Unrealistic Expectations

Unrealistic Expectations

"In the short run, the market is like a voting machine, tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine, assessing the substance [intrinsic value] of a company."
– Benjamin Graham

Way back in the Paleozoic era (as far as markets are concerned), circa 2003, I wrote in this letter and in Bull's Eye Investing that the pension liabilities of state and municipal plans would soon top $2 trillion. This was of course far above the stated actuarial claims at the time, and I was seen as such a pessimist. Everyone knew that the market would compound at 9%, so any problems were just a rounding error.

Now it turns out I may have been a tad optimistic. Two well-respected analysts of pension funds have produced reports this summer suggesting that pensions are now underfunded by more than $4 trillion and possibly more than $5 trillion. I would like to tell you that the underfunding is all the bad news, but when you probe deeper into the problems facing pension funds, it just gets worse. The two reports conclude that pension plan sponsors seem determined to keep digging themselves an ever-deeper hole. But to hear the plan sponsors tell it, the situation is readily manageable and the risks are minimal. Except that pesky old reality keeps confounding their expectations.

And that is the crux of the problem. Whether you believe there really is a problem boils down to the assumptions you make about future returns. If you believe the projections trotted out by pension fund management and the bulk of the pension consulting groups, the underfunding is a mere $1 trillion — a large amount to be sure but manageable for most states.

The emphasis here is on most. Some states and municipalities are in far worse shape than others, and to be honest with you, I don't see how some of them can meet their commitments. Others are trying to be responsible and fulfill their pension fund obligations based on the assumptions their "experts" come up with, but the problem is that those assumptions may be overly optimistic. The seemingly small difference of just 1% of GDP growth can make a huge difference in pension liabilities (and thus taxpayer obligations).This week we begin a series focusing on the problems facing US state and local pension funds. This issue has relevance to you not only as a taxpayer but also as an investor, because it goes to the very core of the question, what is the level of reasonable returns we can expect to see from our investments in the future? This is not a problem that is restricted to the US — it's global. Sadly, we don't live in a Lake Wobegon world where all pension funds and investment portfolios are above average. Not everyone can be David Swenson, the famous chief investment officer of Yale University. Truth be told, David Swenson will have a difficult time being David Swenson in the next 20 years.

Unrealistic Expectations

The past 10 years have seen a growing number of economists and financial analysts questioning the propriety of the methods used to forecast pension fund liabilities. This is more than an academic exercise, as the numbers you choose to base your models upon make massive differences in the projected outcomes. As we will see, those differences can run into the trillions of dollars and can mean the difference between solvency and bankruptcy of municipalities and states. The implicit assumption in many actuarial forecasts is that states and cities have no constraints on their ability to raise money. If liabilities increase, then you simply raise taxes to meet the liability. However, fiscal reality has begun to rear its head in a few cities around the country and arrived with a vengeance in Detroit this summer. It seems there actually is a limit to how much cities and states can raise.

"Aah," cities assure themselves, "we are not Detroit." And it must be admitted that Detroit truly is a basket case. But it may behoove us to remember that Spain and Italy and Portugal and Ireland and Cyprus all said "We are not Greece" prior to arriving at the point where they would lose access to the bond market without central bank assistance.

In response to growing concerns over public pension debt, the Governmental Accounting Standards Board (GASB) and Moody's have both proposed revisions to government reporting rules to make state and local governments acknowledge the real scope of their pension problems. (While it is possible to ignore Moody's, based on the fact that it is just one of three private rating agencies, it is impossible to ignore GASB, which is the official source of generally accepted accounting principles (GAAP) used by state and local governments in the United States.

Under the new GASB rules, governments will be required to use more appropriate investment targets than most public pension plans have been using, bringing them more in line with accounting rules for private-sector plans. Pension plans can continue to use current investment targets for the amounts the plans have successfully funded; but for the unfunded amounts, pension plans must use more reasonable investment forecasts, such as the yield on high-grade municipal bonds, currently running between 3 and 4 percent. From my perspective, not requiring reasonable investment forecasts on already funded accounts is still unrealistic, but the new GASB rules are a major step in the right direction, and I applaud GASB for taking a very politically difficult stance.

