If you're one of the beleaguered members of a public employee union wondering why there's been so much press and talk show noise blaming you for the fiscal crisis so many states are facing because of your "outrageous salaries, Cadillac health plans, and gold plated pension benefits", it's simple. New Gingrich and the rest of the GOP leadership is using classic disaster capitalism to destroy a group they despise as a political enemy: organized labor.
Andrew Leonard over at Salon connects the dots and finds Newt Gingrich's fingerprints all over the crime scene. Behind the growing talk about paving the way for states to 'rationalize' their dire financial situations through bankruptcy is a long term plan to strip away all the benefits public sector unions have fought for over the years - and the unions too.
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Here's how it works:
• Spend decades turning government into the enemy and the private sector into the hero.
• Destroy union jobs in the private sector by shipping jobs overseas.
• Transfer wealth from the middle class by cutting social programs that level the playing field while cutting wages and benefits in the name of 'competitiveness' and 'productivity'. Transfer the gains to CEOs and the investor class.
• Institute tax policies that deprive governments of revenue and ratify wealth transfer to the top.
• Make privatization the answer to every shortcoming of government (convert not for profit government programs into cash cows for the well-connected.)
• Wreck the economy with deregulation and greed on steroids. Put millions of people out of work.
• Make it impossible for states to balance their budgets by taxing, borrowing, or getting help from the Federal government because normal tax revenues are way down.
• Spread hysteria about budget deficits while screaming for more tax cuts.
• Spread the talking point everywhere that public sector unions are the reason states can't pay their bills, because corrupt (Democratic) politicians bought the votes of greedy workers with taxpayer dollars.
• Tell people their services have to be cut because public sector workers make government too expensive.
• Use the financial crisis to break union contracts and pension agreements with carefully rigged 'bankruptcy' mechanisms that will still keep the banks happy. (NY Times story here.)
End goal: Walmart wages for a de-unionized public sector, another chunk of the middle class gone for good, and the destruction of more of the Democratic base.
None of this should be a surprise, though it's pretty clear most of the news media and the public won't connect the dots. Gingrich laid it all out with a speech he gave after the big GOP wins in November.
...I think, for example, you can solve much of the post office’s problems if you simply start hiring new postal workers at a market wage and you find the market wage easy. You advertise for vacancies and find out what people show up for and you’ll find out it’s about a third of the current cost. And I think we just have to be honest and clear about this and I also hope the House Republicans are going to move a bill in the first month or so of their tenure to create a venue for state bankruptcy, so that states like California and New York and Illinois that think they’re going to come to Washington for money can be told, you know, you need to sit down with all your government employee unions and look at their health plans and their pension plans and frankly if they don’t want to change, our recommendation is you go into bankruptcy court and let the bankruptcy judge change it, and I would make the federal bankruptcy law prohibit tax increases as part of the solution, so no bankruptcy judge could impose a tax increase on the people of the states (applause).
emphasis added. Read the whole speech if you want nightmares.
How can Gingrich propose this? Simple. There are real Americans and then there are Democrats.
Anyway…so let me start with a key organizing principle of the next ten years, which is as clear and as vivid and as simple as “we win, they lose.”
emphasis added
There's a damn good chance Gingrich is going to realize his vision. When all of the lamestream media parrots the talking point that union contracts are too expensive, when millions of Americans are either out of work or one paycheck away from disaster - any time you can hold one group up as having 'special' rewards and privileges they don't deserve, you can use the politics of resentment to destroy them.
What the G.O.P. is selling, in other words, is the pure politics of resentment; you’re supposed to vote Republican to stick it to an elite that thinks it’s better than you. Or to put it another way, the G.O.P. is still the party of Nixon. - Paul Krugman
Now the states are in a bind, no question. Unlike the Federal government, they have to balance their budgets by law. For years politicians have made promises and giveaways of all kinds to all people, based on the idea the economy would keep growing, the money could be found somewhere - and they'd be long out of office anyway when the bill came due. Unions are getting the blame for the actions of feckless politicos when they were simply trying to get themselves the best deal they could.
