Byron York - Will Obama pay the price for cutting Medicare?

In the health care debate, Barack Obama is getting away with the rhetorical equivalent of murder.

To pay for the bulk of his proposed remake of the health care system, the president has a two-part plan. Half the money would come from tax increases, and the other half from reduced spending on Medicare.

So far, the health care battle has not focused specifically on the proposed Medicare cuts. But older Americans are the most avid voters in the country, and the latest Gallup poll shows that just 48 percent of people age 65 or older approve of the job Obama is doing as president -- the lowest of any age group. Much of Obama's problem with them can be traced directly to the health care issue.

Click to read entire article: Byron York - Will Obama pay the price for cutting Medicare?

Fayette County Commission Takes a Page from Fed's Playbook

We're all aware that the spending spree in Washington D.C. is going to cost our children and grandchildren. Choices being made by the Feds are obligating future generations for unknown amounts.

The Fayette County Commission will potentially be doing something somewhat similar, albeit on a smaller scale, tomorrow night. At the 7 p.m. Commission meeting on Thursday they are going to make a decision that could hit you and I, along with every future Fayette Countian, in the pocket book.

What could our little county be doing that could have such long term repercussions on taxes?

The Commission will probably pass a defined benefit plan tomorrow night for county employees.

Surprised? I bet you thought they wouldn't do something so costly to the taxpayers during these economic times, didn't you? I bet you thought it was a dead issue, too, didn't you?

Not so. It's on the agenda as old business. In case you've missed the history, the Commission actually approved the implementation of a DB plan in a 4-1 vote toward the end of 2007. Herb Frady, Eric Maxwell, Robert Horgan and Jack Smith voted to implement the plan, Peter Pfeifer voted no. Since the vote, the Commission has simply been fiddling around talking to providers, trying to get the best deal, possibly waiting until they thought they could slide it through quietly.

If you go to the meeting tomorrow night, you're going to hear blarney that'll make you think you're listening to the best o' the best. Fayette County is going to need to find a leprechaun's pot o' gold at the end of a rainbow to cover the tab when the bills start coming due, too.

The Commissioners are going to tell you that it isn't going to cost the taxpayers. Their magnificent plan is different than everyone else's plan.

The plan won't cost you --- now. However, across the country without any exceptions that numerous researchers have been able to find, the tax payer inevitably ends up with a huge bill that is impossible to cover. Sorry, no rainbows, no leprechauns, just a bill that requires either a cut back of services or higher taxes, and sometimes both.

DB plans have been huge contributors to the problems of companies like General Motors, Delta and others.

Another surprise to some? The group the Commission would be hiring to manage (benefit, reap the rewards from) the plan is going to be… GEBcorp. You remember don’t you? They're the ones the Commissioners had give them all the data that justified the implementation of the plan. They “volunteered” their services at no cost just to help out our great county. Wow. Such generosity! Yeah, right. Can you say “deals cut, hee hee hee, rub hands in glee at plans coming to fruition”???

If you go back through my blogs and the articles I’ve written over the past years, you’re going to find that I can now say “I told you so.”

What can you do to stop this? Well, I'd say you could fill the Commission Chambers tomorrow night and voice your opposition, but I have low expectations that you would change anyone's votes.

Herb Frady said he'd vote against it during the election (even though he voted for it, then said he didn't, but tapes proved he did). They don't need his vote. Could be it'll be a 3-2 vote for it depending on who's up for election or who thinks they need to be perceived to be on the side of taxpayers. But it appears it’s going to pass.

I won't go into details about why it's bad. I've gone over and over it in previous blogs. There have been letters written, videos made and plenty in the media.

Maybe it's time for a Fayette County Tea Party.