Moody's has also proposed new rules to require states to use more appropriate investment targets. Their new rules require pension plans to use investment targets based on the yield of high-grade, long-term corporate bonds, currently just over 4 percent. (Source: http://illinoispolicy.org/uploads/files/Pension_debt_more_than_doubles.pdf)

What difference does a more "realistic" forecast make? According to the survey done by Moody's, it makes a difference of more than $3 trillion, or more than double the total actual assets of the 255 largest state-funded pension plans. This is illustrated in the chart below.

Current official reporting suggests that states have funded 73% of their pension liabilities. The fair-market-value approach used by Moody's and GASB suggests that funding is only at 39%. The difference is almost entirely due to the assumptions one uses about the discount rate for future expected returns.

The next two charts provide an illustration. I'm simplifying a bit, but the principles are correct. If you are a pension plan manager, you have to be thinking over very long periods of time. Someone retiring today at age 60 will likely require almost 30 years of pension payments. Someone aged 40 paying into your pension program will likely be getting his or her pension returns 50 years from now. Let's look at a few scenarios of what might happen to $1 billion over the next 40 years under various assumptions of investment returns.

Many state-funded pension plans today assume an 8% nominal return for the indefinite future. Some are beginning to forecast lower returns, but very few would forecast lower than 7%. Moody's argues that somewhere in the range of 4% nominal is more realistic. Notice that the difference after 40 years is well over four times. Even if you assume that magic returns to the markets after 2020 and returns go up to 8% thereafter (the green line in the chart), there is still a gap of $5 billion after 40 years. On assets of $2 trillion, that is a gap of $10 trillion. If you assume only a 4% nominal return for the entire 40 years, the gap is $30 trillion. For the mathematically challenged, that is not a rounding error.

Nominal or Real?

Nominal returns are only part of the story. We live in a world of inflation, and almost all pension funds are inflation-adjusted. The next chart takes the same $1 billion and extrapolates into the future but assumes a modest 2% inflation rate over the 40-year period. The small difference of just 2% annually reduces the real returns by over half. Assumptions can have very wicked children. And grandchildren.

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A 4% nominal growth rate, or 2% real growth, sounds so pessimistic, but it is actually in line with what we've experienced over the last 18 years. And you want your assumptions about the future to be as conservative as possible, so that if there are surprises they are pleasant ones. Looking ahead, economic growth does not appear likely to yield pleasant surprises. We use the following chart from Jeremy Grantham at GMO about a month ago, but we need to look at it again in more detail. These are the forecasts that Grantham makes for real (inflation-adjusted) returns over the next seven years:

Notice that if you had a "balanced portfolio," equally distributed among the six equity-asset classes, your total annual real return would be in the 1.5% range. Using the same balanced approach with bonds, your total return would be 0.1%. In the black bar at far right we see Grantham's projected returns for investments in timber, which can be taken as a proxy for "alternative" investments in general. A pension fund investing 55% in equities, 35% in bonds, and 10% in alternatives (not an uncommon pension allocation scheme) would see a total annual real return of around 1.5% real, if Grantham is correct. To bring returns up to even 2% real for the next 10 years, you would have to knock the lights out for the final 3 years of the 10-year time frame.

You may ask, why does Grantham project equity returns to be so small? Can't we assume that over longer periods of time returns will be in the 8%-plus range? Sadly, 8% is an unrealistic number for long-term growth in the equity markets, as Grantham has so ably demonstrated.

Voting versus Weighing

The father of value investing, Benjamin Graham, gave us a simple illustration for looking at market valuations. He noted that "In the short run, the market is like a voting machine — tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine — assessing the substance of a company." The message is clear: what matters in the long run is a company's actual underlying business performance and not the investing public's fickle opinion about its prospects in the short run.
(Source: Morningstar)

At the end of the day, what the market really weighs is earnings, and that judgment is reflected in the valuation it puts on those earnings. Is $1 worth of earnings worth $8, or $25? Are you expecting a 12% return, or a 4% return? Of course, your answers depend on your view of inflation, what you think of the growth prospects of the company in the economy, and your alternatives for that dollar of investment. The markets can fluctuate a great deal around long-term trends, but they always come back to the average. We've had quite a nice stock market run over the last four years, but let's look at just the last two years, which have theoretically been part of a recovery period. Notice in the chart below that trailing 12-month earnings have been essentially flat, while the market has gone up almost 40%. Almost all of the growth in the stock market has occurred because people were willing to pay a higher multiple for the same dollar's worth of earnings. Valuations are not at nosebleed levels, but they are certainly high; and without something to seriously boost earnings, it is hard to see how the market can justify still higher valuations.

