Entitlements

An entitlement is a guarantee of access to benefits based on established rights or by legislation.  It appears that politicians and much of the public have no comprehension of the definition.  We need to think this issue through.

Entitlements are being lumped in the same big basket regardless of what they are and that is an incredibly dishonest political ploy.  There are "entitlements" that aren't linked to any contributions - food stamps for instance.  The money that pays for the food is simply an outlay of funds into the social safety net.  On the other side of the moon are "entitlements" that are paid for by individuals - Medicaid, Social Security, most pensions and certainly all those paid for or contributed to by by public employees - you know - the folks who sit in license bureaus, collect garbage, run the landfill, do stuff with the roads in winter - those folks.

Then there are the restraints on investment for these folks who contribute to pensions - and lets talk about that for a bit because they are the target of some political wrath and it really isn't founded in anything other then rhetoric and union busting.  The problem is the restrictions on what these funds can invest in and the returns that they make.

The only sure investment - well maybe not so sure - is in government bonds..treasury bills ...These turkeys pay next to nothing...3% or less and mostly less. Otherwise the investment options are AAA rated securities ....HAHAHHAHAHAHHHAHHA...like a lot of bundled mortgage derivatives...you have some trust in Moody's and Goldman Sachs to steer you straight?  I've got a bridge for sale.  The Fed has been keeping interest rates at near 0% for now nearly a decade.  What that means, in simple terms, is that a lot of pensions - which are lumped withing the general barrel of "entitlements" - have huge funds paid into by individuals and get essentially zip return when invested.....CAN YOU make do with CD interest rates at the bank?...it doesn't keep up with inflation.

It would be helpful if the politicos of the world differentiated between "entitlements" that are just made by government to contribute to the social fabric and those "entitlements" that are the result of actual payments by members AND those which have regulatory investment controls that, due to policy, limit the investment return. 

The simple fact is that if pensions earned 5+% there would be no problem. NONE.