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Thread: Wisconsin governor gives Democrats ultimatum

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    Re: Wisconsin governor gives Democrats ultimatum

    i've been asking my friends the last couple of days how many years a retiree pulls from the "pension fund" before they die and we have come to a 15 year time frame. and these people pay into said fund their whole career say 30 years or so. can someone explain to me how is it that this model does not work? maybe we need to audit the fund to find out where that money has gone? and that, i say, will go a long way toward solving the problem. the same can be applied to social security maybe we should audit the i.r.s. to see where the money went.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by majora$$hole View Post
    i've been asking my friends the last couple of days how many years a retiree pulls from the "pension fund" before they die and we have come to a 15 year time frame. and these people pay into said fund their whole career say 30 years or so. can someone explain to me how is it that this model does not work? maybe we need to audit the fund to find out where that money has gone? and that, i say, will go a long way toward solving the problem. the same can be applied to social security maybe we should audit the i.r.s. to see where the money went.
    Don't ask your friends, ask an actuary. ;-)

    Public sector pensions quite often provide full benefits to retirees starting at 55....especially in teachers' unions. In fact, they are often incentivized (at least in Illinois) to retire early. Also in the case of Illinois (and Wisconsin, I believe, so probably other states where collective bargaining for wages and bennies is allowed) their healthcare costs, as they existed when they retired, are paid for by taxpayers....with teachers only picking up the increases....all the way to age 65.

    In the case of Wisconsin, teachers were paying into the retirement system less money than you and I pay into Social Security, and because their pensions specify a "defined benefit" rather than a "defined contribution" (as does the Social Security System and almost all private sector pensions) it's not too hard to do the math in one's head that a $30,000 pension is costing taxpayeres an arm-and-leg-anda'-half.
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    Re: Wisconsin governor gives Democrats ultimatum

    The state had $12.1 billion in outstanding debt at the end of FY 2010. About half of that debt was in the form of general obligation bonds ($6.0 billion) and $9.373 billion was paid for with general resources. The proposed refunding only covers a small portion of the state's debt.

    The total debt can be found at: ftp://doaftp04.doa.state.wi.us/doado...AFR_Linked.pdf (pp.229-230). Unfortunately, aside from the aggregate figures, details concerning the structure of the debt are not provided.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by donsutherland1 View Post
    The state had $12.1 billion in outstanding debt at the end of FY 2010. About half of that debt was in the form of general obligation bonds ($6.0 billion) and $9.373 billion was paid for with general resources. The proposed refunding only covers a small portion of the state's debt.

    The total debt can be found at: ftp://doaftp04.doa.state.wi.us/doado...AFR_Linked.pdf (pp.229-230). Unfortunately, aside from the aggregate figures, details concerning the structure of the debt are not provided.
    As i'm sure you know and you imply, the state is not looking to refinance the entire debt - and there could be good reasons why they are looking at this specific portion. So, the numbers you provided are fairly meaningless.

    It sounds like you have no idea how much WI is attempting to refinance. Additionally, you have no idea what percentage of that has to be completed by 03/16 to help cover the deficit (it could be 100.0% for all you seem to know). So, basically, pretty much everything you provided prior, while interesting, is fairly meaningless to the debate.

    The non-partisan Legislative Fiscal Bureau office says the deadline is 03/16, absent further information (beyond just your opinion) that is the date that seems most likely.

    You could actually be right, but unless you find some actual facts, we may never know.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by buck View Post
    As i'm sure you know and you imply, the state is not looking to refinance the entire debt - and there could be good reasons why they are looking at this specific portion. So, the numbers you provided are fairly meaningless.
    My point has been all along that some refinancing was taking place and that the opportunity to refinance will not end. The state is seeking to finance the debt that is coming due on May 1. It is seeking to refinance the current portion of its debt.

    It sounds like you have no idea how much WI is attempting to refinance.
    I had assumed that you had read the LBF's document, but was incorrect.

    The portion of debt subject to the March 16 deadline is the $165 million that is coming due. Total debt being issued would to $474 million ($309 million new debt + $165 million debt being refinanced).

    Additionally, you have no idea what percentage of that has to be completed by 03/16 to help cover the deficit (it could be 100.0% for all you seem to know). So, basically, pretty much everything you provided prior, while interesting, is fairly meaningless to the debate.
    Completely wrong. Again, had you read the Fiscal Bureau's document the answer would be clear: $165 million. That's about 1.8% of the state's GPR-supported debt. It's a tiny slice. So, even if refinancing on that tiny slice were passed up (and it need not be passed up), the overall impact would be very small.