Previous blogs I've written on the Fayette County Commission's DB plans:
Defined Benefits Gets Temporary Government Bailout, Er, Legislation
Defined benefits are a hot topic in Fayette County, GA. Well, it's a hot topic for those responsible citizens who realize what the future holds for the county should our esteemed local commissioners vote to burden the county with it. For those of you who have been following the ongoing debate, I thought you'd be interested to know the Federal government, yep, the Federal government (that would be Congress) has just unanimously passed The Worker, Retiree, and Employer Recovery Act designed to provide temporary relief to retirees and employers sponsoring defined benefit pension plans. President Bush is expected to sign the legislation into law. This Act, among other things, addressed the unanticipated increases in pension funding requirements. Hello, Fayette County! Is anybody seeing the bailout trend? Is anyone listening?

More on Defined Benefits for Fayette County, GA
Last night the committee the County Commission selected to study implementing a Defined Benefits Retirement Plan for county employees asked for more time (Vote on Defined Benefit Plan Vendor Choice Postponed at County Commission Meeting). Since asking for bids in September the group has been reviewing the many, many plans submitted by various companies hoping to get the County's business. It's big business. It's a carrot with a short stick and a lot of companies are vying to be the ones to chomp down on that juicy veggie. (Hey, I'm the queen of bad metaphors... I'm sure before I finish I'll have you rolling your eyes to the heavens.)

Defined Benefits in Fayette County Georgia
The letter below is a letter to the editor received for inclusion in the Fayette Front Page. As many of you know, I think it's a travesty that the Fayette County Commission has chosen to implement a Defined Benefit retirement plan for their employees.Like everyone else who has ever implemented a similar plan, the Commission says it won't cost taxpayers... I have searched and searched trying to find a similar plan that IS working somewhere. All I find are horror tales. And not surprisingly, almost every government that implemented a DB plan said, when trying to sell it, that THEIR plan wouldn't come back to bite the taxpayers at some point. It was different than all the others. Guess who told 'em that? Those guys who are selling the plan of course!

Pension Problems
Across the country businesses are failing. In some cases the straw that broke, or is breaking, the proverbial camel's financial back is their defined benefit pension plan. Do a Google search and see how many references pop up regarding pension plans and company failures.

Tough Times
The Fayette County Commission has frozen somewhere in the neighborhood of 20 to 25 jobs this year. I just received a notice from Gwinnett that they've initiated a hiring freeze and expect to save roughly $45 million in a 12 month period. We know Atlanta is having problems, seemingly much of it due to their defined benefit program compounded by the current economic difficulties. The state is in trouble for the first time in quite some time. Not too long ago they had a surplus they were arguing about. Now they're in the hole.

Defined Benefits... Pension Woes...
Across the country governments are having major, major problems with their defined benefit pension plans. They are running from them like they are killer bees swarming. Not so in Fayette County. Our "leaders" voted to implement a plan. Yep, they are building hives to house the bees. The taxpayers are the ones who will someday feel the mighty stings.

If a tree falls in the forest…
The County Commission held a number of meetings where they discussed the switch to a defined benefit (db) retirement program for county employees. Unfortunately for taxpayers, they held every single discussion during their daytime Wednesday “workshop” meetings. No public comment is allowed during those meeting. And, it is impossible for 99.999% of the public to attend. They may as well have been standing in a forest with no one around.

Christmas for some, coal for the taxpayers...
Last night’s County Commission meeting was jam-packed with headline making happenings. Unfortunately (or fortunately….) I was off making money selling my pottery and had to miss the meeting. However, I do have audio from the meeting and have talked to a number of folks who were there, and I asked for and received copies of some of the statements made by concerned citizens.

The Tax Hike Cometh…
Oops, goofed, the tax hike has already cometh… However, if you think the County’s tax increase this year is something, wait until the County Commission votes to implement defined benefits for county employees! The County seems hell bent on doing what every other large business has been forced to dump if they planned to stay in business. Companies across the nation have found it impossible to fund the kind of retirement program the County wants to put in place. They’ve gone into bankruptcy; they’ve run to the government to help, they’ve closed their doors.