The next chart is from my friend Lance Roberts. Quoting Lance:

As you will notice each time that corporate profits (CP/S) and earnings per share (EPS) were above their respective long-term historical growth trends, the financial markets have run into complications. The bottom two graphs [see below] show the percentage deviations above and below the long-term growth trends.

What is important to understand is that, despite rhetoric to the contrary, "record" earnings or profits are generally fleeting in nature. It is at these divergences from the long-term growth trends where true buying and selling opportunities exist.

Are we currently in another asset "bubble?" The answer is something that we will only know for sure in hindsight. However, from a fundamental standpoint, with valuations and profitability on a per share basis well above long-term trends, it certainly does not suggest that market returns going forward will continue to be as robust as those seen from the recessionary lows.

So what does this academic discussion about future returns have to do with pension funds? It matters because pension funds make assumptions about their future ability to meet their obligation to pay retirees a monthly check based upon their assumptions about returns. In the next few weeks we're going to look at specific states and their assumptions and what that means for their taxpayers in terms of their budgets.

We all know that Illinois is in difficult straits. The state of Illinois has set aside $63 billion to pay for future benefits. But between now and 2045 they're going to have to pay out 10 times that much — $632 billion. By the state pension fund's own estimate, they need another $83 billion to be adequately funded. Just a few years ago their deficit was a mere $50 billion. Compound interest means that the longer you ignore your problem, the faster it gets worse.

Total state revenues for Illinois were $33 billion for fiscal year 2012. Let's see if we can find a politician to propose that they take 25% of the budget every year for the next 10 years to reduce their underfunded pensions (as opposed to the 12% they allot currently). Mayor Emanuel, do you have a plan?

Because the pension plans are so underfunded, they would need to see average investment returns of nearly 19 percent per year to cover future payouts. The state predicts its pension funds will earn investment returns between 7 and 8.5 percent per year. Even these returns may be overly optimistic. Over the last decade, the pension funds have earned average investment returns of only 4.5 to 6 percent per year. The funds' unrealistic investment targets have already increased the state's total pension debt by more than $14.3 billion since 1996. (Source: http://illinoispolicy.org/uploads/files/Pension_debt_more_than_doubles.pdf)

The unfunded liability in Illinois is $22,294 per person. What we will find next week is that there are states that are actually in worse shape than Illinois in that regard. And no, California is not one of them. (Hint: they have Republican governors. Oops. That's not supposed to happen. Especially if the governors are considered to be vice-presidential material. Just saying…)

We will also look at the specifics of Detroit. One of the ugliest reports I've read in the last year is the report of the new "emergency" manager of Detroit, outlining his proposal to take the city out of bankruptcy. It makes for some of the most dismal reading anywhere. But buried in the data is this interesting chart that the Detroit Free Press created. Note that the unfunded healthcare liability is far larger than the pension liability. That provides another avenue for us to look down. In the meantime, you might look and see what your city or state assumes about the returns on its pension funds. Then look at what the difference between that amount and 4% nominal might be and see what the effect would be on your tax rate. I suggest you do that only with an adult beverage close at hand.

We will close with one sentence from the report of the Detroit emergency manager, referring to the ability of the city to pay its obligations to those who have already retired: "Because the amounts realized on the underfunding claims will be substantially less than the underfunding amount, there must be significant cuts in accrued, vested pension amounts for both active and currently retired persons." Sadly, that sentence is likely to be cut and pasted into many similar documents around the country unless changes are made now. If you wait until you are Detroit (or Greece), it is too late.

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Chicago, Bismarck, Denver, Etc.

Tonight was the theatrical premiere of the documentary Money for Nothing here in Dallas. I predict this movie will soon be winning awards everywhere. The producer and editor, Jim Bruce, has done a magnificent job of giving us a balanced history of the Federal Reserve, with a perspective on how they manage their responsibilities. The movie will open next week in New York and Washington DC and then begin to open around the country. You can find out more by going to www.moneyfornothingthemovie.org. I may be biased because this is a subject that is near and dear to my heart, but everyone in the theater tonight seemed to conclude that this is one of the best documentaries that has been produced in a long time. Jim Bruce makes his living editing major movies in Hollywood, and his talent shows up in spades in this film. Only about 1% of the interviews they recorded (in terms of time) made it from the camera to the actual film. The craftsmanship of weaving all those interviews, one after another, taking small slices here and there and creating one continuous, compelling narrative, is truly amazing. You simply have to see this film if you get the chance.

