Tuesday, September 28, 2010

Not For Everyone Else's Profit

Steve Malanga does a good job outlining what is at stake in the upcoming election cycle-and he does so, by demonstrating why the big government problems we face aren't just down in Washington D.C. In doing so, Malanga links the burgeoning not for profit sector-something he pioneered in pointing out over 16 years ago for Crain's-with the public sector unions; and in the process, underscores why the political battles on the state level are as significant as the federal Tea Party driven fight.

Here's Malanga's thesis statement: "The Tea Party movement may have arisen to protest rising deficits and increasing federal control of everything from health care to the auto industry -- but the big-government coalition it's fighting wasn't born in Washington. The federal agenda that the movement is now battling to overturn originated in state capitals like Albany, Trenton and Sacramento."

The battle will not be an easy one because the forces on the other side are engaged and have deep pockets-courtesy of the shlubs who pay the taxes: "This agenda has been promoted with growing success in the last 50 years by a self-interested coalition of public-sector unions and social-advocacy groups that benefit from bigger government, higher taxes and more public control of the economy. Merely "taking back" Congress on Election Day won't stop the relentless rise of this coalition, which has at its disposal enormous resources."

So, while there is some optimism on the national level, the localized fights are much more uphill-especially in NY State where the WFP is still driving the big government agenda. New York Magazine takes a rather sanguine and incurious look at the party's operation (with an accompanying Socialist realism picture of a smiling Dan Cantor): "Most days of the year, money triumphs over all things in our society,” Cantor says, beginning the pep talk. “Except on Election Day, when we’re all citizens and we get to vote. There are two conceptions wrestling with each other in America right now: The tea party is saying government is a waste, or evil, even. Our view is that government will be as good as we make it, by electing people who stand for a certain set of values we all share about decency and equality and opportunity."

But, of course, Cantor bowdlerizes the Tea Party critique of government-as he elides the key questions of size and affordability. What can Cantor cogently say, without opting for assisted suicide, about pension obligations that, if not addressed, will sink New York into a morass of debt?

He can say tax the rich suckers even more-and he does; but when it comes to the party's survival, he willingly tosses principles aside, and signs onto the Cuomo pledge that no one believes the party will adhere to: "Just days earlier, however, the WFP was staring down the barrel of a (figurative) gun held by Andrew Cuomo. Political third parties in New York are required to get 50,000 votes in a gubernatorial election every four years to maintain a ballot line. The WFP wanted to endorse Cuomo, the Democrat and favorite, in order to rack up the necessary votes in November; Cuomo wouldn’t accept the endorsement unless the WFP swallowed his budget-cutting agenda, a plan that could chop the pay and pensions of the unionized public employees who make up the WFP membership. Backing the WFP further into a corner was a recently concluded federal investigation of its business practices. The party blinked."

But this marriage of convenience says as much  about Cuomo as it does about the WFP. How hard will AC push his planned shrinkage with the Working Families as his bedfellow? And Cuomo is swimming upstream against  the currents churned by the WFP and his own party. Malanga underscores the point: "By the early 1990s, in fact, a fifth of all New York City Council members and 15 percent of state legislators had come out of the social-service world. They could be counted on to advocate for higher taxes and more money for government services. Over time, these activists partnered with another growing force in local government that shared their affinity for bigger government -- public-sector unions."

But it has been the public sector unions who have led the way-causing California to teeter on the precipice of bankruptcy; and NY following the Golden State into insolvency Here's Malanga's money quote:

"One example: In 1970s California, the most influential groups in state politics were the private-industry associations of the trial lawyers, insurance companies, doctors and hospitals. But by the mid-1980s, the biggest donors to political campaigns and spenders of lobbying dollars in Sacramento were public-sector unions for teachers, state employees, police, firefighters and prison guards.

The rise of these groups coincided with a growing public-sector ability to win big pay and benefit raises, including pension benefits. One startling result: Today, states and cities face an estimated $3 trillion in unfunded pension and retiree-health benefits for public employees -- a burden that will squeeze budgets for decades."

So all of  Dan Cantor's hokum about government being as good as we make it, masks the hard reality that there can be no good government that is so large that it taxes the ability of a free market economy to support it. And if the local state issues aren't addressed-and we have praised Cuomo for his rhetoric on this issue-then the locality will not survive in its present condition-and the exodus of tax payers to less burdensome jurisdictions will exacerbate the income divide that Cantor claims to be jousting against.

The bill will soon be coming do-and the local grasshopper mentality that was aided and abetted by stimulus spending has rewarded a profligacy that simply postpones the inevitable: "The big-government coalition heavily supported candidate Obama for president, and he has rewarded them. The various stimulus packages of the last year and a half have included hundreds of billions of dollars to preserve state and local government jobs. Much of this aid came with huge strings attached: Local governments that took the money committed to not cutting their program spending or reducing their workforce."

So, for those of us who feel that the handwriting is on the wall, and that a giant scythe is going to be needed to reduce the scope of Leviathan, there is a long hard slog ahead. This November may auger a new beginning, but any changes that are started in this tsunami ahead better be bolstered by a strong willed and determined electorate. The coming battle isn't for the faint of heart.