Wooten on Defined Benefit Plans, etc. - worth a read
State lawmakers must rid pension plans that bilk taxpayers
By Jim Wooten Monday, August 20, 2007, 09:23 PM
The Atlanta Journal-ConstitutionThe system abused by former Fulton County Superior Court Clerk Juanita Hicks and her hand-picked successor is flawed on so many levels that, but for the self-interest of beneficiaries in elected office, it would have been fixed decades ago.

Seven Fayette County Commission Chairman have spoken out... It's time to wake-up!
Seven, yes SEVEN, former Fayette County Commission Chairman have now voiced their opposition to actions of the current Board of Commissioners. That is unprecedented in the history of this county, and perhaps in any county in Georgia or the United States. They have spoken out against the firing of County Attorney Bill McNally. They have spoken out regarding the current Board’s plan to move employees to a defined benefit plan.

Infomercial Suspect in its Claims?

Just had to pass this article along.

ATR: Myth vs. Fact: The Obama Infomercial Lies to Taxpayers About Obama Tax Hike

PRNewswire-USNewswire/ -- Americans for Tax Reform released the following in response to the Barack Obama "infomercial" televised nationally on Wednesday evening:

How Do You Give a Tax Cut to Non-Income Taxpayers?

Myth: "As president, here's what I'll do. Cut taxes for every working family making less than $200,000 a year. Give businesses a tax credit for every new employee that they hire right here in the US over the next two years, and eliminate tax breaks for companies that ship jobs overseas."

Fact: According to IRS data, 33% of families don't even have an income tax liability, so it's impossible to cut their income taxes. Also, Obama's summary conveniently leaves out the fact that he would bring the small business tax rate to over 50 percent and would hike the capital gains and dividends tax at a time of market turmoil. His plan is a massive tax hike.

Obama to U.S. Companies: Don't Let the Door Hit You on the Way Out

Myth: (Ted Strickland speaking): "Think of this. Barack Obama is going to be a Democrat in the presidency who actually cuts taxes. But he's gonna cut taxes for the people who really need a tax cut. He's gonna cut taxes for the struggling families. And he's gonna do that while holding accountable those companies that take advantage of tax breaks in order to send jobs offshore and to other countries."

Fact: Obama will raise taxes by over $1 trillion by hiking the small business tax rates, the Social Security tax rate, and the nest egg tax rates on capital gains and dividends. Also, the reason companies move overseas is because our taxes are already too high. How does raising their taxes do anything but make this problem worse?

"Rocket Fuel" for Small Businesses?

Myth: (Gov. Tim Kaine) "Barack has looked at the small business side of the American economy and says 'Look, that's where most innovation and entrepreneurship is. Let's give them the rocket fuel to really accelerate rather than giving tax cuts to the ExxonMobils or the big oil companies that need not one ounce of help from the government to be very successful.'"

Fact: Under Obama's tax hike, the tax rate on two-thirds of small business profits will exceed 50 percent for the first time since Jimmy Carter. If that's rocket fuel, the U.S. economy won't ever get off the launch pad. Also, raising taxes on energy companies won't do anything except make energy more expensive for consumers.

Barack Obama, Spending Cutter?

Myth: "I've offered spending cuts above and beyond their cost."

Fact: We can't say it any better than the AP: "Obama's assertion that "I've offered spending cuts above and beyond" the expense of his promises is accepted only by his partisans. His vow to save money by 'eliminating programs that don't work' masks his failure throughout the campaign to specify what those programs are --- beyond the withdrawal of troops from Iraq."

Small Businesses and Savers Should Be Worried About Obama

Myth: "So I'm not worried about CEO's, I'm not worried about corporate lobbyists, I'm not worried about the drug companies or the oil companies or the insurance companies -- they'll be fine, they're going to look out for themselves. I'm worried about the couple that's trying to figure out how they're going to retire. I'm worried about the family that's trying to figure out how they can save for their child's college education. I'm worried about the single mom that doesn't have health insurance. I'm worried about the guy who has worked in a plant for 20 years and suddenly sees his job shipped overseas. That's who I'm worried about. That's who I'm going to be fighting for and thinking about every single day that I'm in the White House."

