Tag: Boomergeddon
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Virginia and the Next Global Debt Crisis
Ten years ago the Lehman Brothers debacle precipitated the financial meltdown we associate with the Great Recession, and the financial media are full of retrospectives. A key question is what lessons we learned from the epic failure. The main conclusion drawn, according to Daniel J. Arbess in the Wall Street Journal today, appears to be…
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Graph of the Day: Virginia’s Declining Fertility Rate
The number of births in Virginia continues declining, reaching the lowest level in years in 2017 — only 100,248. A decade before, births had numbered 108,884. Demographers Savannah Quick and Shonel Sen at the Demographics Research Group at the University of Virginia attribute the overall dip in fertility decline to a dramatic decline for 15-…
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Unfunded Pension Liabilities a Benefits Problem, Not Just a Funding Problem
In the analysis of unfunded state pension liabilities, there are two main components: assets and liabilities. Here in Virginia, most attention is focused on the asset side of the equation — how much money have state and local governments set aside to pay for retiree benefits, and how well is the Virginia Retirement System managing…
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Moody’s Reaffirms AAA Rating. Don’t Get Cocky, Virginia.
Moody’s Investors Service, one of the nation’s three bond rating agencies, has reaffirmed Virginia’s AAA bond rating and stable financial outlook, the Richmond Times-Dispatch reports. Moody’s had issued warnings that Virginia’s hallowed AAA status was looking fragile, due mainly to a sharp draw down in previous years of the Commonwealth’s budget reserves. The Revenue Stabilization…
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Seven Years and Counting…
Medicare’s Hospital Insurance Trust Fund (HI) will be depleted in seven years — three years sooner than forecast previously, according to the 2018 Annual Report of the Medicare Boards of Trustees. By 2026, Medicare Part A, which covers hospital payments, will be running a $52 billion annual deficit, a gap that will increase rapidly in…
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Virginia’s Hidden Deficit: the Unemployment Trust Fund
There are many measures for gauging a state’s fiscal condition. The most commonly cited is the condition of its General Fund: Is the state balancing its budget? Digging deeper, one can examine the degree to which a state is funding (and falling short of) its pension obligations. And one can track the extent to which…
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No Compromise on the AAA Rating
A downgrade of Virginia’s AAA credit rating could cost the Commonwealth between $33.9 million to $72.7 million in additional interest costs on its roughly $4.8 billion in state debt, says Secretary of Finance Aubrey Layne. “If S&P downgrades and the other two follow, which they usually do, it could cost us millions,” Layne said, as…
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Can the U.S. Outgrow Its National Debt?
In previous posts I have described the Republican-backed 2017 Tax Cuts and Jobs Act as a Hail Mary pass, a gamble that by boosting economic growth the United States can outgrow the burden of chronic deficits and a rapidly accumulating national debt. I wasn’t optimistic, but I was willing to wait and see. After the…
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State Pension Problems Still Getting Worse
Another year, and another analysis by the Pew Charitable Trusts on the deteriorating condition of U.S. states’ public employee pension plans. Drawing on data from 2016, Pew concludes that despite scattered actions by the 50 states to shore up their pensions, the funding gap only got worse. In 2016, the state pension funds in this…
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Petersburg Backs Away from the Precipice
The City of Petersburg looks like it has finally dug out of its fiscal hole. City Manager Aretha Ferrell-Benavides presented a $73 million budget to City Council last week that restores funding to schools and public safety even while building up the cash reserve by $950,000. Last year the city lurched from crisis to crisis…
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Medicaid, Pensions Kneecapping State Budgets
Take heed Governor Ralph Northam! Take heed Virginia House and Senate budget negotiators! One in five tax dollars collected by state and local governments across the United States go to Medicaid and public-employee health and retirement costs. Of the $136 billion growth in inflation-adjusted taxes collected by state and local governments between 2008 and 2016, two-thirds…
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Just a Reminder…
The national debt has passed the $21 trillion mark. It took only six months to get there from $20 trillion. Unlike the last time the U.S. racked up debt this rapidly, the economy is growing, not in a recession. Blame whomever you want — Boomergeddon is coming. It’s just a matter of time.
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Working Longer Versus Saving More
One of the big decisions Americans must make as they plant their retirement is when to start collecting Social Security benefits. The popular wisdom is that each year you delay collecting Social Security translates into an 8% increase in annual benefits. The Social Security Administration can afford to goose the payout because (1) it pays…
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Enjoy It While It Lasts
Woo hoo! Tax cuts and spending increases — it doesn’t get any better than this. The United States is about to enjoy its biggest fiscal stimulus since Barack Obama’s American Recovery and Reinvestment Act of 2009. All this spending and tax cutting is going to feel great for the next couple of years — especially…
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The New Normal: Rising Interest Rates
The United States enjoyed a three-decade decline in interest rates, beginning with the early-1980s quashing of inflation by Federal Reserve Board Chairman Paul Volker and culminating with Ben Bernanke’s Quantitative Easing in the mid-2010s. Lower interest rates, which made equities look more favorable by comparison, helped drive stock market indices like the Dow Jones Industrial…