    In sum:

    1) Today is not a drop dead date. 3/16 is the date for refinancing ~1.8% of the state's GPR-supported debt (fraction coming due on May 1, 2011).
    2) 3/16 only closes the window on debt maturing May 1, 2011. The overwhelming share of GPR-supported debt (>98%) could be refinanced later.
    3) Considering that the overwhelming share of the state's GPR-supported debt is not bound by the March 16, 2011 date, refinancing opportunities will not disappear if the March 16 deadline passes. Only a small slice of debt is subject to that deadline.
    4) The maturity schedule would only be useful for knowing the statutory deadlines--latest date--applicable to other tranches of debt e.g., portion due on May 1, 2012, etc. As more than 98% of the GPR-supported debt is due later than May 1, 2011, substantial refinancing opportunities would exist were the state to pursue that strategy after adopting a credible budget.
    5) If the governor truly wants to refinance 1.8% of the GPR-supported debt, he can always strip that provision from this larger package and allow for stand-alone legislation. My guess is that he won't. He's seeking any leverage he can obtain for his larger political battle. However, in the whole scheme of things, given that more than 98% of the debt would not be subject to the March 16 date, that leverage is actually very small.

    The non-partisan Legislative Fiscal Bureau office says the deadline is 03/16, absent further information (beyond just your opinion) that is the date that seems most likely.
    I've already covered that issue. The March 16 date applies only to the portion of debt that is expiring on May 1, 2011 ($165 million).

    You could actually be right, but unless you find some actual facts, we may never know.
    That issue was covered in multiple posts. This post brings everything together so that there is no question whatsoever on the issue.
    Last edited by donsutherland1; 03-01-11 at 02:03 PM.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by donsutherland1 View Post
    I've already covered that issue. The March 16 date applies only to the portion of debt that is expiring on May 1, 2011 ($165 million).



    That issue was covered in multiple posts. This post brings everything together so that there is no question whatsoever on the issue.
    I don't have time right now to read the whole post as well as I should, but you are right. I knew it was 165 total looking to be refinanced - and assumed you did too. That piece of the post was just poorly worded on my part. So, out of that 165 mil, are we in agreement that 100.0% of that has to be refinanced by 03/16 in order to close the budget deficit in the current fiscal period?


    2) 3/16 only closes the window on debt maturing May 1, 2011. The overwhelming share of GPR-supported debt (>98%) could be refinanced later.
    Apparently, that won't be in time to close the deficit from the current fiscal period. So, that doesn't really help them.

    5) If the governor truly wants to refinance 1.8% of the GPR-supported debt, he can always strip that provision from this larger package and allow for stand-alone legislation. My guess is that he won't. He's seeking any leverage he can obtain for his larger political battle. However, in the whole scheme of things, given that more than 98% of the debt would not be subject to the March 16 date, that leverage is actually very small.
    You are wrong here, since it afffects the budget, he needs a quarum. To deny that, is the reason democrats have fled to Il.
    Last edited by buck; 03-01-11 at 02:10 PM.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by majora$$hole View Post
    i've been asking my friends the last couple of days how many years a retiree pulls from the "pension fund" before they die and we have come to a 15 year time frame. and these people pay into said fund their whole career say 30 years or so. can someone explain to me how is it that this model does not work? maybe we need to audit the fund to find out where that money has gone? and that, i say, will go a long way toward solving the problem. the same can be applied to social security maybe we should audit the i.r.s. to see where the money went.
    We need to do that, anyway.
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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by haymarket View Post
    Oh brother. Yet again



    That was the US Supreme Court. We all can have an opinion of what the Constitution means. Theirs counts.

    That's fine, and no one is taking away their free speech or any other constitutional rights. The Supreme Court shouldn't be making law.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by Chappy View Post
    The whole world is watching.
    Hopefully Walker does not chicken out.
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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by buck View Post
    So, out of that 165 mil, are we in agreement that 100.0% of that has to be refinanced by 03/16 in order to close the budget deficit in the current fiscal period?
    Yes.

    Apparently, that won't be in time to close the deficit from the current fiscal period. So, that doesn't really help them.
    Longer-term, it will need to be addressed.

    You are wrong here, since it afffects the budget, he needs a quarum. To deny that, is the reason democrats have fled to Il.
    The way things have been handled, the refinancing provision would probably need to be part of separate legislation and the democrats would need to be guaranteed that they would not be compelled into providing a quorum for the other legislation. Currently, the small share of debt refinancing is being used as leverage to try to bring them back to overcome the lack of quorum. I fully understand why it is being handled as it is, but I don't believe that leverage is sufficiently great to produce the outcome of allowing for a quorum.

    Ultimately, some deal needs to be reached to overcome the impasse resulting in a lack of quorum e.g., perhaps the collective bargaining provision could dropped, but only in exchange for a commitment from Democrats to allow for a quorum on legislation that would actually bring about substantial pension and/or health benefit restructuring that would contribute to eliminating Wisconsin's long-term fiscal imbalances. Fundamental reform in either area would constitute a big step forward. The state is on a fiscally unsustainable path.

    A worst-case scenario where the state waits until after the next election cycle to address its urgent fiscal challenges would be very damaging.

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