Author: Larry Littlefield

If there is one thing the public employee unions and newspapers such as the News and Post seem to agree on, it's that the quality of public services doesn't matter and future generations should be worse off. Since the former vigorously defends those workers who do not do their jobs and those with seniority, the latter always seeks to go after future public employees and those who do the most work.

It is why they may be doing it. That’s my take on the recent controversy in Arizona. Recall that in the early 1990s recession, when the U.S. and its states faced a fiscal crisis and the economy was down, the blame was cast on the poor, Blacks, Latinos, Immigrants, and those living in older central cities, their problems and burdens. The "Republican Revolution" consisted in cuts in funding for services for such people — and massive funding increases on everything else combined with tax cuts. Well with crime and the welfare rolls down, I thought that wouldn't be so easy to blame the same people this time around. But if you are desperate to find a scapegoat, anything is possible.

As I picked up from The Daily Politics, the city has released its list of employees with their base salary in 2009, something I believe it is required to do by law. The list is in PDF format, which means it cannot be sorted, summed, or averaged. One cannot find the median pay for a title and/or a department, or calculate one title’s share of the total pay in a department. On the other hand the list is in alphabetical order by name, which means it is easy to find someone's name and cluck about their individual pay. If you're not out to gossip, each individual's name is a useless piece of information. And while the department each employee is in is spelled out, their title is not. I'm not sure if there is a glossary, or where it is.

According to the budget, spending on public schools will barely decline at all, even with pensions tabulated separately. Including pensions public school spending will almost certainly increase. Remember that, and the fact that the city’s non-teacher school expenditures are exceptionally low, when evaluating the education the United Federation of Teachers decides to provide in exchange for your taxes next year. Overall pension contributions will rise by $851 million dollars, taking into account past investment losses and retroactive pension enhancements, according to the budget. “In 2010, however, the pension funds are experiencing positive investment returns which are expected to lower required contributions commencing in 2012.” Those positive investment returns are based on financial assets becoming overpriced. See today’s financial news for a possible market response. The Chief Actuary is reviewing actual pension trends, and the city has set aside $600 million extra to cover the possible findings. It will not be enough, if the pensions are to be actually funded.

As public services are gutted in FY 2011, remember that its debt service will rise by just $340 million (assuming the text is right and not the table on p. 224), followed by an increase of nearly $2.5 billion a year later in FY 2012. That’s also when the federal stimulus spending runs out. And even more pension contributions are required, particularly for teachers, thanks to the 2008 deal that allowed them to retire years earlier. For the possibility of additional federal stimulus spending despite a large deficit, see the market response to conditions in Greece. Reality may wait for FY 2012, but it may also come sooner – after the state elections in November. Even before reality hits, the city will cut spending on libraries by well more than half. In this moment of need, moreover, help for the poor will also be cut. Excluding Medicaid, which is taken advantage of by the health care industry and the middle class and will rise a projected $243 million, not enough for the health care industry to stop objecting to cuts and threatening to let our babies die if they don’t get more. All this despite a series of city and state tax increases already enacted.

Our 1997 Saturn station wagon has reached 13 years old, the average age at which a private motor vehicle in the U.S. is scrapped. On that basis, and with some pretty comprehensive (exceptions below) records on spending, I can tell you what it cost my family in today’s dollars: $67,658 in total, or $5,200 per year, or $434 per month, or 80 cents per mile. That isn’t the typical cost of having a car in Brooklyn; it may be fairly described as the minimum average cost. We don’t use the car to go to work or school, and only average around 6,500 miles driven per year, which not only reduces variable costs such as gasoline and tolls, which in any event are merely 19.1% of the total, but also cuts the cost of insurance. We also have a clean driving record, qualify for every insurance discount out there, and went with liability coverage only after four years. We don’t pay to park, although we have gotten parking tickets despite doing our best to avoid them. And the car itself is small, fuel thrifty and bought stripped with a manual transmission and no AC. Even so, the cost of having our own car has been a significant part of our total budget. Was it worth it, and what are the alternatives?

Conservative “think tanks” continue to push the so-called “fair tax” plan — replacing the progressive federal income tax with a regressive national sales tax. Their argument is that the U.S. needs to tax work and investment (income) less and consumer spending more, to rebalance the economy. The fact that the tax burden would shift from the wealthy to the middle class and poor, in this view, is merely an unimportant (and undisclosed) side effect. Meanwhile, a Federal Deficit Reduction Commission may recommend a federal value added tax – a sales tax that is more difficult to cheat – in addition to the income tax. Former Fed Chairman Volker has suggested it. The reason is the United States is broke, and we are facing higher taxes and diminished public services as a result. On April 15 the U.S. Senate, dominated by members of Generation Greed who do not want to admit what they have done to their children and the country, passed a non-binding resolution objecting to the addition of a value added tax by an overwhelming margin.

As usual, there is an option that I would be in favor of that no one is likely to consider – enacting a regressive value added tax as a replacement for the even more regressive payroll tax. If a shift in the tax burden from work to spending were the goal, and the shift from the rich to the rest were not, Republicans and conservatives would be in favor. If restraining excess consumerism while raising revenue without hurting exports, which President Obama proposed to double, were the goal Democrats would be in favor. And yet I have not heard anyone make this proposal.