New Mexico: another heartfelt domino of liberal policy

[_The CCC]

It should also be pointed out that the effects on state and local budgets aren't theoretical or future projections. Services are currently being cut in many areas:

The report’s case studies are particularly shocking. The Democratic-controlled Legislature and Gov. Jerry Brown often talk about the need to help the state’s poorest citizens.Yet, the Stanford report makes the following point regarding Alameda County (home of Oakland): Pension costs now consume 13.4 percent of the county’s operating budget, up from 5.1 percent 15 years ago. These increases have “shifted up to $214 million in 2017-18 funds from other county expenditures to pensions,” which “has come mostly at the expense of public assistance, which declined from a 33.6 percent share of expenditures in 2002-03 to a 27 percent share in 2017-18.”

The problems are even more stark in Los Angeles County. As the study noted, pension costs have shifted approximately $1 billion from public-assistance programs including “in-home support services, cash assistance for immigrants, foster care, children and family services, workforce development and military and veterans’ affairs.”

http://californiapolicycenter.org/forge ... tting-now/

Float a damn Bond.

[_Analytics]

I was under the impression that the consumer price index growth was relatively low relative to the GDP growth rate precisely because gains are accruing to the wealthiest. With median wage stagnant, you can't raise prices much. Increasing the amount of free capital the wealthy have causes them to chase investments and drive rates down, no? I'm not sure that huge tax breaks to the rich would spike interest rates. You probably would get more growth because this is a deficit spending plan. You are borrowing from future obligation to pump today's economy. The lesson of the recession recovery is that growth doesn't mean spiked inflation, though, right? That's not to say there aren't other problems with this. If you have to monetize this debt down the road, that's inflation. I'm just not seeing the near-term relationship.

That is a pretty serious response to a tongue-in-cheek post. I basically agree with you. Japan has proven that you can have massive debt and very low interest rates for an extended period of time.

If the government can borrow with impunity, then let the feds bail out the pension plans. Why not? It's just government debt which you can pay for with either printing more bonds or printing more greenbacks. The price of the ink is the same in either case.

The classical view of things was that people made decisions about whether to save or invest based upon interest rates. If the one-year interest rate is 10%, you compare your utility of spending $100 now with your utility of spending $110 in a year. If interest rates go up, that gives you a greater and greater incentive to save. But as far as I can tell, absolutely nobody actually makes decisions that way. I try to save 15% of my income, and if interest rates go down I feel an urge to save more so that I'll meet my retirement goals. That is the exact opposite of the "rational behavior" I learned in Econ 201. And it is the same with institutional investors. If interest rates go down, you have to raise pension contributions and raise premiums on LTC insurance policies.