WhackyNation

Already facing a $4 billion underfunding of two of the state’s pension plans, the legislature is going to learn it’s short another $5 billion in health care promises it’s made to future state employee retirees.  Taken together, the state has $9 billion in unfunded liabilities.

Will this be a sneaker wave crashing down on this state’s liberal constituencies who want their Democrat-controlled legislature to spend more money on their pet programs?  Or, will, once again, Frank Chopp find another accounting gimmick to shove the bill onto future legislatures?

The legislature is already dealing with the $4 billion problem with the pension plans by amortizing the debt until the year 2024.  But, the additional $5 billion liability is new on the horizon since accounting rules have only made government account for future cash flow requirements to fund pensions and not for the other retirement benefit promises, i.e., health care.

But that’s changing next fiscal year.

Precipitated by the financial collapse of the City of San Diego a few years ago, a new accounting rule known as GASB 45 (pronounced GASBEE) for the Governmental Accounting Standards Board that issued it in 2004, will take effect in July, 2007.  When it does, observers believe that the problem will amount to $1.7 trillion for all levels of government in America.  This will be a shock to Americans who already face a staggering Social Secuity funding issue for retiring baby boomers.

GASB 45 requires government to account for the unfunded liabilities for retirement benefits other than pensions, namely healthcare, insurance and disability benefits.  Under old accounting rules these expenses were most likely accounted for during the years of actual retirement.  Now government must account for the cost of the future benefit during the working years of the employee, or about 1/30th the cost of estimated retirement benefits each year an employee works.

But GASB 45 only requires governments to expense for these future liabilities, but not to fund them.

Huh? Funding is the actual allocation of real dollars to an account (also known as cash flow);  Expensing simply accounts for the liability on income statements.

So, if the government delays funding, what’s the big deal?  The impact will come from honest accounting records detailing indebtedness.  That in turn will bespeak of the quality of fiscal policy which impacts bond ratings, in other words, the cost of credit and the ability of the state to borrow money. 

And, if the state had no plan to rectify the unfunded liablities, future taxpayers would face huge bills to pay for the pensions and healthcare benefits already earned by our current state employees.

Since the GASB 45 rule change was announced, the Washington Office of the State Actuary has had a committee studying the healthcare unfunded liability.  It’s not an easy task since health care insurance costs have been volatile.  How does one model these costs 10, 15 or even 20 years out?  The committee’s report is not due for another month and no numbers are final.  But the number heard around the hallways is $5 billion, give or take.

My prediction is that Frank Chopp will engineer another accounting trick, as he did with paying for the pension plan underfunding (see below).  Doing this will allow him to keep cash in next year’s budget so he can reward his constituencies by pushing retirement indebtedness onto future taxpayers.

Background: Unfunded Pension Liabilies

The Washington State Department of Retirement Systems (DRS) manages eight retirement systems, serving more than 436,000 current and former government employees.  The three largest are the Public Employees’ Retirement System (PERS), the Teachers Retirement System (TRS), and the School Employees’ Retirement System (SERS).  The Department of Retirement Systems also administers plans for the Law Enforcement Officers’ and Fire Fighters Retirement System (LEOFF), the Washington State Patrol Retirement System (WSPRS), the Judges’ Retirement Fund (JRF), and the Judicial Retirement System (JRS), as well as the Deferred Compensation and Dependent Care Assistance programs. 

Although two of the retirement plans are underfunded by $4 billion, “Washington State is not in crisis,” explains David Pringle of the State Actuary Office.  He explains that all eight plans taken collectively are more than 100 percent funded.  That’s because several other plans are overfunded.

Eight years ago, during the booming stock market days, all the state’s retirement plans were in great shape.  But then two things happened: First the Democrat-controlled legislature, over the objection of the Republicans, approved “Gain Sharing” for already retired PERS1 and TRS1 employees.  The concept was to share some of the great return on state pension assets from the booming stock market with the retirees, you know, the old-grey-haired-former-school-teachers-on-a-fixed-income.  The problem with this liberal policy was that it did not forsee the possiblity of a downturned stock market.  Since gain-sharing increased the base pay of already retired employees it accrued an unfunded liability in event of a bad stock market.  And, the bad stock market was the second thing to trigger a small collapse in the state’s pension assets.

