Even before that report was released, politicians started arguing about bridge tolls. And predictably the press has treated bridge tolls as the main story. It isn’t. The main story is the other aspects of the proposal which have united all our politicians against our future, once again. Why has no one questioned putting a permanent tax, on wage income only (not retirement income or investment income), to pay for just five years of ongoing normal replacement of MTA facilities and equipment? Why have there been no articles in the Times, News, Post, Newsday, etc. etc. asking what would happen in 2014, when the bonds issued against that future revenues would have been spent, and the MTA would be right back in the same position despite permanently higher taxes? Doesn’t anyone care that the MTA is in this position today precisely because no one bothered to care about today back when today was tomorrow? Has no one pointed out that New Yorkers will be paying a higher sales tax, forever, just to pay the interest on money that has already been spent, to which they want to add this additional tax? How much deeper into indentured servitude are the generations in charge willing to send younger and future residents of New York City, the Metropolitan Transportation District, New York State and the United States by deferring costs and advancing revenues? Does everyone comfort themselves by telling themselves there is no choice?
You may not have heard this, but as reported by Bloomberg News “Ecuadorean President Rafael Correa halted payment on foreign bonds he calls ‘illegal’ and ‘illegitimate,’” and is seeking to restructure his country’s debts. “A debt commission Correa formed last year said in a 172-page report in November that the global bonds due in 2012 and 2030 ‘show serious signs of illegality,’ including issuance without proper government authorization. Correa invoked the 30- day grace period on the interest payment last month, saying he wanted to analyze the commission’s findings.” Serious illegality? Like encumbering younger generations of New Yorkers with future-destroying debts without a constitutionally mandated referendum, and passing pension enhancements in the middle of the night and claiming they were “free” based on bogus assumptions provided by the beneficiaries, as in New York? Is bankruptcy and default just a left-wing idea? How about the demand, during the negotiations over the auto industry bailout, by Tennessee Republican Senator Sen. Bob Corker, that before taxpayers are asked to put in any money the auto industry bondholders should be forced to take some losses, and the compensation of Big Three workers should be reduced to what other people earn? I believe he was talking about 30 cents on the dollar for bondholders.
Perhaps we need a Correa of Governor, replacing Madoff. Like New York City, New York State, and the MTA, the Big Three provide more expensive, lower value transportation services that competitors because of the sweet deal some people got in the past. They want people in the future to pay for this. So do those in New York. The city, state and MTA can use the tax system to force people to pay for debts and retirement obligations for the past while enduring declining public services, but only until they get the idea that they would be better off leaving. And when enough get that idea, the result could be a social tidal wave, given that the New York State legislature see younger generations and new businesses as cows to be milked to death.
You may have heard that Bernard Madoff, of Bernard L. Madoff Investment Securities LLC, has been arrested for running a Ponzi scheme that lost $50 billion. “’There is no innocent explanation,’ Madoff, 70, told the agents, saying he traded and lost money for institutional clients. He said he ‘paid investors with money that wasn’t there’ and expected to go to jail.” With that statement he became one of the more honest leaders of his generation, many of whom on the public sector side have handed out tax breaks, excess spending, pension enhancements, and other goodies with “money that wasn’t there.” Madoff provided a sweet deal for those who go in early by ripping off those who invested with him later. Just as the New York State legislature has provided a sweet deal for special interests while selling out the future and those who will live in it. He will go to jail. In a just world they would follow. But Madoff ripped off the rich and powerful, while the legislature has ripped off the young and increasingly poor.
The actual New York State Governor is going to propose reductions in public services, and eventually higher taxes on those who work, and NOT just the rich. But are any of those sweet deals going to be discussed? Is retirement income going to be subject to the same income tax rates workers have to pay on the same income? Are public employee union members, or everyone else, going to have to pay all those extra pension contributions required due to those “free enhancements.” Is the infrastructure going to be maintained without going deeper into debt. Are the debtholders going to accept, the way they are being forced to accept for a wide variety of other debts, that state and local government debtors are in too deep to pay it all back? My guess is “shared sacrifice” will, after negotiation with the legislature, fall on those already sacrificing, and exclude those who grabbed without sharing. With the sacrificing both disguised and vastly increased through more deferral — even more debt.
So this is what is coming. Defaults on state and local debts. Defaults on pensions. And the collapse of public services and benefits, with the state and local governments — thought illegitimate because everyone is smart enough to stop bothering voting in the rigged elections — harassing people to extract taxes for which nothing is provided in return. More and more our future well being is being sold by those looking to cash in now. Those providing the cash now should understand that those my age and younger will feel no “moral obligation” to pay those debts and pensions in the future. Municipal bonds? Investors should think twice.
Could "we" default on "our" obligations? What does a state legislature, whose members serve almost forever, cannot be run against due to ballot access restrictions, which appoints its own successors (generally relatives or staff members) in special elections few people know about, and passes deals in the middle of the night that fly in the face of the state constitution, have to do with us? PUT BANKRUPTCY ON THE TABLE!