“What a salesman,” he said, mockingly. “I guess that’s what you learned … selling that stock that went south.”
– California Governor Brown, to challenger Kashkari, during televised debate Sept. 4th, 2014 (ref. SF Gate)

If anyone wants to know what the theme of Governor Brown’s attacks on GOP candidate Neel Kashkari is going to be over the coming weeks preceding the November 4th, election, his remarks in their debate last week would probably provide accurate clues. At least a half-dozen times, Governor Brown smeared Kashkari with accusations of being beholden to his banker friends on Wall Street. You know, those guys who shorted the investments of millions of small investors and turned America into a debtors prison? The sharks at Goldman Sachs? The banker bullies who took taxpayer funded bailouts and then collected billions in personal bonus checks? It will play well.

But Governor Brown is the king of taxpayer bailouts. Because pension funds, the biggest players on Wall Street, are getting bailed out by taxpayers. And over the corrupt courts who deny activists their chance to get pension reforms onto the ballot, or deny voters who have passed pension reforms the chance to enforce them, Gov. Brown presides. Over California’s obscure but powerful Public Employee Relations Board, an entity that consistently overrules common sense details of proposed pension reform and compensation reform, Gov. Brown presides. And before the billions in taxpayer sourced public sector union dues that deluge every policy debate, every press briefing, every lobbyist’s bank account, or politician’s war chest, Brown bows down, beholden, and says – “your wish is my command.”

California’s state and local governments owe an estimated $1.0 trillion dollars (ref. CPC Study), about half of it in the form of unfunded retirement healthcare and pension liabilities for government workers, the other half for bonds and short-term borrowing to finance projects whose costs were inflated by unions, or deficits whose root cause is government union greed. Every dime of that debt benefit a public sector union agenda; every dime of it was facilitated by bankers. Unions and the bankers worked together to con voters into approving the myriad measures that lead to this fiasco, or, even more likely, pressured beholden politicians behind closed doors into enacting them without voter approval.

And Governor Brown presides over this entire, gigantic, exploitative joint venture between government unions and financial firms. Who will bail out California’s state and local governments from a trillion dollars of debt?

Taxpayers.

Who does Brown think will pay for the bailout, when government worker pension funds report too many of their investments were comprised of “that stock that went south?”

Taxpayers.

Who does Brown think benefits from obscenely inflated asset prices that make life unaffordable except to the super rich? Pension funds benefit, of course! Without asset bubbles, the pension funds would collapse overnight, just like subprime mortgage derivatives did back in 2008. The same corruption. And the same victims.

Taxpayers.

What a salesman. What a hypocrite. Governor Brown, the taxpayer bailout king.

20140909a_Brown-350pxJerry Brown – the bailout king of California.

Across California this November, voters will decide on local tax measures promoted as necessary to “keep teachers in classrooms,” and to “protect public safety,” when invariably the amounts being raised are roughly equivalent to the amounts by which pension funds are planning to raise contributions. CalPERS intends to increase their required annual contributions by 50% over the next five years. CalSTRS needs an additional $5.0 billion per year, or more. Jerry Brown is no dummy. He can connect the dots, but he’d better make sure the voters don’t.

The pension bankers and their union allies hide behind rhetoric that is transparent in its falsity, with a press that is either too innumerate, too busy, too biased, or too scared to challenge any of it. CalPERS claims their investments help California’s economy, when 90% of their investments are made out of state, and 16% of their retirees live out of state. Union officials claim their pensions are “modest,” citing “averages” of $25,000 or less, but not revealing how those averages include millions of people who only worked a few years for state or local government and barely vested a pension. The truth: For recent retirees who benefit from the “enhancements” of the past few years, the average non-safety pension plus benefits in California is over $60,000 per year; for safety retirees it is about $100,000 per year.

And Brown leads this chorus of deceit with abandon, claiming last week that thanks to his pension reform (AB 340), “government employees will pay 50% of the normal contribution,” conveniently neglecting to explain the “normal contribution” is deliberately underestimated via using hyper-optimistic rates of return when making the calculation, and ignoring the fact that the unfunded liability (caused by years of insufficient “normal” contributions) requires a much larger “unfunded contribution,” for which public employees, their unions, and the politicians like Brown who are controlled by the pension bankers and the unions, expect taxpayers to bear 100% of the cost.

Bond issuers earn billions on fees to enable California’s state and local governments to accumulate unsustainable debt. Pension funds pay billions each year to financial firms to speculate on global markets in a desperate attempt to prolong the nominal solvency of unsustainable government pensions. And when these bills come due, and when the investment returns fail to meet expectations, taxpayers fund the bailout.

Neel Kashkari may or may not have some explaining to do. But Governor Brown, the bailout king, has no business calling anybody, anywhere, a tool of bankers.

*   *   *

Ed Ring is the executive director of the California Policy Center.