The 2003 Actuarial Valuation Report (AVR) found that gain-sharing adds an estimated $622 million to the present value of the fully projected benefits liability in Plans 2/3 and the unfunded liability of Plan 1 by $930 million.

If left intact, gain-sharing will cost an additional $7.8 billion over the next 25 years.

Even the Democrats are waking up to their fiscal blunder.  There is a good chance Frank Chopp will engineer a repeal of gain sharing this year.

So, how has Chopp dealt with the $4 billion unfunded liability issue in the last three legislatures?

In order to balance the last few budgets and still increase spending on pet programs, Washington’s legislature has had an accounting trick to pay for the unfunded pension liability.  The trick resembles a mortgage stretched out until the year 2024.  By paying interest only on this debt for the next few years, the last legislature got away with a payment of less than $100 million.  According to a model (see page 36) presented to the Select Committee on Pension Policy this fall, the first principal payment won’t occur until 2010.  Payments will gradually reach $900 million by 2024.  And, remember, these payments will be made by future taxpayers for debts accrued by Frank Chopp’s past few legislatures.

As liberal as this policy is, Frank Chopp did get a lucky break the last six months.  The stock market boomed.  And, if the stock market keeps performing well, the pension plan underfunding liability could possibly evaporate.  Last year, the state received 15% on all its managed pension monies and its assets grew from $60 billion to $70 billion.  A few more years like that and it would be good news indeed since the current model assumes only an eight % return on managed assets.  But that’s gambling on the stock market.

If Chopp lucks out with the stock market in the pension fund, he can never have any such luck on the $5 billion unfunded health care liability.  The difference is that unlike the pension fund, with $70 billion earning (hopefully big) market returns, the health care fund has zero assets invested.  Chopp has to come up with a real $5 billion to pay for health care. 

Despite the pension plan problems, Washington State is faring better than most states.  Oklahoma, for instance, is facing the staggering problem that its teacher’s pension plan is only 35 percent funded. 

In the private sector, the rising cost of retirement has led employers to reduce benefits.  But public employers have been reluctant to follow suit.  The Democrats are beholden to public employee labor unions.

Ultimately, it’s not government that will be held accountable, it’s taxpayers — be it through higher taxes, reduced services, or a combination of both.

Above all the solution to the problem must be full financing. The bill for all governmental pension promises must be paid as they are made, just as prudent private companies do. Otherwise, the younger generation is left to pay for the contract.

While I am referring to other blogs, the Daily Kos reports that the LD race between Don Barlow and John Serben is heading for a recount … the recount being triggered by one vote.  Democrat Barlow is ahead by 50.17 of the vote and is the most likely winner after a recount.

Josh Feit at the Slog has written an interesting report saying Frank Chopp wants to dilute Helen Sommers’ power as Chair of Appropriations.  Highly recommend you check it out.

Congratulations, Seattle environmentalists.  You just brought stress and trouble to about 600 blue collar families. 

Transalta just announced it is closing the coal mine in Centralia.  About 600 local workers will lose their jobs which will stress the local economy.

The company feels it is cheaper to ship coal from elsewhere than mine next door to its coal-fired electrical generation plant.  Expensive state environmental regulations impacted the decision.

This shutdown will certainly hurt Lewis County’s economy as some of the highest paid blue collar jobs were at the coal mine.

This closure along with the passage of the green-power initiative will certainly mean much, more expensive electrical bills in the future.

Now that the dust of the campaign has settled, will TVW’s CEO Cindy Zehnder go after the Democratic Congressional Campaign Committee with a vengeance?  Or will Zehnder play politics and damage TVW’s ability to cover political speeches in the future?

The DCCC stole video from TVW and produced an independent expenditure ad entitled “I do it” which aired in the final weeks of the Reichert-Burner race in the 8th district:

The soundclip at the beginning of the ad was taken from TVW’s coverage of the Mainstream Republican’s Cascade Conference.  When the ad aired newspapers were quick to point out that Reichert’s remarks were unfairly truncated and his very next sentence indicated he sometimes went against his party’s leadership.  Here’s the full transcript.  Notice how the meaning changes completely with the last sentence which was cut from the DCCC ad:

“When the leadership comes to me and says, ‘Dave, we need you to take a vote over here because we want to protect you and keep this majority,’ I do it. There are some times when I say, ‘No, I won’t.’”