Fact: If he's worried about the couple about to retire, Obama should be asking himself why he wants to tank their 401(k) nest egg by raising capital gains and dividends taxes. If he's worried about the parents saving for college or struggling to afford health insurance, he should ask himself if raising their small business employer's tax rate to over 50 percent is a good idea. If he's worried about the longtime employee's job getting shipped overseas, he should ask if the fact that America has the second-highest corporate income tax rate in the world has anything to do with that.

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Kudos to Peachtree City for Saying it Straight

Peachtree City is raising taxes. If you live in Peachtree City that can’t make you a happy camper (or more accurately, a happy home owner). You tax bill is going to be higher.

The School Board is also raising taxes. The County Commission raised taxes last year and said earlier they were going to raise them this year.

Whoa, you say, I haven’t heard that. In fact according to some of the campaign literature I received the Commissioners said they haven’t raised taxes in two years. Janet, you have to be mistaken.

Nope. It’s just like former President Clinton’s statement regarding the definition of “is”. There are taxes and then there are taxes.

When Peachtree City says they’re raising taxes, they are doing exactly the same thing the County did last year and the School Board did both years. However, rather than candy-coating it with misunderstood terminology, “millage rate”, they said it straight out with great honesty.

Here’s a real simplified explanation of how millage rates work (don’t hold my feet to the fire if it’s not 100% technically complete, I’ll link you to an article that uses all the correct terms at the end of my editorial):

When your property values increase, which they usually do each year, the governing authority has the ability to off-set that increased value by decreasing or rolling back the millage rate. If they roll it back, those taxes don’t go up. If they leave it without changing anything your taxes go UP due to the increased value of your property. If they RAISE the millage rate, the taxes go up even higher.

Not rolling back the millage rate is called a “back-door tax increase”. Because it’s such a sneaky way to get more tax dollars from you, the state finally started requiring cities and counties to hold three public hearings anytime they weren’t going to roll back the millage rate.

Fayetteville isn’t rolling their back and neither is the School Board. Now Peachtree City is doing the same.

Those living inside the cities will get a double whammy. Their city and the school board didn’t offset the mill rate.

Unfortunately, even though the state requires the three hearings, most people only see something about their governing body having a public meeting regarding the millage rate. I’d venture to guess that 80% of the population doesn’t equate millage rate with tax hike.

In fact, I sat through a County budget meeting last year and Fayette County Commissioner Eric Maxwell said something to the effect that they weren’t going to raise taxes, no way, no sir. However, he said, they wouldn’t be able to roll back the millage rate for the first time in five or six years. I was filming that day, maybe I’ll go back and see if I can dig it up for you.

A tax hike by any name is a tax increase. Whether you say your not rolling back the millage rate or say you’re increasing taxes.

Although I’d prefer that Peachtree City not increase taxes, at least they say it like it is.

Christmas for some, coal for the taxpayers...

Last night’s County Commission meeting was jam-packed with headline making happenings. Unfortunately (or fortunately….) I was off making money selling my pottery and had to miss the meeting. However, I do have audio from the meeting and have talked to a number of folks who were there, and I asked for and received copies of some of the statements made by concerned citizens.

Three topics caught my attention in particular. Defined benefits, the increased cost of the emergency “bunker” (as it’s been nicknamed) and the Sheriff’s proposed purchase of new guns.

In this blog, I’m going to focus on the defined benefit (db) program and on one of the speakers who addressed the Board last night. It’s Christmas, I don’t want to tax you with a long blog. You’re gonna be taxed enough as it is with all your Christmas shopping, the increase in taxes the current Board dropped on you and the increase in taxes you’ll see once they implement the db program…

Former Senator Rick Price (who’s also a past County Commission Chairman) spoke against the proposed db program at last night’s meeting. He presented a list of ten questions regarding the program. Just as a bit of background on the Senator, he is a financial planner. He knows his stuff. Thus he has the benefit of looking at the idea of the db program from multiple sides. He’s been in the hot seat on the Commission, he’s been in politics at the state level and he has an intimate knowledge of the financial world.