8 Responses to Governor Brown – The Bailout King

  1. BOPRN says:

    What a load this ‘article’ is. Where to start is difficult as there is just so much misinformation here. Guess you have a gullible audience, and I have to congratulate you on that, but geeeeze – this is some bad stuff.

    I remember when you used to write some 1/2 decent articles. Sad to see those days are long gone.

  2. Mike T. says:

    …. open information about what all state-money employees make as salaries or as lifetime-salary-continuances.

    A better word than “pension” or “retirement income” is the term “lifetime-salary-continuance”: that describes much more accurately what it is.

    (By the way: I get one. A nice one. For every $100 I was paid gross salary, a total of about $30 was put into lifetime-salary-continuance accounts (PERS and SocSec): $7 me PERS, $7 me SocSec, $7 employer PERS, $7 employer Soc Sec. And today the PERS lifetime-salary-continuance is literally 4x the Soc Sec, even though the same amount was put into both!!! go figure that out!!)

    So, I am in the Transparency data. With a nice PERS, thank you, state of California and county property taxes. (About 60% of the funding of a California Community College comes from its local county property taxes!!!)

    The word that should be used: lifetime-salary-continuance.

    For one thing, a “pension” implies the person is not working anymore. In the “game” of STRS and PERS, there is plenty of working while collecting a lifetime-salary-continuance.
    Here is an example: the CEO of the state agency The California Community Colleges has a lifetime-STRS-continuance of $181K and is working at a PERS-salaried-job of about $200K.

    There are numerous such examples. College presidents who retire and go out of state to work: there are numerous examples ….

    STRS CCollege employees who teach one class at CSU and gain non-vested PERS at their high STRS salary and not at their part-time PERS CSU salary: this is a well-known ‘wangle”, maintain your fulltime STRS CCollege job while doing one class a semester of a CSU PERS part-time teaching job.

    I was inside the business: the role of STRS and PERS as a “motivator” of employee behavior is enormous …. un-beneficial to the public behavior.

    It’s all about self-interest: that is the motivator. And PERS and STRS are clearly great self-interest motivator. Want a super retirement after working an easy (and unchallenging) job for 30 years? try PERS and STRS. In fact, I cannot understand why any PERS or STRS job doesn’t have about 5,000 applicants: guess no one knows what a “good thing” it is. As long as you’re doing a “numbskull” job, you might as well have a guaranteed super lifetime-continuance, right?

    Take a look as the state CCCCO as a jumping off place into the colleges: the state agency pays $136K for an administrative job, and the same job at the colleges (with salaries inflated by lax boards) will be $165K. The colleges are all overpaid: this came about because of lax boards. No wonder the colleges all claim that a central state board is bad policy ….. opinion about policy is highly influenced by self-interest.

    The then the colleges are not state agencies, are they? they are actually private business which as chartered by the state. So, basically, the state “farms out” public education to private businesses, not to state-run agencies (and the so-called state “regulation” is much less than you might think. The private businesses run mainly for the benefit of you-know-who …. themselves.)

    Every ship tacks before the wind of Self-Interest. Not difficult to understand, as Adam Smith well knew.

    Main point: how about using the word lifetime-salary-continuance and drop the “pension” word, which is not a neutral term but a positive term which disguises the real situation.

    • Tough Love says:

      Quoting … “(By the way: I get one. A nice one. For every $100 I was paid gross salary, a total of about $30 was put into lifetime-salary-continuance accounts (PERS and SocSec): $7 me PERS, $7 me SocSec, $7 employer PERS, $7 employer Soc Sec. And today the PERS lifetime-salary-continuance is literally 4x the Soc Sec, even though the same amount was put into both!!! go figure that out!!)”

      Easy to “figure out” ….. only about 1/3-1/2 of the actual total “cost” of your promised pension has actually been funded. Should your younger shorter-service “active” associates ever wake-up and realize that THEIR current contributions are being drained to pay you, you’re likely to see some MAJOR pension cuts in your future.

  3. SeeSaw says:

    You are obviously never going to admit that Jerry Brown is a great Governor–sometimes he is a little too pragmatic. He is going to bury Kaskari!

    • BOPRN says:

      Agreed SeeSaw. Prior to retiring I watched Brown fix numerous things that Swarfailure did. The state was sinking fast with all the bond debt accumulated by the ‘governator’. The Republicans indebted the taxpayers via bonds so they could buy their way into office via lower VL fees. Most of that is now paid off. The mess good old govervenator left the general state in was something, with the largest state department (CDCR) in even worse shape. He completely dismantled the CDCR medical system and JB has been trying to fix that – in the mean time it has cost the taxpayers billions per year. There is so much more, but these nut jobs just have to hate on Brown (who is fixing the mess THEY left) rather than concentrate on their own shortcomings. Its just amazing. One has to wonder if this group would even take its next collective breath if it weren’t for the need to complain about what JB is doing.

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