But, aside from how dirty this ad was, the bigger issue is will TVW take action against the DCCC in order to protect its copyright?  If it doesn’t, then TVW might find its cameras won’t be welcome at some speaking venues in the future.  Already Sandra Day O’Connor refused TVW’s cameras from taping her comments at the UW.  Who will be next?

Lawyers have apparently told TVW that a similar case occured in Ohio in the last campaign cycle.  A local court found the offending politician guilty of using broadcast material illegally, but a federal court later overturned the verdict.  This case history may provide the cover for Zehnder to avoid going after the DCCC.  But she would be wrong if she ducked the responsibility.

TVW needs to sue for civil damages.  It should argue that there is a dollar value in damage to its reputation and future ability to cover speeches.  A successful suit with a large dollar reward would give future would-be violators pause.

In addition, the TVW board should authorize its management to produce rebuttal ads to shame future offenders into pulling their illegal ads.  TVW’s rebuttals should not only run on its own channels but also on the same channels where the offending commercials ran.  The board should authorize a contigency fund to pay for the rebuttals if needed.

This is a paragraph from TVW’s copyright statement:

All content, including text, graphics, audio, video and applications on this site are protected by U.S. copyright and international treaties and may not be copied without the express permission of TVW, which reserves all rights. Re-use of any of TVW’s content and graphics online for any purpose may be granted on a case-by-case basis provided the content and/or graphics are not modified in any way, all copyright and other notices on any copy are retained, and permission is granted by TVW. Re-use of any of TVW’s content and graphics online for any commercial or political purpose is strictly prohibited.

The statement is pretty clear, and until the DCCC violated it, no other campaign has ever violated TVW’s copyright.

If Zehnder doesn’t go after the DCCC, then with her precedent of not defending copyright she’ll be opening the door to future campaigns to lift video at will.

What to make of Joel Hunter quitting as president-elect to the Christian Coalition?

The media today is speculating that Hunter’s concerns about global warming and poverty dilute the Christian Coalition’s focus on abortion and homosexuality, and the string-pullers in the Coalition have had second thoughts.

I have an outside-the-nine-dots thesis.

I think Hunter may be getting ready to run for president perhaps as a third party candidate.

Check out Hunter’s website promoting the sale of his new book, Right Wing, Wrong Bird.  There are 40 podcasts available and the topics could be grouped under the headline “Why I am running for president.”

Hunter has been talking a lot about global warming and aleviating poverty with social programs this past year.  These are issues that find a home in the Democrat Party.

But what about a third party?

What if Hunter could take the Chrisitan Coalition base from the Republican and unite it with the environmentalist and socialist bases from the Democrat Party?  Might there be a new majority party possible?  The question is, do the environmentalists and socialists care enough about their pro-choice and pro-gay rights allies to leave the Democrat Party for a chance of promoting their agenda in a new third party headed by an evangelical?

I think the answer might be no.  These constituencies feel so fervently about their causes that if they felt they could gain by realigning themselves they would.

Socialists want more than anything else a redistribution of wealth.  Hunter can buy them off.  This could include the labor unions.

Environmentalists have a lot more in common with evangelicals than they do with Hilary Clinton, John Kerry or Al Sharpton.  And heaven help us if the enviro-whackos ally with the religious whackos.  The two groups seem to have a common short circuit in their brains on how they approach and discuss issues.  If you want to be scared shitless about this prospect just visit the Evangelical Climate Initiative where the lead sentence reads:

The same love for God and neighbor that compels us to preach salvation through Jesus Christ, protect the unborn, preserve the family and the sanctity of marriage, and take the whole Gospel to a hurting world, also compels us to recognize that human-induced climate change is a serious Christian issue requiring action now.

So, do the numbers.  Are there enough evangelicals, environmentalists, socialists and laborites to wield a plurality, or even a majority in a three party nation?

Am I whacked out here?  Or am I onto something?

Another head-shaker on the front page of the print version of today’s Seattle Times.

An aerial picture of the last couple of miles of light rail track leading to the airport is headlined:

Your ride to the airport is on the way

My ride?  My ride?  This will never be “my ride” to the airport.  Nor will it be for 95 percent of the Times’ readers.  The rest of us will be commuting on clogged freeways and streets because the light rail tracks don’t run anywhere near where we live.

