Recently journalist David Sirota noted how corporate subsidies and retirement costs are crowding out state and local spending on public services. He’s right to be concerned about those outlays, which crowd out spending on higher education, welfare, courts, parks and the environment and cause increases in taxes and tuition and other fees.
But Sirota left out two other members of the “Crowd-Out Coalition.” One is debt service paid to Wall Street. The other is salary paid to state and local government employees.
This year, the Crowd-Out Coalition will receive more than $44 billion of California state government spending, including $4 billion of business incentives, $5 billion of debt service, $25 billion of salaries and $10 billion of retirement costs.
That’s three times more than the state will spend on the University of California, California State University, welfare and parks combined. Worse, the spread is widening.
Why are some programs getting less money while others are getting more? It’s not that state revenues are lower. California revenues are up.
The answer is old-fashioned political power. According to the California Fair Political Practices Commission, the top 25 political donors are government employee unions and business organizations. Together, they spent more than $1 billion on campaigns in the first decade of this century.
Missing from the list are any focused on UC, CSU, welfare, courts, parks or the environment, or in keeping a lid on taxes, tuition and fees.
This explains in significant part why California’s spending on colleges, universities, parks, courts and welfare has fallen while spending on salaries, retirement benefits, business incentives and debt service has increased. Taxes have gone up, and tuition for California colleges and universities tripled over the past decade.
It also explains why an unholy alliance has developed among the Crowd-Out Coalition.
Two members — government employee unions and business organizations — have teamed up on occasion to defeat candidates who have other priorities. More recently, Wall Street and government employee unions have a new goal.
As cities such as Chicago, Los Angeles, Detroit, Stockton, San Jose and San Bernardino have demonstrated, when local governments spend more money on Wall Street and retirement costs, they spend less on citizen services. This explains why those cities have cut back so much on libraries, community centers and sidewalk repairs and boosted parking and other fees.
When that’s not enough, city leaders have to choose between paying lenders and retirees and providing basic services, such as police and fire. At that point, a federal bankruptcy filing allows cities to temporarily stop paying Wall Street and retirees and to put citizens first.
Later, when the bankruptcy court has approved a recovery plan, bankruptcies can be used to force Wall Street and government employee unions to share in the pain of rationalizing unbalanced budgets.
This is why Wall Street and government employee unions fight to prevent cities from declaring bankruptcy. Without bankruptcy as an option, cities must keep paying even if that bleeds them dry.
Bankruptcy is not a preferred option. It should be a last resort. And Wall Street, corporations and government employee unions are not responsible for crowding-out. That responsibility lies with elected officials who capitulate to them rather than stand up for citizens.
States are not permitted to declare bankruptcy, so the Crowd-Out Coalition doesn’t have the same concern in those cases. But that’s more cause for citizens to worry. At the state level, the only solution is to elect officials who stand up for citizens.
Link to original article: http://www.mercurynews.com/opinion/ci_25191825/david-crane-pensioners-living-longer-isnt-only-cost