I know that a lot of Senate staffers (and even a few senators) read this letter from time to time. You have a very interesting vote coming up in a few weeks after President Obama nominates a new Federal Reserve chairman. I strongly suggest you view this documentary prior to casting your vote or asking your questions (if you're on the committee). That will certainly make for a more lively and entertaining committee meeting. Drop me a note and I will arrange for you to get a copy of the film. (If you're in the White House, you might possibly want to watch just to see what kinds of questions could be coming up for your nominee. Just a thought.)

Monday evening I fly to Chicago for a speech and then on to Bismarck for a presentation for BNC Bank. Before ending up in Bismarck, I will fly to Rapid City, South Dakota, to gaze at Mount Rushmore and put my feet on to South Dakota soil, at which point I can say that I've been to all 50 states. My friend Loren Kopseng will pick me up and fly me up to the Bakken oil fields for another tour of the area. The next week I will be in Denver and the following week in Toronto and New York.

It is quite late and time to hit the send button. I might have lingered too long at my friend David Tice's after-moving party, as the conversation was just so much fun. But great conversation didn't get the letter done, so as usual I am up until I can meet the deadline. But it was worth it. I can always sleep late another day. But not today. I promised some of the kids and my sister I would have brunch with them, and I have to set my alarm clock early enough to be on time. Then, in the evening, my daughter Abbi and her new husband Stephen will be down from Tulsa. We will spend the next day or so catching up and doing family stuff. Have a great week.

Your hoping he can find above-average returns somewhere analyst,

John Mauldin Thoughts from the Frontline
John Mauldin

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Sep. 13, 2013, 4:53 p.m.

Clearly Mr. Nettesheim’s comment is not popular, but that’s no reason to not respect it (that would be to you gloconic@hotmail.com).

There have been many criticisms of the public pension systems directed on how they’ve been run, but very little education on how and why they’ve arrived at such a precarious position. One only needs to read the minutes of board meetings when the topic of increasing benefits is discussed and voted on. The drivers of these discussions are the union representatives on these boards who are trying to get increased benefits for their members. Not coincidentally, these discussions happen most often during election years. When pension plans had a surplus in the years of high returns, most staffers urged their respective boards to allow the surplus to sit versus pay them out in increased benefits, citing that returns would not stay in the double digit range forever. Since staffs do not hold a vote, they could only rely on their facts and figures to sway boards. Most, if not all, boards disregarded this advice and voted to increase benefits anyway. In large part, this has led us to today’s unfunded liabilities. Rather than only look to tax payers to support this hefty bill, why not force the unions to take responsibility for their benefit structures that they have negotiated. Their flexibility to bring benefit packages to a more reasonable level will go a long way to begin to decrease the amount of this liability.

Also a word about tax payers and the pension funds. Defined benefit plans like many defined contribution plans, stipulate that contributions are shared by both the employer and the employee. In a state defined benefit plan, both the employer (the state) and the employee (state workers) pay into the pension plan and the funds are managed by an investment staff that seeks to invest the funds to achieve a rate of return at or above a hurdle rate, which is determined by the plan’s actuary. The state pays contributions through its revenues. The revenues comes from tax payers, so while tax payers are the ones paying for the contributions, it comes out of the revenues a state collects for everything else as well. There are also many years that the states do not pay any contributions, which are the years that the pension funds earn a return higher than the actuarial hurdle rate which typically ranges from 7% to 9%. In those years, none of the tax payers payments are going into the pension fund, but contributions from the employees (state workers) go to the pension fund every year. These contributions are automatically deducted from their paychecks and they do not have a say on how much this % is. They choose this course, as well as accepting a job that pays lower wages than in the private sector, as a trade off for a “defined benefit” payment when they retire.

I hope this puts a more balanced perspective to this argument. A final note to Mr. Cawthorne: you may want to find some stress reducing activities if you are stressing yourself out about where to move based on how funded a state’s pension fund is. Just saying.

