again downloaded and compiled it. That year New York City spent $22,517 per student, somewhat lower than the average of $23,382 for the Downstate Suburbs but far more than the $17,440 for New Jersey, $18,945 for Upstate New York, and $12,367 for the U.S. as a whole. As usual I have adjusted some of these figures for the higher average private sector wage and cost of living in some locations, notably Downstate New York and New Jersey. This reduces the NYC figure to $17,548 per child, still 41.9% higher than the U.S. average but below the average for Upstate New York.

New York City’s “non-instructional” spending has always been very low compared with other areas. In FY 2011 the city’s “instructional” spending was $11,791 per student with adjustment, above the adjusted averages of $11,258 for the Downstate Suburbs and $7,895 for New Jersey, above the average of $10,726 for Upstate New York, and 82.5% higher than the U.S. average of just $6,461. Examining instructional wages and benefits alone, New York City’s adjusted figure of $10,326 per student was 81.5% above the U.S. average – nearly double -- but slightly below the average for the Downstate Suburbs at $10,645. The city’s instructional wages and benefits per student had been above the average for the Downstate Suburbs the year before. The city remained well above the average for Upstate New York and New Jersey by this measure. Moreover, on an unadjusted, straight dollar basis the city spent $13,250 per student on instructional wages and benefits in FY 2011. That is $265,000 for every 20 students, or $159,000 for every twelve. Based on city budget documents, this figure has gone up considerably since. Additional commentary, and the spreadsheets, may be found on “Saying the Unsaid in New York.”

Prime News On The Way

Prime News, our annual recap of local election results will be mailed on Wednesday to those on our mailing list. If anyone not on our list wants a copy or if you just can't wait, you can email me at primeny711@aol.com and I'll send you a PDF.

America the Bankrupt

The Federal Reserve credit market debt data (Z1) was released for 2012, and I checked to see how the deleveraging was going. Back in 1952 the total of America’s debts, business and personal, federal, state and local, and financial was the equivalent of 135% of U.S. GDP. Despite the blandishments of the growing credit card industry and the “guns and butter” policies of the Great Society in the 1960s, that figure was just 168% of GDP in 1981, the year Ronald Reagan took over and the great national party began. The torch was passed to a new generation, as the “Greatest Generation” that had faced the depression and World War II was gradually replaced by the richest generations, those born between 1930 and 1955 or so, in control of our institutions. By 2009, as Barack Obama took office, total U.S. credit market debt had soared to 381% of GDP.

All the economic pain of the Great Recession, all the mortgage and credit card defaults, all the bankruptcies, all the diminished lives and expectations, only reduced total U.S. credit market debt to 359% of GDP in 2012, still more than double what it had been back in 1981. At that pace, it will take 38 more years for America’s debts to get back to where they were in 1981. But believe it or not, that’s the good news. If one were to exclude financial debt, the debt financial companies owe each other through instruments such as swaps and derivatives, the deleveraging has not yet begun. Total non-financial debts, public and private, were 253.9% of GDP in 2009 and 253.8% of GDP in 2011. In 2012, debt by this figure rose to 255.7% of GDP, which is perhaps the only reason our so-called economy more or less improved. An economy of people and governments spending money they don’t have, because businesses aren’t paying people as much as they want to sell to them. The spreadsheet and more commentary can be found on “Saying the Unsaid in New York.

The Real LIRR Scandal

News broke yesterday that the doctor who helped hundreds of perfectly healthy LIRR employees retire with enriched disability benefits was sentenced to eight years in prison. "Ajemian, 63, had pleaded guilty to conspiracy and fraud charges as part of a massive $1 billion scam. Between the late 1990s and 2008, Ajemian recommended that more than 700 LIRR workers receive disability benefits — the vast majority of whom were perfectly healthy."


At one point virtually everyone at the LIRR was retiring with a disability pension, compared with just 25.0% of MetroNorth workers. Not just the line workers, but the managers too, were in on the scheme. Here is what makes it worse. Do you believe that grifter attitude toward the rest of us suddenly appeared just before retirement? Or does the LIRR have a grifter culture that affects the way it works from the first day on the job to the last day on the job? You may recall the reaction of those in the northern suburbs to a possible merger between MetroNorth, which just restored rail service very rapidly after an accident, and the LIRR -- no way! That grifter culture is killing off not only the LIRR but all of Long Island, and as the non-grifters move away to avoid paying for it, that burden will be shifted to other parts of the state.

Gun Crazy

Shocking information is now available connecting gun ownership with violence.  First, John Hopkins reports that domestic violence homicides are three fold greater in homes where there is a gun.  Second, Harvard reports that suicides are much higher among gun owners and this is confirmed by NPR.  Finally, Wikipedia reports 67% of homicides involved a gun.

Stop and Frisk Trial is Over

Here is my report from the Federal Courthouse wrapping up closing arguments where Judge Shira Scheindlin was quite critical of the City/NYPD.  

Census Bureau Public Employee Pension Data for 2011

I’ve downloaded the public employee pension data for FY 2011, and find that New York City is in the same situation. Which is no surprise, because it will probably be in that situation for years, perhaps decades. The city’s pension funds are in something close to a death spiral, with 13.8% of total assets paid out that year. The national average is 7.7%, the figure for the New York State pension funds, which also cover local government workers in the rest of the state, is 6.3%. The city has 1.30 workers to every retiree receiving benefits, compared with the U.S. average of 1.69 and the 1.57 for the state pension funds. That is one year paid for a permanent vacation in retirement for every one year, four months worked, on average. City taxpayers contributed $24,701 to the pension plan for each public employee in FY 2011, compared with the U.S. average of $6,622 and the average of $6,731 for the rest of the state.

The City Actuary has said that New York City is contributing $1 billion less per year to these pension funds than is needed by his own calculation, which will have to be made up later many times over. This is the City Actuary has been in office, and seems to have felt there was no problem, for the 20-plus years when one retroactive pension increase after another has passed, the city’s pension costs have soared, and taxes have been increased and services cut to pay for it. And it has already been announced that the city will have to contribute an extra half $billion a year from now, because the rate of return was below expectations a couple of years ago. But if one looks at the actual rate of return the city is likely to achieve, and how underfunded the pensions have become under the watch of City Actuary Robert North, two Comptrollers who are running for Mayor, and a former budget director who is running for Mayor, I would say that taxpayers ought to paying into the pension funds 100.0% of benefit payments out, to prevent a death spiral that would bankrupt the city. The actual figure in 2011 was 78.9%. The spreadsheet and additional commentary may be found on “Saying the Unsaid in New York.”

Infernal Revenooers

Dateline: Hyde Park, NY 

You gotta hand it to Dubya’s eye for talent.


New York Explained

So as one state legislator after another is indicted, or revealed to have engaged in behavior that would be unacceptable in anyone I would call a friend, everyone is huffing and puffing. Let me clue you in on the reality. State legislators have no real power, but do not face real elections. Sheldon Silver and Dean Skelos have real power over your lives, but you don't get to vote in their elections. Those who are under indictment do. If Silver and Skelos want to keep their jobs, and engage in the big time (if technically legal) corruption, these men need to have the backs of their actual constituents, despite their small time (and sometimes illegal) corruption.

Since quite a few of the state legislators recently exposed have been Black, one Black state legislator had this to say. “Why are we allowing folk who’ve been in power longer–who are perhaps smarter and slicker, who are are more dangerous under those conditions and perhaps robbing far more–we leave them alone and we target these over here?”


That sort of says it all, doesn't it?