They've left their minds, in San Francisco...

Spending money that isn't there...

If you think things are bad on the public employee pensions front for California, or even the U.S., check out what's happening in The City By The Bay.

To be honest, everyone - including SF's most "out there" boosters - admit the city is in the midst of a severe financial crisis. What most people aren't aware of is just how bad things have turned for "Baghdad By The Bay."

A story in The Bay Citizen lays it out for readers: "San Francisco's public-employee pension fund is in weaker shape than many people realize, according to an analysis by Professor Joe Nation released Tuesday. It is underfunded by some $6.8 billion, Nation's report finds. The city's pension fund is officially underfunded by $1.6 billion. Nation's study argues that the pension fund is relying on a 7.75 percent annual rate of return that is unrealistic over the long term. The study argues for 6.2 percent, which it says was the average rate of return in the capital markets from 1900 through 1999."

If you want a sneak peek at what is going to happen to California, check out San Francisco. If you want an advance look at what is going to happen to the U.S., keep an eye on California. And if you'd like a real-time view of what's ahead for everyone else, look at Greece.

Whitman vs. Brown: Debate No. 1...

Tonight's early scorecard from the Whitman vs. Brown gubernatorial debate...

Overall, I score Meg the winner.

Neither one scored a decisive blow/knockout...tough for either to maximize their answers - or their opponent's - in the campaign.

Brown was much more energetic (someone cut off that guy's coffee intake, please) and Whitman came out of the box sounding like she was over-rehearsed.

There were 10 questions plus a closing statement (1 hr.)...

Round by round scoring, courtesy of this ringside judge...

1 - Budget: Brown
2 - Death penalty/crime: Whitman
3 - Jobs: Whitman
4- Public employee pensions/unions: Whitman
5- Experience: SPLIT
6 - Holding the line on cuts/funding for higher education: SPLIT
7- Campaign ads (misleading?): SPLIT
8- Immigration: BROWN
9 - Campaign funding (self vs. special interests): Whitman
10- Water: Whitman
CLOSING: Whitman

My scorecard: Whitman 4, plus closing; Brown 2; SPLIT 4.

The event, held at UC Davis (not far from Sacramento), was staffed by Sacto area media. The questioning was pretty predictable and weak. At least one question was a direct jab at Whitman.

Both had funny lines. Brown, taken to task by Whitman for his own stake in the state's pension system, said that his longevity (which precludes him tapping into it until he "retires") was a plus...joking that he's "best pension buy California's ever had" since if he wins, he won't collect till 76..or even into his 80s. Whitman's most memorable line: "Putting Brown in charge of pension reform like letting Dracula run blood bank."

Two more debates to go...

What did Jerry know and when did he know it?

Radio bonus (late addition): About 15 minutes into this podcast from the John Batchelor Show, we discuss Friday's revelations...

The pensioner...

Earlier today, the Orange County Register (a newspaper I actually "threw" back in the early '70s as a substitute paperboy) broke a story that could have significant impact on California's gubernatorial race between current state Attorney General/former two-term Gov. Jerry Brown (D) and former eBay CEO Meg Whitman (R).

California, which is drowning in debt (some say as much as $600 billion-plus when all unfunded liabilities are counted) is coming apart at the seams. One of the largest aspects of those liabilities is the ever-growing mountain of obligations to state employee pensions.

The public's awareness of (the magnitude of) these liabilities has increased in part due to politicians like Whitman drawing back the curtain on the greed and graft in Sacramento, and the perks connected to public employee unions. And media outlets like the Los Angeles Times, the Bee newspapers and Wall Street Journal have done their duty in reporting scandals like the city of Bell's pension scandal (and now property tax mess) and the city of Vernon's culture of corruption.

As public resentment has grown and become more vociferous, the opportunity to capitalize on citizens' collective anger has not been lost on politicians. Notably, Brown - never one to pass up a good photo opp or media dog-and-pony show - has come out in recent weeks as standing foursquare against the problem. As the public's awareness of the Bell scandal and the burdensome pension schemes has increased, so has Brown's campaigning (on it) - despite the fact that he as former governor helped enable the system now destroying the Golden State.

Until today...

Thanks to the OC Register's Sacramento correspondent, Brian Joseph, California voters now know that Brown not only feels their pain when it comes to these pensions but he also has enjoyed cashing pension checks. Brown as a lifelong public employee, has collected a pension. This isn't hard to imagine since he's been Secretary of State as well as Governor (and now Attorney General).

According to Joseph, writing in the paper's Watchdog blog, "Campaign spokesman Sterling Clifford did tell the Watchdog that Brown started receiving an annual pension of about $20,000 when he turned 60 in 1998 and pocketed it every year until he assumed the attorney general’s office, when it was suspended. That means Brown’s received a pension on top of his $115,000 salary as Oakland mayor [prior to serving as AG]."

One of the questions surrounding all this has to do with time. Brown's pension (and, by the way, it appears he was double-dipping) appears to be significant: about $110,580 annually, which is what someone who has been a member of the select Legislators’ Retirement System (LRS) receives if they've been part of the system for a period between 25-29 years. The problem is that Brown, after he has completed his latest term as AG, will have only served a total of 16 years (which is only $73,720 annually). Quite a difference and until we all started hearing about this today, Brown didn't seem to be doing much - and certainly not doing much - about the crucial 9-year discrepancy (a discrepancy that could be worth hundreds and hundreds of extra dollars).

