The current debt ceiling
"crisis" has highlighted the fundamental difference between two
philosophies of government. The
majority of Democrats would like to increase revenue, or as most taxpayers
would say, increase taxes.
Republicans for the most part would like to cut government
spending. Controlling only one
house of the legislature put Republicans at a distinct disadvantage. In the recent budget battle they were
able to pass a 38 billion dollar reduction, a pitiful amount considering the
multi trillion dollar budget. But
even this “victory” may have been a chimera. Columnist Jonah Goldberg asserts that after the gimmicks are stripped away the actual reduction amounted to 352 million. Progressives
clearly have a different view of the value of money. Former Congressman David Obey is quoted as saying, “It was a
lousy
$8 million,” in response to criticism of a pork project. Senator Schumer is quoted as
saying, “And let me say this to all of the chattering class that so much
focuses on those little, tiny, yes, porky
amendments, the American people really don’t care.”
Most people, Republicans and
Democrats, agree that the current deficit spending is unsustainable. More and more people are becoming aware
that we are heading for what columnist Mark Steyn calls a “demographic recession.” Steyn may be somewhat optimistic. It is more likely to lead
to a “demographic depression.”
Governments: federal, state and local, have committed themselves to
generous pension plans and other expenditures that they have absolutely no
chance of honoring. These
governments will have no choice but to default on their obligations.
The city of Pritchard, Alabama is in the vanguard of the default crisis. 150 retired workers no longer receive
their pensions. The city’s
population has declined by 40 percent in the last few decades and along with
that its tax base. The government
of Pritchard could not pay these pensions even if it wanted to. Pritchard is a unique case but it is
representative of what in is store for other pension plans. Michael Aguirre, the former San Diego city
attorney claims that, “Pritchard is the future.” Aguirre has advised San Diego to declare bankruptcy in
order to restructure its pension plan.
The California State Teacher’s Retirement System and the California
Public Employee’s Retirement System are the nation’s two largest pension
systems. Their assets aren’t
enough to cover their obligations. According to a Sacramento Bee article, “A recent Manhattan Institute study found that U.S.
teacher pension plans need almost $1 trillion more in funding to pay promised benefits.” The fact that these
pensions are unsustainable has been obvious for some time. Yet, according to the same article, “The number of educators receiving $100,000-plus
annual pensions jumped 650 percent from 2005 to 2011, going from 700 to 5,400.”
The political class and their Nomenklatura live
a very comfortable lifestyle regardless of any economic downturn. The government of Bell, California
provides an extreme example of how politicians feather their nests. This southern California city of 38,000
was paying its mayor an annual
salary of almost $800,000. Other city officials were receiving similar inflated
salaries. Their only problem was
that they were excessively greedy.
Perhaps if the mayor had settled for $400,000, his salary would have
gone unnoticed. There are many
examples of excessive government salaries. Beverly Hall, the former Atlanta Schools Superintendent
received a salary of $415,293 in 2010 and $581,860 in bonuses between 1999 and
2010. In additions she has won
numerous awards.
She is now under
investigation for fraud. The
education establishment is riddled with charlatans with bogus credentials from
elite universities making six figure salaries. Although not a graduate of an
Ivy League university, Otis Mathis, the former president of the Detroit Public
Schools board, was supposed to be a role model for students. He had a “learning disability” that
prevented him from composing a coherent sentence. The school board was satisfied with his performance until it
accepted his resignation
after it was reported that he routinely performed inappropriate sex acts during
meetings with a colleague.
Wasteful government spending is under attack on
a broad front. Politicians and
their allies in the media are prepared for the counterattack. Their first
approach is to make opponents of tax increases appear heartless. A recent AP article on the recent Minnesota
budget battle begins, “The blind are losing reading services. A help line for
the elderly has gone silent.” It
is good practice to put a human face on the suffering. In this case it is Sonya Mills. Ms.
Mills is a 39-year-old mother of eight who will have to do without $3,600 a
month in state child-care subsidies. Ms. Mills’ plight might elicit
sympathy from a tenured college professor or an AP reporter. However, a man working two jobs to
support his family might wonder what other benefit Ms Mills is receiving from
the government aside from $42,000 a year in tax free subsidies. If taxpayers cannot be convinced to
open their wallets for the government out of compassion, they can be threatened
with real cuts. The city of Ann
Arbor, Michigan laid off members of its fire department due to budget
shortfalls. At the same time it
was funding an $850,000 piece of art.
When politicians claim that the
elderly will not receive their Social Security checks they are attempting to frighten
people into supporting tax increases.
Only a fool would threaten the defunding of a study to train Chinese
prostitutes to drink more responsibly or the defunding of the Cowboy Poetry
Festival.
Progressives believe that there is an almost
unlimited supply of money. Van
Jones claims, “We are not broke. We were robbed and
somebody has our money.” In one
respect progressives are correct.
The Federal Government has an unlimited supply of money with its ability
to perform “quantitative easing.”
The problem with quantitative easing is that it is a tax: a tax that
hits the poor particularly hard. This
is explained by John Maynard Keynes who stated, “by a continuing process of inflation, government can confiscate, secretly and unobserved, an important
part of the wealth of their citizens.”
