While the Great Recession is now over two years old, 2010 is shaping up to be a terrible year for state/county/local governments. Just about every layer of local government is hurting, including universities, school districts, transit authorities, etc. Exacerbating the situation is the down turn in housing prices, which will impact the main source of local revenue as property taxes fall. Sales tax receipts are down, etc.
In addition, costs are up. Governments are spending more on unemployment, medicaid, etc. Many students who would have gone to a private university are thinking of attending community colleges to save money.
We all know what is coming. We can see the looming iceberg but we can't seem to steer the ship of state away from disaster.
I am a resident of Illinois. We are effectively broke as a State. We owe over $5 billion in unpaid bills. The University of Illinois is owed over $400 million by the state. Human service agencies have been decimated and are struggling to survive. The budget for next year is $11-$12 billion in the hole. My local community has just cut out its programs for senior citizens, which have existed for decades. The taxpayers now have to pay 100% of cost of garbage pick-up etc. In the long term, public pensions are underfunded by billions and billions of dollars.
And we are not alone. California, Arizona, Georgia, New Jersey. The litany could go on. This disaster is creating an ugly dynamic that explains the title of this diary. The coming war over public employee pay, benefits and pensions. This war will have a profound effect on people's lives as well as the political landscape.
The Republican Party is going to tap into working class resentment against public employees for political gain. We are seeing this play out in New Jersey. It goes something like this. The private sector worker is on the ropes. Pensions have not existed in years. You are paying more for health insurance. Vacations are non-existent. You have taken pay cuts, sometimes 30-40-50% to save your job. Millions of jobs have evaporated. Meanwhile, the argument goes, public employees have pensions/health insurance/raises/relative job security. Those teachers get summers off and every holiday known to man. Sure they might have given up a recent raise, but compared to you, they are living like Kings. Can you retire at 55? Those policemen can. You, if you are lucky, will work until you are 70.
We ignore at our peril how toxic this situation can become. Yes, we have heard variants of these arguments for years, but not in the context of a complete financial meltdown. The taxpayers will not tolerate and in many cases cannot pay increased property taxes. Something has to give.
We also have to acknowledge why this argument plays so well. Human resentment and jealousy is a funny thing. People aren't jealous of Bill Gates, Warren Buffet, the banksters, Tiger Woods or movie stars. They exist in a different galaxy. However, all of us know people who work in government. People do become jealous of those who they perceive to be like themselves, but are doing better.
The public employees will rightly say: hey, we did not create these problems. We have often received less money than others. Yes, we receive a pension, but it is often a substitute for social security. We have had to pay parts of our pensions and have to contribute to our health insurance. We had the good sense to unionize. Do you really want a 63 year old cop chasing an 18 year old gangbanger down the streets?
It is hard to generalize this situation. The situation of public employees varies greatly. In parts of the US, there are policemen/teachers making over $100,000 a year. In other parts, people doing the same job might be lucky to make $45,000, if that.
The sad thing is it doesn't matter who is right. The situation is bleak. In an ideal world, we would close these gaps by both tax increases and cuts. The political will to do this is non-existent. Clever politicians are going to exploit this resentment and play it like a violin. Public service is going to suffer. Schools are going to get worse. Transit is going to go to hell. And unless a second stimulus is passed, 2011 is only going to be worse.
How do we fight this? It will take imagination and good will. Private citizens will have to pay more. As Democrats, we have to push for a second stimulus package. We have to rethink how we provide services and look at government payments to business. Public unions will have to be smart. They will have to make concessions and be flexible. They can't throw their new members out to protect the pay of the veterans. We are all in this together and will all have to work together to get out of this situation. Unfortunately, it is hard to put this position on a bumper sticker. Everybody has to take some of the pain. No one wants to hear that. I don't. The thought of paying more taxes for less service is not appealing. I will be willing to do it if I feel every one else has made a sacrifice also.
By the way, I am one of those people who took a 50% pay cut. I am making more money than a lot of you, but it has hurt. Yet, I can pay my mortgage and have health insurance. I feel grateful to have any job. I will probably have to work until I die, but many of you have it much worse. We can make it through this, but we have to acknowledge that the above will be an issue. It already has been.