Author: Larry Littlefield

From the Politicker: "'I don’t know where those numbers come from,' said Bloomberg, speaking on WOR 710 this morning. 'There’s no rational independent group that would say it.'…Deputy Comptroller Alan van Capelle fires back. 'Dollars to doughnuts this out of touch Mayor has not even read our report.”

That's probably true. But I have read the report. Among the many infuriating things in it, Table 2 on page 9 states in big type that the "normal" rates for contributions to (for example) the current NYC teacher's pension plan is 6.4% to 6.8%. That isn't so bad is it? On page 10 "if no further adjustments to pension benefits are made, other assumptions are accurate, and investment returns are equal to the assumed rate (in Chart 4, 8.0 percent), the gap between contributions as a percentage of salary and the entry-age normal rate will narrow." Well guess what. Presumably based on those same assumptions, in tiny print in a table on page 40 (but without a spreadsheet with all the parameters showing how this is calculated) we find that the total contribution would still be about 20% of salary in 2040. And 14.6% of salary — double Liu's boldfaced rate — in 2060.

I have just read three news accounts of Governor Cuomo’s pension proposals. Cuomo does not propose any sacrifices at all for current workers and retirees. None of the news accounts said any of the following.

1) That current employees approaching retirement and current retirees received drastically more generous and costly pensions than they had been promised when they were hired. The unions claimed it would cost nothing, but they lied.

2) That future public employees would not only receive less in pension benefits than current workers and retirees are getting, but also less than they had been promised when they were hired.

3) That future public workers would earn drastically less in overall compensation than current workers and retirees. In the article, the differences is expressed as a “savings” for the government. The comparison between current and future workers is not mentioned, or justified, or questioned. And it’s connection to broader social trends and values across all areas of public policy is unexplored.

As noted in this post, the U.S. Census Bureau has released elementary and secondary school finance data for fiscal year 2009, along with a PDF report with revenue and expenditure data by category for states and larger school districts. I have tabulated the detailed data in a similar way, and have attached to this post a spreadsheet with data for for New York City, Downstate New York, Upstate New York, New Jersey, Massachusetts and the U.S., plus all school districts within New York State. The data includes revenues by source (federal, state and local), and spending by category (instructional vs. non-instructional, wages, benefits and other, interest and debts), all expressed per student. In high-wage high-cost areas – New York City, the Downstate Suburbs, New Jersey and Massachusetts – an adjustment is made for this.

When I first started compiling data from the Governments Division of the U.S. Census Bureau more than 20 years ago, spending on the NYC schools was low, particularly compared with the rest of the New York metropolitan area. Today, however, that is no longer the case. I’ll recount this history, and what has changed for the city from FY 2009 to the current budget proposal, in my next post. But this post will focus on FY 2009, when total spending per student was $22,569 in New York City, $22,357 in the Downstate Suburbs, $18,318 in Upstate New York, and $19,566 in New Jersey. This compares with just $16,406 in Massachusetts and just $12,547 in the U.S. Adjusted for the higher cost of living and general wage level here, New York City’s per student spending at $17,133 was still 36.6% higher than the U.S. average. The Downstate Suburbs were at $16,972, New Jersey at $15,436, and Massachusetts at $12,858 – about the same as the U.S. average once living costs/average wages are adjusted for. New York City’s spending per student, therefore, in addition to being much higher than the U.S. average was also higher than in the Downstate Suburbs or New Jersey. Upstate’s spending was higher still.

Suddenly, everyone is in a panic. Housing prices are falling, stock prices are falling, and businesses are not hiring. Is anyone surprised? Stocks are overpriced, based on the average dividend yield, and corporate profits are inflated by rising government debts which allow businesses to pay less and sell more. Younger generations are worse off than those who came before, as a result of the decisions of those who came before, and will have to pay less for housing. And corporate executives have had basically one idea for the past 15 years — move production to lower wage countries, and then sell the resulting product to Americans. Who came up with the money by borrowing until they were broke, and the government stepped in to postpone the collapse of the economy until it is broke. The executives paid themselves richly for that one idea. They have yet to come up with another one.

You want a booming economy? Look at this chart. We'll have a booming economy when our debts are back to normal levels. Optimistically, that will take a decade. Pessimistically, we're Japan or Weinmar Germany.

The New York Times reports today that experts are baffled that index crimes remain low across the country despite dire economic times. They might also have been baffled that crime soared in the 1960s and early 1970s despite good economic times. The explanation is obvious — generational values. There was a crime generation just as there was a welfare generation, and a divorce and single parenthood generation. It’s the same generation. And now they are on to something else.

The crime index measure street crimes. These are disproportionately committed by young, poor men, often minority men. What the crime experts are forgetting is that as Generation Greed has aged, the surge in street crime by the poor has been replaced by a surge in white collar crime by the non-poor, and lesser victimizations that are not strictly illegal in a "beyond a reasonable doubt" sense but merely immoral. Most of the poor minority men of Generation Greed are getting too old to rob and rape and kill and burgle. The better off members of that Generation are now running our public and private institutions. Which is why we are rotting toward an institutional collapse.  Because while we had a 30 year crackdown on street crimes, some would say an excessive crackdown, there is nothing of the sort going on with regard to our institutions. This is what happens when crime moves up the social ladder. A lot of it isn’t even illegal. No "broken windows" theory applied.