Jeb Bush and Newt Gingrich
Better off Bankrupt (http://articles.latimes.com/2011/jan/27/opinion/la-oe-gingrich-bankruptcy-20110127)
L.A. Times
January 27, 2011
Summary: A proposal to alleviate budget issues by allowing entire states to declare bankruptcy, thereby eliminating their outstanding debts and union contractual obligations. This would directly lead to the loss of pensions for tens of thousands of teachers.
Intended Audience: General Public
Key Points: 1) State budgets are being choked by decades of irresponsible concessions to employee unions, namely in the form of pension plans; 2) A mass of former state employees are cashing in (California owes 12,000 former employees over $100,000 each in pension payments this year); 3) Bankruptcy would provide a mechanism to avoid tax increases and eliminate debt.
Relevance: We are entering this profession at an interesting time. For the last forty-five years teacher unions have deferred better annual salary for the promises of repayment in the form of pensions. This has proved, however, to be unsustainable. During an interview on OPB Radio yesterday, an author (I forgot her name entirely) reported that the annual salary of a first year teacher in 1970 plus inflation would be approximately $70,000 today. First year teachers are lucky to earn half of that. The idea has been that teachers make up for what they are not payed in benefits and pension plans. Now a proposal has been made that would eliminate the carrot. Personally, I am not banking on Social Security or company or state pensions, and feel other young people would be wise to do the same. It is high time that we take an active stake in our own retirements, make our own investments, and save our money in places that draw more than %0.5 APY. I would much rather take a higher salary up front and use an IRA than hope that our government can fulfill its financial obligations.
Wow, there is so much in this article and it is such a complicated issue as it raises discussions on school budgets, teachers' salaries, economics, investing, state fiscal responsibility, financial oversight and many more.
ReplyDeleteThe part that sticks out to me the most is allowing states to declare bankruptcy - especially a state like California whose economy is bigger than most countries. Not only do the states get to renegotiate all sort of union contracts, but there are going to be a lot of entities and indiciduals that will not get paid. I think it would also be a legal quagmire when it comes to when and how states could file bankruptcy.
It seems to me like it would be a better idea to hold people accountable for the investments, make sure budgets are balanced, hold union executives responsible for their decisions and make sure banks and investments are following federal and state laws than to go ahead and allow bankruptcy of states.
Thoughts?
Yeah, I debated posting this because it is not specifically about education. However, after debating the issue with a couple of friends, I realized that it is very much a big picture education issue.
ReplyDeleteWisconsin's governor just proposed his budget for the next year. It looks grim to say the least for education funding.
Regardless of our politics, these issues are a reality. We are entering teaching at a pretty bad time and are going to have to be incredibly well qualified, passionate, determined, driven and innovative just to survive the job market, let alone be financially stable.
I honestly believe, however, that if we "do the right thing" we will be exceptional. If we approach education as a career and as a profession, not as a job, we will be employable.
Not only will we simply be employable, but teachers like that will likely be in demand.
Doug, I love the chart! And yes, it is the American way to overcome challenges and though it may not be easy, we can - and have to - do it!
ReplyDeleteJeff, Your last three paragraphs are very true and I totally agree we all can be exceptional and in demand teachers by doing the right thing.
I love that the corporate income tax only makes up %9 of our nation's annual revenue. I understand that we have to keep corporate rates low to encourage economic growth, but that is a little ridiculous.
ReplyDeleteI agree with Doug on the promises unable to live up to point that he made. How did they not see the ballooning of entitlement program spending coming? A whole mess of babies were born in the 1950s and not a whole mess afterward. It seems not so difficult to see. Then again, hind sight is always 20/20.
Perhaps the bankruptcy plan is the only way to reset the government's finances (though I detest the idea on many levels). If that is the case, hundreds of thousands of people will be absolutely furious. I cannot even begin to imagine the social and political turmoil such a move would create.