Currently county employees have an award-winning defined contribution retirement program. Some of the Commissioners and the Interim County Manager are pushing hard to switch to a db program. They put together a handpicked committee of employees and an attorney (who doesn’t deal at all with db programs or anything related) to “study” the feasibility of switching to a db program. The committee worked with the group that will get the county’s business if they’re successful in selling the program to enough of the Board to “study” the issue… sure, right, sounds good to me, too.

From what we’ve seen thus far, the program is a shoe in and county employees are going to get a really nice Christmas present. The taxpayers are the ones who’ll be left holding the proverbial stocking full of coal, one we won’t deserve to have foisted on us.

Here are Senator Price’s ten questions. What do you want to bet that we never see a response to them? Or, if we do, they’re answered in rosy gloss-over-the-fact prose by the guys who set the program up for Henry County (huge unfunded liabilities to the tune of millions and millions) who’re now trying to sell the program to the Fayette County commissioners?

Here are his questions:

As a taxpayer of Fayette County, I am requesting the Board to respond to my written questions below as individual Commissioners and/or as a group BEFORE a vote is taken on implementing a Defined Benefit Retirement Plan.

1. Is the board going to vote to implement a benefit plan change of any type before the end of 2007?

2. Will you vote to implement a Defined Benefit Retirement Plan WITHOUT a series of PUBLIC MEETINGS once the board has made a decision to implement a Defined Benefit plan?

3. Can you explain why this Board has not hired an independent pension consultant?
(NOTE: When the Board enhanced the existing Defined Contribution Retirement Plan in 1995, the Board hired an independent consultant to evaluate options for plan design, cost and eventual coordination of the bidding process and finally, the selection of a new Defined Contribution Plan company.)

4. Please explain why this Board has as their stated goal that Fayette County Employees retire with 100% of an employee’s pre-retirement salary. Please name any major private sector employer who has as their stated goal that their employees retire with 100% of their pre-retirement salary.

5. Please explain why this particular board is willing to commit future boards and taxpayers to the unfunded liabilities that are prevalent in most government defined benefit programs. See attached.

6. Is the Board aware that constitutional officers, (Sheriff, Tax Commissioners), firefighters/EMTs and other certain public safety employees have Defined Benefit Plans also have available to participate in, i.e., the Georgia Firefighter’s Pension Fund and the Peace Officers’ Annuity & Benefit Fund of Georgia? These additional pensions are funded by additional surcharges to fines and fees that taxpayers pay. Some are voluntary and some are mandated by the state legislature.

7. In your research, are you aware of Henry County’s Defined Benefit Plan shortfall? Are you aware that Henry County implemented their Defined Benefit Plan 4 years ago and now has a $25 million dollar “unfunded liability” that falls on the Henry County taxpayers? See attachment.

8. Can the Board explain why most major corporations in general, and Delta Airlines in particular, have frozen or cancelled their Defined Benefit Retirement Plans but Fayette County is reversing this trend by planning to add a Defined Benefit Retirement Plan?

9. Is the board aware of the possible negative exposure a county employees spouse or beneficiaries may have by participation in a Defined Benefit Plan versus the current plan?

10. Please review the attachments that show three local governments whose audits show that even though the are funding their annual dollars (at 100%) that actuaries advised, they all have shortfalls that will have to be paid by the taxpayers. Will this board show the true cost of a defined benefit plan?

Respectfully,
Rick Price

The Tax Hike Cometh…

Oops, goofed, the tax hike has already cometh… However, if you think the County’s tax increase this year is something, wait until the County Commission votes to implement defined benefits for county employees!

The County seems hell bent on doing what every other large business has been forced to dump if they planned to stay in business. Companies across the nation have found it impossible to fund the kind of retirement program the County wants to put in place. They’ve gone into bankruptcy; they’ve run to the government to help, they’ve closed their doors.

