My goal in Part Two was to show what caused the national debt, why it keeps growing larger and who bears the most responsibility of that debt.
Now I will return to the CalSTRS “Retired Educator Winter 2012” newsletter, which said, “Statewide, CalSTRS benefit recipients (I’m one of them, and there are more than 200,000) received $6.03 billion in payments in 2006. The economic ripple effect in the form of job creation as those benefits were spent totaled $9.22 billion, according to a 2007 study by the Applied Research Center at California State University, Sacramento.”
None of this was borrowed money. Educators paid a percentage of their gross earnings into CalSTRS during their working years as I did. This money was invested and earned interest, which was more than $30 billion for 2011. This money does not contribute to the national debt.
In fact, California’s economy gained $6.71 for every single dollar committed to pensions by employees, employers and taxpayers and each dollar also generated 44 cents in government revenues.
Furthermore, according to the Pensionomics: Measuring the Economic Impact of State and Local Pension Plans, these pensions support 2.5 million jobs and $358.6 billion in economic activity.
Does this sound as if the wealthy are funding the start up of small businesses?
For example, in 2006 in California, 976,233 state residents received a total of $23.52 billion in pension benefits from state and local pension plans… The average pension benefit received was $2,008 per month or $24,097 per year… Retiree expenditures stemming from state and local pension plan benefits supported 205,221 jobs in the state. The total income to state residents supported by pension expenditures was $15.1 billion.” Source: Pensionomics – National Institute on Retirement Security (and this was just public sector pensions)
Then, according to Retirement USA, one in five private-sector workers is covered by a traditional pension while 55% of people 65 or older rely on Social Security for half or more of their income—the median income for older households with Social Security and pension and annuity income was $32,105 in 2008, not including earnings from work.
In addition, CalSTRS ended 2011 with net assets of $155.34 billion and that money isn’t sitting around gathering dust. Those billions are invested and earning money. To earn money off those investments, means someone else made money too and this generated jobs.
The CalSTRS newsletter says 53% of those billions were invested in Global Equities, which is a category of mutual funds in which investments may be made in stocks of corporations throughout the world. A portion of the fund’s assets are usually committed to American markets, although the major portions are held in equities of developing countries
In addition, 17.6% of CalSTRS funds were in Fixed Income accounts, 14.8% in Private Equities, 12.1% in Real Estate, etc. When CalSTRS earns money from those investments, that means those investments also earned money for businesses and created jobs for Americans and for the citizens of other countries depending on where the money was invested.
However, where do the wealthy that benefited from the Bush tax cut keep most of their money?
Continued on March 2, 2012 in What the Numbers say about Creating Jobs in America – Part 4 or return to Part 2
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
To subscribe to “Crazy Normal”, look for the “E-mail Subscription” link in the top-right column.