You're watching...
Forbes Investment Strategies Editor Bill Baldwin discusses the impact of takers and makers in the 11 states in fiscal turmoil.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Crime -- good morning in three weeks before Christmas very low volume modest gain for the Dow thirteen 1070.
Now do you remember that story we brought to follow us on Wednesday morning last week eleven states all in a death spiral.
So is that an article in -- magazine those of the sites that are on the screen.
They're in such bad financial shape the bill Baldwin who wrote the article suggested that would.
Death spiral applies while William Baldwin is -- right now we welcome program.
Welcome and didn't mean to cause any panic you know -- you didn't cause panic -- a lot of interest -- -- that really stood things up but you know it.
Well I got several hundred comments on this story not all of them favorable effect it took -- problem with something like this OK great so we're gonna sell our beautiful beach house in Malibu California.
And moved to Bismarck and within a ten print whether they're right back up LS I'm not kind of what I was saying if you had to move that wasn't that at all what I was saying is.
Don't buy -- in California -- don't put your business that.
I don't movie business what that this is already there if you get a job offer from Google and it's in Silicon Valley take it just wrap house don't -- -- okay.
Now what's -- offs of the -- -- what is driving what you -- deaths while.
There -- a lot of economic factors that are built into this but the essential one in my view is whether they're -- war what I call and I know this is that contentious word.
More takers and makers you know and I don't mean that the takers are bad people I'm assuming and my article that every single person drawing money from the state government.
As an employee as a state employee who's retired.
Or as they deserve it and -- welfare recipient is indeed title.
That's not the point the point is what happens when you chase out the private sector jobs that support all that spending account got that now -- boil it down.
One of the -- on -- and companies always been for years instance he's -- this week cannot afford to pay the state woke up pensions in many states which we have promised to.
Is that of the heart of the best -- article as one of the contributing factors and when they visit Illinois is a big the biggest okay.
Now most of these states pay the money that they promised to pace the Fed to -- must night.
In most cases mostly that's true.
The reason is it is not fair and it may be even unconstitutional.
To take away a pension that's already been -- best just that but there are ways to cope with this crisis -- the states -- addressing what they could be -- They could stop credited new years of service they could put not just new employees but existing employees it to a 41 K plan which is well -- -- what you have that as what I had to put existing employees and to that.
Yes that's a real -- change it will is not a sharp is taking away something that there's ordered the current which I don't think you can do I don't think that's fair.
OK so right so if I'm I state.
Prison guard in California.
And I've been promised a great pension up -- put in thirty years and I -- in fifteen years right you can take away half my pension but not the half -- -- here.
For the remaining fifteen years put me up world want tapes of their oss solutions it's not a death spiral if the politicians take the right action especially in regards to state look at pensions this can be done you telling me.
I think there's a way to stay in California and -- -- great states great letter.
To North Carolina sense of fiscal responsibility so why they're not doing it that what you know -- bill c'mon you know you know that in California the unions would and in Illinois the -- would never -- For the kind of steps that you'll talk about -- The bulls that's been done anywhere is to put new employees -- -- -- 401K plan and that's not even happen in California you're not answering my question you know perfectly well the unions would not stand for with the they have a supermajority the unions do right.
It is that answers the question yeah well I hasn't slowed down far right won't stand -- death spiral stands -- -- that was bad at all you come -- -- -- again thank you -- another article like that what you've -- back.
There -- up.
To.