And it’s not just private companies (like IBM, General Motors, Delta Air Lines, etc.) who’ve had huge problems with trying to pay the bill for defined benefit type retirement. Counties and cities are having to go back to taxpayers to fund bloated defined benefit programs.

At a time when so many are crashing and burning in large part due to defined benefits, the County is looking to grab onto the golden tether and ride the horse straight into our pockets. Yep, that’s where all this is going to end up, with taxpayers having to pony up the funds to cover benefits for employees who’ve long since moved on to other jobs, states, countries...

Right now, it looks like the county is getting ready to commit to a defined benefit system that is raising taxes across the state and beyond.

Who’s giving them advice on this plan? From everything I’ve seen at the meetings and heard from others in the know, the company that will ultimately get the business is providing all the studies, data and info. Oh, and a committee of employees who are getting close to retirement and one outside attorney who has absolutely no knowledge of retirement systems and said so during his first briefing to the Commission.

I’ve talked to umpteen insurance types, financial wizards and the like about defined benefits. Every single one, no exception, basically said “RUN” in the other direction if someone starts talking defined benefits. I’ve been on the Internet searching for someone who says something good about a defined benefit program. The only folks saying they like it either work for or are affiliated with someone who’s also selling benefit programs. Find a think tank who says it’s a good idea… find an independent financial wizard who says it’s a good business decisions… If it’s a bad business decision doesn’t it stand to reason that it’s a bad decision for the government to expect us to fund this type retirement?

Here’s my prediction based on the information that abounds on this issue: We’ll be fine for a few years. All will be rosy and everyone will sing merry songs and give glowing reports. Then the County will have a wave of retirements. They’ll scramble a bit to cover the unfunded liability. It’ll grow. And grow. By the time the next change of command on the Board of Commissioners the county will be in a deep hole with no way to dig itself out. There will be some major scrambling to try and figure out how in the world to pay benefits for those who only worked for the county for five, six and seven years. They’ll do without some recreation, they’ll do without some needed road improvements, they’ll cut back here, cut back there… and raise our taxes ‘cause there ultimately won’t be any other way to cover the tab that will grow exponentially as more and more hit retirement age.

I worked for the government for 14 years. I had both a defined benefit retirement and a 401K plan. I didn’t appreciate it while I was there, but boy I love it now. I understand why everyone would want a defined benefit retirement plan. It’s there for a lifetime if you don’t cash it out. However, my 401K would do the same thing. In fact, I rather like it better. When I die, my husband or my kids will get whatever I didn’t use. The defined benefit? It doesn’t belong to me. It belongs to the government. They’ll give the money I paid into it to someone else.

One of the reasons for moving to a defined benefit system that is touted is that it makes the county government competitive. Well gee, I guess it’ll make ‘em even more attractive now that every other company in the world is ditching their defined benefit. I would argue that for most of us it’s things like salary, health, location, and the job itself that attract us. Until most hit their 40s or 50s they’re not thinking much about retirement. If they are the type that does, many would be happier (or as happy) with a 401K or the system the County currently has. Who wouldn’t like to own their own future? Who doesn’t like the idea of the company matching their contributions? Managed correctly a 457 or 401 can out-perform many retirement systems and it doesn’t go away the day you die.

We need to make sure county employees aren’t stuck out in the cold when they retire. We can’t expect them to live on Social Security alone. A good percentage of county employees are socking money away for their future under the current program. Some aren’t. Some of those are young and aren’t yet thinking of that day in the future when they’ll retire. Some have spouses who are making sufficient money that they’ve opted to take every penny of their salary. Some who aren’t contributing to the current retirement program won’t want to pay their portion of the defined benefit program either if it means a decrease in their take-home pay.

[[[[Just in case you're wondering what the difference is between a defined benefit retirement plan and a defined contribution plan like the County currently offers here's easy to remember definitions: defined benefit: controlled by others and they tell you what you'll get; defined contribution : you own it, and put your own funds into it. Usually companies do a match with a defined contribution plan]]]]]