Those pensions people complain about as being too lavish? In many cases, those pension benefits were negotiated in place of wage increases. Workers were told they couldn't expect a lot of money now despite inflation - but their retirements would be good. Unlike private sector unions which used to be able to go on strike or stage a slow down (back when there still were private sector unions), public sector unions can't use those methods because of public safety issues and restrictive laws. (The New York State Taylor Law for example imposes big fines and jail times for work stoppages.) Most people don't go into public service jobs expecting to get rich. They're looking for decent wages and benefits, a measure of job security, a decent retirement, and the knowledge that they're doing jobs that need to be done, jobs that benefit the public.
All of this makes them targets for Conservatives.
Politicians were happy to make pension and benefit deals because they got a quiet workforce in exchange for promises to come up with money way in the future. It's like the guy who runs up a big tab on a credit card while never budgeting the money to pay it off. It also makes all the people of the state who got the benefits of those workers services over the years complicit in the coming default. Ditto for all the businesses and interest groups that got tax breaks in exchange for contributions and revolving door jobs.
How are states going to get out of the budget trap? The economy picking up would be a big help - but a Republican party that's blocked all effective actions has succeeded in delaying that until they can steal credit. A modest rise in taxes would make a huge difference - but that's politically impossible now. The State of Illinois saw the lame duck legislature actually raise the state income tax and projections for the budget already look a lot better. How much did they raise it? Scare headlines scream 66 PERCENT TAX HIKE! - which is another way of saying it went from 3% to 5%. Talk about framing...
“No other state had to [raise taxes],” says Ralph Martire, executive director of the Center for Tax and budget Accountability, a bipartisan think tank in Chicago. He describes the scope of the tax increases as “transformational.”
But the financial crisis in Illinois is unusual. The state had no choice but to raise taxes, Mr. Martire says: Cutting spending was not a viable option because already, major cutbacks had been made and spending is at a historic low. Then there is the debt: The state already owes $8 billion to vendors, including social service agencies.
Also, Illinois is facing $77.8 billion in underfunded pension liabilities, according to the state’s Commission on Government Forecasting and Accountability. This makes it the largest underfunded pension system in the United States.
A more reasonable measure moving forward, Martire says, would be to overhaul the state’s tax system. He calls it “underperforming and antiquated” for not addressing modern tax growth, leaving out the service sector in its sales tax, and not taxing according to income, which he says hurts lower- to middle-income families.
emphasis added.
In New York State, a blue state, a liberal state, which just elected a Democratic governor with a familiar name, it looks like they'll be following the Gingrich playbook. Taxes on the rich? Let them expire. Layoffs of state employees? Thousands of jobs may be on the chopping block. Local governments strapped for cash? Don't look for money from the state, and don't even think of touching property taxes.
With Democrats like these, do we really need Republicans any more?
Scapegoating employee unions is not going to solve the financial crisis facing the states. Ruthlessly slashing government and cutting taxes is not going to solve the root financial inequities destroying our country. The deal working class people get in this country is the Raw Deal. We could be trying for that change we were promised.
But that's not what we're looking at. Thanks Newt!
UPDATE: Here's a couple of links to articles that flesh out this diary in useful ways. Paul Krugman pointed to a piece by Iris J. Lav and Elizabeth McNichol which takes apart the myths and lies being spread about state budgets - Misunderstandings Regarding State Debt, Pensions, and Retiree Health Costs Create Unnecessary Alarm ; Misconceptions Also Divert Attention from Needed Structural Reforms
Another piece by Mike Konczal - Kristol, Kalecki, and a 19th Century Economist Defending Patriarchy all on Political Macroeconomics - has some pointed observations on the Dark Age economic rationalizations that are driving the austerity craze and worse.
Amateur political ideology speculating and ranting time. Paul Krugman has been wondering about monetary morality lately, and more generally what is causing conservatives, Republicans and indifferent elites to believe Dark Age things about the economy. Some are Austrian economists who have their models and thoughts. But I think we see three general trends in thought that are going to be captured by three different comments: supply-side myopia, business leader pleading for more control, and the ‘Natural’ part of money.