To anyone who thinks for a moment, the headline is blatantly inaccurate.  On the surface its a feel-good-about-our-community-headline, but underneath its a let’s-all-drink-the-Kool-Aid-and-believe-in-the-politically-correct-things-in-our-community.  The headline editor obviously has an agenda to promote public transit and uses the paper’s headlines as a way to promote his or her own politics. 

What’s wrong with this?  Well, for the newspaper’s sake, crap like this erodes the paper’s credibility.  For the community, it further propagandizes a transit solution that may or may not be the smartest or best one.  The headline registers in the minds of readers in Bothell, Woodinville, Issaquah and other communities as one more message that “the RTA is a good thing.”

At least on the internet version, the headline was neutralized by changing the word “Your” for the article “A” :

A ride to Sea-Tac is on the way. 

A politically neutral headline in today’s paper would have been more appropriate, say:

Making tracks to the airport 

The older I become, the more I feel Thanksgiving is the best holiday in America.

No agendas, except taking a moment to reflect on all the bounty and goodness we have in life.

It’s a time for family and friends, for people we care about.

And reflection.

And reaching down to give “thanks.”

I don’t know about you, but my life is better than it was last year, ten years, 30 years ago.

I live in the greatest country that has ever existed.

I believe our generation has the capability of solving many humanitarian needs for the first time in world history.  I am doing what I can to make that happen.  And I hope you are, too.

I see a better world for my children.  My children will live in a better world because of us and the bounty the world has to offer us.

And, for this, I am thankful.

Blessings on you and your families.

Phil Robins passed away November 8th in San Diego.  He was 74.

Many of us knew him as Chairman of the Mainstream Republicans of Washington, a position he served from 1998 to 2004.  We will miss Phil’s jolly outlook on life, his energetic leadership and, for me, his booming, bass voice.  I will always remember Phil starting each Mainstream Board meeting with a thunderous, “An enthusiastic Mainstream welcome to you all.”

Phil had humility and a great love for his fellow man.  Few of us really knew that he had been fortunate to have been born into one of America’s wealthy families.  He could have done anything with his life and career.  Yet, Phil dedicated his life to the service of others.  His entire career was spent with the Boy Scouts of America organization.  In retirement he served on the boards of Swedish Medical Center in Seattle and the Columbia River Exhibition of History, Science and Technology Museum in the Tri-Cities.

For the past several years — as he fought a battle with cancer — he realized his ultimate dream.  An avid sailor all his life, Phil moved onto his sailboat in San Diego and served as Commodore of the Kona Kai International Yacht Club.

Per his wishes, his ashes will be spread in the San Juan Islands where he enjoyed boating during his years in Washington State.

Our lives were made richer by his fellowship.  Sail on, Commodore.

Can you believe it?

First John Murtha, an unindicted co-conspirator in the Abscam scandal, and now Congressman Alcee Hastings?  Has there ever been a Speaker of the House more in-ept?

Nancy Pelosi, what are you thinking?

Why are you planning to name Alcee Hastings to chair the critical House Intelligence Committee when you and Steny Hoyer and Murtha and 413 members of a Democratic controlled congress voted to impeach him as a judge for bribery?  He was only the sixth judge ever impeached by Congress.

So a few years have gone by.  You owe favors to the Congressional Black Caucus, and you feel you owe a few to the politically correct.

Why are you nominating this man who you impeached and the senate convicted for taking a bribe from mobsters to chair the House Intelligence Committee?  This is an incredibly important commitee for our national security.

If he’s already taken a bribe from mobsters, might he also be bought by foreign governments for intelligence?  We know what he is, we just have to negotiate the price.

It didn’t take long.  Around 8:04 this morning the phone rang.  Mike Armstrong’s legislative assistant Wanda was told to pack up and move to some broom closet in the legislative office building.  Evicted.  No longer welcome in the fancy leadership offices in the Legislative Building, i.e. the building we all know as the state capitol.

This weekend Representative DeBolt was re-elected minority leader by his caucus.  Mike Armstrong who had been assistant minority leader had the cajones to run against DeBolt.  But DeBolt wheeled and dealed a better game.  Differing sources say DeBolt got 21 or 25 votes from his caucus.  Amazing.

So now it was pay back time.  Off to Siberia, Mike Armstrong.