The other question connected to this problem for Brown is that the LRS is somewhat of a secret. Only a few select state employees are eligible and the system, which voters typically think they dismantled with Proposition 140 back in 1990, still pays out...handsomely. (Read the story for more information.)

Currently, Whitman's campaign hasn't said or done much to capitalize on the problem for Brown. (Team Whitman, however, has taken Brown to task for the pensions his subordinates have raked in...)

Brown vs. Whitman...

Brown's team, however, doesn't seem to get how bad these latest revelations could be for "Governor Moonbeam," who has made a career out of appearing frugal.

In an email to Joseph, Brown spokesman Clifford wrote, "He concluded his brief email with this reminder: “And of course if you are worried about paying out Jerry’s pension, the best thing to do is elect him Governor so he doesn’t collect it.”

In these tough economic times, much due to the incompetence, willful negligence and criminality of public officials, that's probably not a message that will resonate with a large number of voters.

Not what was promised...

Dear Al Gore: How’s that “Social Security lock box” working for you? (About the same as Global Warming™, er, Climate Change®, eh?)


How's it goin'?

For all those college students who voted for Hope & Change™…looks like your only Hope will be if someone gives you some spare Change.

California – the “Used to be Golden” state.

Pelosi: “We’ve got the votes.” Stupak: “You know how to count to 16?”


That is surprising news!

“LIKE A CALIFORNIA WILDFIRE, populist rage burns over bloated executive compensation and unrepentant avarice on Wall Street.” “What is the result of ‘False Public Employee Pension Promises’ for $100, Alex?”

Now about those doctors at the White House health insurance press events? “Get yer white lab coats here! Get yer lab coats! Can’t tell the pros without ‘em!”


Get yer lab coats!


Get yer lab coats, here!

Can’t tell the pros without ‘em!”

California - it's worse than you think...

The new Great Seal? (Graphic/POLITICAL VANGUARD)

The big talk right now is that California has a $20 billion-plus budget gap. Not only is that not true, but it also is misleading when it comes to the bigger picture.

To begin with, the budget deficit actually tops $36 million. Here's the breakdown:

-$21 billion in general fund
-$7.3 billion in money owed Unemployed Insurance Fund
-$3 billion in unsold assets, like San Francisco's Cow Palace, the LA Memorial Coliseum and the State Compensation Fund.
-$5 billion in lost lawsuits, unable to pay due to lack of cash (there is at least another $5 billion in lawsuits pending)

The bigger problem, though, is California's debt. Currently, the state is at least $600 billion in DEBT (not deficit). Some state officials - on both sides of the political aisle - actually put the number above the $650 billion mark.

This debt includes:

-More than $200 billion in unfunded liabilities at CalPers (the public employees retirement system).
-$48 billion in unfunded liabilities in CalStrs (the state teachers retirement system).
-$110 billion in unfunded health care.
-In addition, there are billions owed to state trust funds (the state Recycling Fund, for instance, is owed $500 million in money that's been borrowed by the governor to cover deficits).
-California owes $8.8 billion in short-term loans that have to be paid off by June and almost $120 billion in outstanding bonds and interest that will be paid over decades.

In his lame duck State of the State address, Gov. Arnold Schwarzenegger noted that the cost of state employee pensions rose 2,000 percent during the last decade, while state revenues have increased only 24 percent. In addition to this alarming figure, government itself is one of the few "growth industries" in the state. The private economy has to deal with high unemployment and small business bankruptcy rates that grew 81 percent (2008-09) but f"at and happy state workers" were able to grow their ranks (by 1 percent).

"California is deeply in debt. You could say that it's bankrupt," Attorney General - and presumptive Democratic gubernatorial candidate - Jerry Brown told a group of young Democrats earlier this month. Likewise, GOP U.S. Senate candidate Carly Fiorina talked about the possibility of bankruptcy during a recent chat with SoCal business owners.

This isn't new territory: last year, the state issued close to a half-million IOUs to vendors as well as to residents waiting on their state income tax returns. It also halted construction on thousands of infrastructure projects. Another cash shortage this summer will result in additional IOUs and delayed payments.

The state has the lowest credit rating of any state in the nation, although it still is above junk-bond status. If the state falls to junk status, some investors would be unable to buy state bonds, making it even more difficult for the state to borrow money and infuse cash into its coffers. Either way, it now costs the state more to borrow the money it needs to function. The state Constitution mandates that debt service has the second highest priority for payment, after only education, and the state continuously receives tax revenues. The state treasurer plans to sell $10 -$14 billion in bonds this year, with the first sale of $2 billion scheduled for early March.

If states weren't prohibited from declaring bankruptcy, California would have (had to) long ago.

It is, however, for all intents and purposes...insolvent.

(Sources: CA Political News, Sac Bee/Dan Walters, LA Times, governor's web site, KSFO, SF Chronicle)