Who Really Owns America? Hint—It’s Not China: The truth is elusive. It’s good we have a discipline known as mathematics. While the Chinese, Japanese and plenty of other nations own substantial amounts of our national debt, Americans really hold most of it. Here is the breakdown:
• Hong Kong: $121.9 billion (0.9 percent)
• Caribbean banking centers: $148.3 billion (1 percent)
• Taiwan: $153.4 billion (1.1 percent)
• Brazil: $211.4 billion (1.5 percent)
• Oil-exporting countries: $229.8 billion (1.6 percent)
• Mutual funds: $300.5 billion (2 percent)
• Commercial banks: $301.8 billion (2.1 percent)
• Federal, state and local retirement funds: $320.9 billion (2.2 percent)
• Money market mutual funds: $337.7 billion (2.4 percent)
• United Kingdom: $346.5 billion (2.4 percent)
• Private pension funds: $504.7 billion (3.5 percent)
• State and local governments: $506.1 billion (3.5 percent)
• Japan: $912.4 billion (6.4 percent)
• U.S. households: $959.4 billion (6.6 percent)
• China: $1.16 trillion (8 percent)
• The U.S. Treasury: $1.63 trillion (11.3 percent)
• Social Security trust fund: $2.67 trillion (19 percent)
So, America (that’s all of us) owes foreigners about $4.5 trillion (31 percent). America owes itself $9.8 trillion (about 69 percent). Memo to comic Andy Borowitz: tell China not to try to put America up for sale on eBay; obviously, it just won’t work.
Unions and Public-Pension Benefits: The Center for State and Local Government Excellence has released an Issue Brief entitled “Unions and Public Pension Benefits.” Everyone has an opinion about public pensions, but these opinions are not always driven by the facts. Are local and state governments about to declare bankruptcy because of pension obligations? Of course not! There are substantial investment holdings held in trust and pensions are generally paid out over 20-30 years or more, not in a lump sum. With a few exceptions (those plans that are fully funded or very poorly funded), most pension plans are making necessary changes that will strengthen their funding levels over a period of years.
Are public-sector pensions overly generous? The authors found that the average annual benefit in 2008 was $23,000. While public-sector pensions are more generous than those in the private-sector, wages for public-sector workers are lower than for private-sector workers with similar jobs. Repeat: Wages for public-sector workers are lower than for private-sector workers. Looking back over the last 20 years, the authors found that changes in pension policies were driven by the need to stay competitive with the private sector and the individual state’s fiscal condition. The role of unions in benefit growth is not significant, although union membership does correlate with higher wages, which translates into higher pensions.
It is a time of dramatic change and public-sector employees and their unions are feeling the crunch. The challenge is for labor and management to come up with solutions that are both affordable for taxpayers and meet long-term worker goals. Doing so, however, requires a foundation of trust. Governors in several states have launched initiatives to curb collective bargaining in the public sector. One possible implication is that governors view unions as responsible for pushing up state and local pension benefits.
The brief identifies the impact of public-sector unions and other factors on benefit levels, wages and employment. The first section summarizes what is known about pensions, wages, workers and unionization in the public sector. The second section reports on a series of empirical exercises to determine the role of unions in explaining public pensions and wages.
Results show that unions have no measurable effect on plan generosity or rate of growth in pension benefits, but do have a quantifiable impact on wage levels and perhaps number of workers.
The third section presents a possible reason for this outcome. Public-sector pensions are legislated, not bargained, so the powers of persuasion that lobbyists articulate to lawmakers may be more important than the number of union members; in contrast, wages are bargained and, therefore, union strength could have a more direct effect. The final section concludes that this area is ripe for further research because results appear to contradict the general perception of commentators and politicians.
Readers can access the entire 18-page report at http://goo.gl/95gXY. Skeetlebutt