What a sad time.  To this pundit, it is hard to understand why the caucus did not dump DeBolt for either Armstong or Bruce Chandler who challenged him.  DeBolt, who is almost invisible in this state’s media, led his caucus to a stunning defeat in this year’s election.  His staff in HROC (House Republican Organizing Committee) which raises money to win elections totally screwed up.  Check the Public Disclosure Reports and you’ll see for yourself the most pathetic excuse of an attempt to win more seats for Republicans.  HROC spent more than $230 thousand on loser challenger candidates, most of which we would all agree were whackos, and less $70 thousand defending their own incumbants.  If you look at the PDC’s closely, you will see almost zero direct contributions went to moderate, mainstream Republicans.  We’re down how many seats, Mike?  I guess if you’re critical to DeBolt, his chief of staff or head of HROC, Kevin Carns, you get zero help at election time.

So why, my Republican legislators, did you re-elect a minority leader, who keeps losing you seats?  Don’t you ever want to be in the majority?  Isn’t it time you ended the tyranny?

And while I am at it, doesn’t it seem disgusting that at a time when so many Republican legislative assistants and caucus staff are losing their jobs due to a shrinking caucus, that DeBolt’s campaign manager is telling everyone that she’s getting a job.  Careful, Mike.  Remember what happened to Wilbur.

What’s all this political correctness about Trent Lott being renamed Minority Whip in the Senate?  So, everyone knows he made a gaffe at Strom Thurmond’s birthday party a few years ago.  But who can seriously think, except the left-wing whackos, that Lott really did mean what he said?  His comment was an insensitive attempt at trying to show respect to a man with whom he had worked for years.  Even Lott admits this and has apologized more than once.

Unlike John Kerry and his miltary joke gaffe a few weeks ago.  Kerry still hasn’t taken full responsibility for his remarks.  He still hides behind the lame excuse that he was misunderstood because he botched a joke.

Compare Kerry to Lott.  Kerry doesn’t own up to the fact that he uttered the words he did, yet he is let off the hook by the left.  Lott has owned up many times, yet can’t be shown the same respect.  Why?  Is it pure partisanship?  Does the race card and political correctness have anything to do with it?

But the icing on the cake is that the Democrats elected Robert Byrd Speaker Pro Temp.  Byrd is the only sitting senator who was a former Ku Klux Klan member.

If you can forgive Byrd for being a white-capped clanner, why can’t you give Lott a break here?

And if you left-wing whackos really understood how the game is played, you would want Lott back into power.  When he was minority leader he kept a lot of right-wing whacko issues from getting to the floor or even out of committee, something Bill Frist did not do.  Maybe you should take another look at Lott, who started his career as a Democrat.  Lott may feed red meat to the right wing with some of the things he says, but his actions bespeak he may really me a more moderate.

Think, before giving us the Byrd.

During the past few days I have exchanged some posts with PBJ over at Sound Politics.

PBJ is a Republican activist in the 23rd Legislative District (LD), an area comprising the northern most part of Kitsap County.

What prompted me to post was PBJ’s glee that Republican legislator Bev Woods lost to a Democrat because it was payback for Bev voting to increase the gas tax.  Bev was a well-respected legislator and her defeat was a real loss for her caucus.  She was ranking member of the Transportation Committee, a committee important to the 23rd District and its ferries.

PBJ’s and other like him/her elected a Democrat instead.  This new, liberal legislator will undoubtedly vote to increase a lot more taxes this next biennium and to implement more of the Democratic social agenda, things Bev would have voted against. 

I pointed out to PBJ that I voted for Republicans who I didn’t necessarily agree with all the time.  Supporting them was important to attempt a majority.

The anti-war, anti-Bush coalition certainly tolerated a lot more political diversity than we Republicans.  That’s why they control this state.

Activists are more passionate about their politics than average citizens.   When passion, however, turns to rigidity and absolutism it prevents us Republicans from forming a majority coalition.  We must learn to work better together.

Half a loaf, as the old adage goes, is better than none.

Last night I saw Tim Conway and Harvey Korman perform at the Paramount.  Nice evening, and good to remember that talented performers can make you laugh without using expletives all the time.

Of the many one liners, these three made me laugh the most.

1) You must be sharing an IQ with someone.

2) Sex? Sex? At my age, I’m lucky to be able to get into my own pants.

3) See where Hilary Clinton is off and running for President in 2008.  She’s changed her haircut and image.  It’s already working.  Why last night Bill even hit on her.