http://www.nytimes.com/2010/12/23/business/23prichard.html?_r=2&pagewanted=all

http://www.nytimes.com/2010/12/23/business/23prichard.html?_r=2&pagewanted=print

Alabama Town’s Failed Pension Is a Warning

By MICHAEL COOPER and MARY WILLIAMS WALSH

PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.

Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”

The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

(READ MORE AT LINK)

Dire outcomes predicted for municipal pension systems

Redrant: This article mentions ST. Paul, MN. Minneapolis, where I live has been slogging away at it's pension problems and there is a somewhat painful fix for the Minneapolis schools. The legislature did not get to a ST. Paul, MN school pension "fix". I don't know if school pensions are included in the "city" figures.

I live in Hennepin County where I worked my entire career. Hennepin County farmed out it's pension to the relatively healthy http://MNPera.org. Hennepin County should have virtually no pension obligations beyond a potential higher current payroll contribution to the MNPera which is basically a "shotgun IRA". It's amazing how relatively minor decisions long ago can have relatively large effects. Greg Lang

http://www.kellogg.northwestern.edu/News_Articles/2010/municipal-pension-systems.aspx#

Social Security in the red this year

http://www.washingtontimes.com/news/2010/aug/5/social-security-red-first-time-ever/

Social Security will pay out more this year than it gets in payroll taxes, marking the first time since the program will be in the red since it was overhauled in 1983, according to the annual authoritative report released Thursday by the program's actuary.

Meanwhile President Obama's health care overhaul has givenMedicare's basic Hospital Insurance an extra 12 years of financial stability, though it did not solve all of the program's long-term challenges.

"The financial status of the HI trust fund is substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act," the program's actuary said in its annual report. "These changes are estimated to postpone the exhaustion of HI trust fund assets from 2017 under the prior law to 2029 under current law and to 2028 under the alternative scenario."

RED MORE AT LINK

Another more sinister one is the requirement that everyone have a BMI or obesity rating included in their mandatory nationalized health records

Cross posted at http://milliondollarway.blogspot.com/2010/08/obamacare.html#comment-form (Is is easier for me to write up something in response to something else.)

Yup! An added 3.8% tax on investment income will tend to slow investment. Obama carefully parsed his statement to "tax on income" but it leave the opportunity for tax increases that are not strictly income taxes.

Lengthening depreciation is one ploy. When president Jimmy Carter called, just once, for something like an "working value" tax. In my case, my house is paid in full. The other day i did the math and if I bought it with a market rate 30 year mortgage the principle and interest would run me $1000 per month. That would be a significant increase in income taxes paid withoujt technically raising the income tax rate.

Another more sinister one is the requirement that everyone have a BMI or obesity rating included in their mandatory nationalized health records. Being above the BMI could conceivably be deemed a burden on the health care system so the overweight would pay a "fat surcharge" for Obamacare. Low income people are more likely to be overweight so there could be a means testing for the BMI excess surcharge. There will be some rich and fat people but mostly this will be a "fat tax" on the middle class. If more money is needed they would redefine the BMI surcharge much like the way the EPA redefines "dangerous air" as the air gets cleaner.

Part of it for investors is the uncertainty. You might recall the old land-line phone "surcharges" which were more than a third of the phone bill before I went to IP and cell phones. Those "nickel and dimes" add up.

My http://65y.com blog needs a posting so I will cross post there.