On drug tests and pensions
Drug test the rich
Catherine Rampell in The Washington Post: Scott Walker is right: It’s time for more Americans to get comfortable peeing in cups. Our nation’s fiscal health may depend on it.
I’m referring, of course, to taking a drug test as a condition for receiving government benefits. Walker, the Wisconsin governor and a likely 2016 Republican presidential contender, made this a centerpiece of his recently announced state budget.
But if we really want to take advantage of this innovative fiscal rebalancing strategy, the most fertile place to start may be among the many well-heeled beneficiaries of the country’s $1.4 trillion in tax expenditures — the back-door spending that politicians do through the tax code. About half of this tax-side spending is captured by the top 20 percent, which means that drug-testing people who want to claim tax breaks could produce a huge windfall.
Want to take that deduction for home mortgage interest? I’m sorry, sir, you’ll have to submit a urine sample. Eyeing that carried-interest tax loophole? Here’s a cup for you, too.Same with charitable deductions, health insurance deductions and everything else on your thick, itemized 1040.
Sure, some Americans will complain that blanket drug-testing is an unreasonable violation of their Fourth Amendment rights. But as long as they’re clean, they should have nothing to hide. Right?
The war on hard liquor
Gerald D. Skoning in The American Spectator:With colleges under growing pressure from the federal government under Title IX to reduce binge drinking and alcohol-related student misbehavior, Dartmouth College recently announced that it would ban hard liquor on campus.
The sexual assaults, fraternity hazing and hospitalizations that have rocked campuses around the nation have often involved extreme intoxication, like the case of the former Vanderbilt football players convicted of raping an unconscious woman, or that of a Stanford swimmer recently accused of rape.
Dartmouth isn’t the first school to ban hard alcohol — Bates and Bowdoin have similar rules — but it is the first Ivy League school to do so. Despite Dartmouth’s prominence as a member of the Ivy League, experts caution not to expect many institutions, if any, to follow its lead.
The changes are part of a collective push to end sexual violence on campus, as Dartmouth is one of 95 schools under federal investigation under Title IX for mishandling sexual assault cases. But it is unlikely that adoption of a hard liquor ban will be effective in curtailing sexual misconduct and may in fact be counterproductive by encouraging riskier student behavior like drunk driving.
Pensions no lifelong promise
Steven Greenhut in Reason: “If you have the facts on your side, pound the facts,” goes the old legal adage. “If you have the law on your side, pound the law. If you have neither on your side, pound the table.” A newly published federal court decision found the California Public Employees’ Retirement System was merely banging the legal table with its “iron fist” in the Stockton bankruptcy case.
Judge Christopher Klein rejected the pension fund’s argument that California cities could not reduce pension benefits even in bankruptcy. The decision could dramatically change the way pensions are handled in future bankruptcy proceedings, even though the judge upheld the city’s workout plan, which leaves existing pensions untouched while “impairing” creditors.
The most fascinating part of the ruling details one specific way CalPERS bullied Stockton officials. For instance, municipalities can switch to another administrator (or create their own system), but CalPERS makes it difficult for anyone to leave.
The pension fund maintains a termination pool. When, say, a special district shuts down, CalPERS shifts its accumulated contributions to an investment fund with a much lower yield than the general fund — around 3 percent, rather than its typical 7.5 percent expected rate of return. In public pension funds the size of the unfunded liabilities, or debt to pay pension promises, is determined by the predicted rate of return. Higher returns obviously mean lower debt.
When Stockton went into bankruptcy and mulled cutting its pension obligations, CalPERS threatened to place the city in that termination pool — something the judge called a “poison pill” that would have increased the city’s debt by $1.6 billion. Instead of working with Stockton on a plan to help it reduce benefits and stay solvent, CalPERS threatened it with a massive debt.
Stockton went into the bankruptcy facing down CalPERS’ “iron fist.” But now that Klein put his ruling on paper, other cities know about the pension fund’s “glass jaw.”