Sep. 12, 2013, 4:59 p.m.

A couple of thoughts.

First, the vast majority of public plans discount their liabilities at the same rate as the expected rate of return on their assets. This is significantly different from the corporate plan space where they discount the liabilities off of the AA, 10 year corporate bond rate and use a different expected rate of the return that more closely resembles reality. As you state, the higher liability rate massively underestimates the true obligation of the plan. When coupled with the unrealistic expected rates of returns on the plan you cover so well in your article, it doubles down on the problem. This tying of the liability discount rate to the expected rate of return is the key driver why public plans don’t embrace Liability Driven Investing (making the future dollar size of the liability of the plan the investment benchmark as opposed to the summation of the weighted averages of the asset class specific benchmarks. The thought is the plan exists to pay the beneficiaries, so that objective becomes paramount.) when adoption by corporate plans is now widespread. In short, reducing the discount rate on the liability and enforcing a realistic expected rate of return on the assets will be a double whammy that is not widely understood.

Second, in your Illinois example, you mention that each tax payer has a $22,000 obligation to pay for the top five state plans. Currently, the state is doing a comprehensive survey to understand the total liability obligation owed across all jurisdictions. Illinois has more governmental bodies than any state in the Union and when the total liability is known, it is expected to more than double the $22,000 owed by each taxpayer. Using the proper rates discussed above makes it worse yet again. Throw on the same obligation at the Federal level ($17T national debt/120M taxpayers) and each Illinois taxpayer will owe over $200,000. With an average annual personal income of $50,000, you’re looking at a disaster. The cross collateralization of the debt across all elements of government, local, state and federal, is not being taken into account by the bond rating agencies nor the personal credit rating agencies. Bond rating agencies look at each jurisdictions taxing ability, separately, without taking into account the other publically known tax obligations the taxpayer has already accumulated. Credit rating agencies focuses primarily on mortgage, credit card and student loan debt. Their methods grossly miss the mark and mislead decision maker’s ability to solve the problem at hand. Imagine trying to get a car loan or mortgage on $50k gross income while holding $200k of debt. If one adds the personal debt the average American already holds with their publically known tax obligation, what do you believe their true credit score is? And if a State’s ability to service debt is based on the amalgamation of this over-indebted/insolvent taxpayer base, how can Illinois be rated investment grade or even solvent. If we thought the rating debacle seen with the MBS meltdown was bad, wait until this occurs.

Sep. 9, 2013, 12:10 p.m.

Very good article - but I fear there’s a little confusion about what GASB and Moody’s have done. I’ve produced several reports on what they have done - and what they haven’t done - and given several presentations to various pension reform groups in Northern California.

GASB will change the way governments report their pension finances in their audited statements. That’s it.

Moody’s will change the way they evaluate pension finances in their credit rating process. That’s it.

Neither will make governments fund pensions differently. No one should say either will require governments to pay more. No one should say they will make governments declare “bankruptcy”.

No government must change its financial statements because of Moody’s adjustments.

But what GASB and Moody’s ARE going to do will have very powerful impacts.

Most people think the big change in GASB’s new pension financial reporting rules are that unfunded pension debt will be reported as a bona fide liability on government balance sheets for the first time. That’s a hugely important change - but I don’t think it’s the most important or impactful change.

To (slightly) paraphrase Bill Gates - “Only fraudulent accounting allows governments to report balanced budgets”. That’s a comment about “Income Statements” - not “Balance Sheets”.

The Fatal Flaw in GASB’s old rules is pension expenses that create unfunded pension debt are reported in the future as that debt is paid. That’s absurd – the payments of a debt eliminate the debt, they don’t create it. Unfunded pension debt is created by pension expenses in the past – most of which have never been reported to the people.

It’s more complicated than this - but it’s “good enough for government work” - pension expenses will be reported when they occur - when they create the unfunded pension debt - not when the debt is paid.

I calculate this will increase many if not most governments’ reported pension expenses three to four times. The notion of balanced budgets is going to be blown sky-high. Further - in the first year government’s conform to GASB’s new rules (fiscal years beginning after 6/15/14) they will not only put unfunded pensions on their Balance Sheets as a “real liability” - but they are going to have to report what created that debt. One way or another governments are going to have to tell us they didn’t report hundreds of billions of real past pension expenses that created the debt. Very few people have realized how HUGE the Tsunami of red ink in the first year is going to be. HUGE!

