Tuesday, June 15, 2010

Public Employee Crisis

The San Francisco Chronicle had an interesting analysis of how the growth of public employee political power is threatening the state's economic viability: "For public employee unions - those representing police, firefighters, teachers, prison guards and agency workers of all kinds at the state and local levels - these are the worst of times. Despite record high membership and dues, and years of unparalleled clout in state capitols, public-sector unions find themselves on the defensive, desperately trying to hold onto past gains in the face of a skeptical press and angry voters."

And the anger, of course, devolves from the fact that the fattening of the public work for is directly proportional to the shrinkage of the private sector-and the looting of the citizenry needed to pay for the government expansion: "The biggest blow to unions' public support has come from revelations about jaw-dropping compensation and pension benefits. Police have received unwelcome attention for budget-busting overtime and the manipulation of eligibility rules for "disability pensions," which provide higher benefits and tax advantages. Other government employees, particularly managers, have been called out for "pension spiking": using vacation time, sick pay and the like to boost income in the last years of employment, which are the basis for calculating retirement benefits."

And the public exposure of the abuses, dramatizes the disparities between what a government worker can expect to receive in retirement with the bleaker future of the private sector worker: "Such gaming of the system boosts starting pensions to levels that can approach, and even exceed, employees' salaries. Some examples from the reporting of the Contra Costa Times' Daniel Borenstein: A retired Northern California fire chief whose $185,000 salary morphed into a $241,000 annual pension; a county administrator whose $240,000 starting pension was 98 percent of final salary; and a sanitary district manager who qualified for a $217,000 pension on a salary of $234,000. At a time when most Californians anticipate an austere retirement (if they can afford to retire at all), government pensions are a source of real voter anger."

All of these revelations that are fueling widespread voter anger-and are the impetus behind the Tea Party phenomenon (a grass roots anger that is even being felt in New York State)-seems to have by passed the wunderkinds at the White House. How else to explain the fact that the president has called for an additional $50 billion in aid for propping up the public sector at the state and local levels? As the Washington Post reports: "President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid "massive layoffs of teachers, police and firefighters" and to support the still-fragile economic recovery."

Could there be a greater disconnect between all the president's men and women and what's going on in the rest of the country? As John Hinderaker comments on Powerline: "Increasingly, the central conflict in American politics is between the cash-strapped private sector and lavishly compensated public employees. With government workers now out-earning those in the private sector by something like two to one, many taxpayers are saying "enough." But President Obama, with his usual tone-deafness, is pressing ahead with plans to widen the gap between the lush public sector and the hard-hit private sector even more..."

This feeds into the questionable ideological presumption that propping up the public sector-all the so-called, "jobs bills," as well as the failed stimulus-is actually helping the economy: "The original "stimulus" bill was all about keeping state and local government spending, and the salaries it supports, sky-high. It doesn't appear that President Obama has a game plan to help the economy, other than continuing to feed the already-bloated public sector. This is consistent with his apparently complete ignorance of basic principles of economics. Democrats in Congress, however, can see the writing on the wall. It will be interesting to see whether they are willing to brave voter wrath by stimulating the public sector still further."

Foe New Yorkers, all of this has a Yogi Berra,"This is like deja vu all over again," quality to it. For those of us who lived through the Lindsay-Beame years in the city, we can see the handwriting on the wall. Lindsay, as Murray Kempton mused, was a, "splendid flop," precisely because of how he fueled the growth of government at the expense of the private economy in New York. Fred Siegel makes the point and reads the wall writing-he gets the last word: "In his second term, Lindsay allied himself with the rising public-sector unions, the same constituency that has been central to Obama’s unsustainable expansion of federal spending based on borrowing. Lindsay wasn’t solely responsible for the fiscal crisis that hit New York in 1975, but his policies of expanding government spending and employment and paying for it with debt made it all the harder for the city to recover...A similar fate may now await America at the hands of our Lindsay-like president."