GASB’s new rules don’t explicitly say the discount rate used to calculate Total Pension Liability (the present value of future pension payments that have already been earned by employees and retirees in the past) must be lower than the Pension Fund’s target rate of return. They do require a VERY COMPLICATED 70 year or so cash flow analysis to determine what the discount rate will be. My understanding of this process is that IF the government has a history of paying what the actuaries said they had to each year, then the target rate of return will be used as the discount rate - even if there is a significant Net Pension Liability (Total Liability less the market value of Pension Fund assets). BUT - if they have a history of not paying what they were supposed to - then they will be forced to use a lower rate. The more they have underpaid - the lower the rate.

The cash flow analysis is very complicated - this is my best effort to understand its impact on the discount rate. But even if a government isn’t forced to use a lower discount rate - most likely GASB’s changes will still have a huge impact on their Balance Sheets.

I calculated what the impact of GASB’s new rules and Moody’s adjustments would have been on the 2011 financial statements of 7 California counties. Those 7 counties reported a combined total of $10 billion in “Net Assets” - aka “Net Worth”. The new GASB rules would have forced these counties to write off 90% of their Net Worth - down to $1 billion. BUT - Moody’s adjustments would have indicated that New Worth was $17.5 billion less than reported. All together they would have reported a $7.4 billion negative Net Worth. Only Marin County would have been left “above water” - and Marin has the highest per capita income of all US counties!

You can download my reports from my website www.YourPublicMoney.com.

Sep. 8, 2013, 7:55 p.m.

I would highly recommend a visit to “Crazy Horse”, also a mountain carving but done without any FEDERAL FUNDS! It is a few miles away and In my 60 years of intensive travels around this country one of the most impressive. Explore the visitors center and learn of the artist travails as he spent his whole life here. An unforgettable experience!
Bill Warr - an avid fan

Fritz Cooper
Sep. 8, 2013, 7:55 p.m.

Timothy, John Mauldin is much more accurate in his assessment of conditions and anticipation of future events, than most analysts I read. His presentation of alternatives and possible courses of action is decidedly informative and “un-pedantic”. Mr. Mauldin presents his findings (with attribution), and yes, occasionally his opinions which he clearly labels as his, with humor and candor. Hiss assessments and recommendations are easier to understand than, let us say, the U.S. Federal Reserve, it’s Chairman, Board of Governors and it’s Open Market Committee. 

Yes, Timothy, I do subscribe to John’s paid newsletters, and his freely distributed newsletters, and own all but the first of John Mauldin’s books, and I attended the “Money for Nothing” screening in Dallas on Friday evening. Were you inclined to read these, you would understand the context in which John’s comments were created, and perhaps benefit from them.

Please let us know how well you pension plan is funded, if you have one?

Sep. 8, 2013, 2:35 p.m.

Our problem is that we really do not know what our true liabilities are.

Factoring in the unfunded liabilities of the U.S. Government, the per capita debt is more than $350,000.

The Fed and the Treasury are out of control.


Bruce Sammut
Naples, FL

Sep. 7, 2013, 9:43 p.m.

is it “Nettesheim” or “Nettlesome”?

Sep. 7, 2013, 6:12 p.m.

  As a Deacon in a Reformed Presbyterian Church, we are in charge of helping the poor.  As I am reading the statistics and the signs of the times, both the poor and the middle class will be more and more squeezed by taxes, “revised” cost of living measures, and greed.  If you church, or whatever help-the-poor group you support, is not getting ready to help more poor people, and take steps to prevent the middle class from falling into poverty, please do so.

  As for employers, you might want to consider this story about Henry Ford.  Mr. Ford was showing some union officials around his auto plant.  He told the officials that this one machine would replace 25 men.  A union official asked, “How are they going to buy Fords without a job?”  Henry did not lay anyone off, he retrained the men instead.

Willis Smith
Sep. 7, 2013, 5:18 p.m.

The fact is that government employees at all levels have as good or better retirement plans that those offered by major companies.  Most people simply don’t have a defined benefit retirement.  So the question is why are the taxpayers being forced to pay better retirement benefits than they themselves receive?  In my experience the average government worker is not all that talented to warrant special retirement benefits and their salaries are comparable to those in private industry if not higher.

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