This is gonna hurt
Tomorrow during the 8 O’clock Hour, we’ll talk in-depth with Alan Beideck, New York’s labor economist for the North Country.
Beideck can’t talk about Governor Andrew Cuomo’s looming budget cuts. He’s just a numbers guy and doesn’t weigh in on policy or politics.
But we collectively face an $11 billion bucket of red ink next year and Beideck does paint a painful portrait of just how dangerously reliant we are on Albany.
More than 12,000 people in the seven North Country counties that he surveys work directly for New York state.
On average, those workers earn $20,000 more each year than private sector workers in the region. They also have better benefits.
In all, more than one out of every ten dollars that people here take home in salary comes in the form of a state paycheck.
And that doesn’t begin to touch the thousands more people who are paid by state grants, pass-through funding for public schools, or Medicaid reimbursements hospitals.
Often when we talk about this situation here on the In Box, it becomes ideological. People who hate “big government” see a proper correction and even a kind of comeuppance in all this talk of slash-and-burn budget cuts.
But put politics aside for a minute. Even if we only see “our fair share” of cuts, our economy will feel it far more because we are so profoundly dependent on Albany.
What’s more, there are growing indications that Gov. Cuomo will single out the state’s prison system for heavy cutbacks. Here’s a bit from Fred Dicker’s morning column in the New York Post.
Ten years ago, 69 state prisons employed 20,311 guards and held just over 70,000 inmates. Today, the number of inmates has dropped 19 percent to 56,600 in 66 prisons…
But the number of guards declined just 7 percent to 18,800.
Again, even if we only lose “our fair share” of prison jobs, the pain will be out-sized because so many of our rural towns rely on corrections as a main pillar of employment.
We’ll get a first look at Gov. Cuomo’s budget proposals early next month and Republican leaders in the state Senate — including Betty Little — will get a chance to push back.
But unless something changes drastically, this is going to hurt.
Tags: economy, nys budget, politics
Cuts to underutilized prisons and shrinking classrooms are inevitable, and can no longer be delayed. Hopefully, the blow will be softened by passing regulatory and mandate reform measures as a way of making the area more hospitable to private sector job creation.
This may be a bit of a tangent but there is another side of the prison cut debate.
Many of the prisoners are from the City which makes it a huge burden on their family to visit. I’ve seen people at the end of the ramp at exit 30 confused and with a look like they were possibly heading into Siberia; asking for directions to Ray Brook. It isn’t right to place prisoners so far from their families.
This isn’t going to be a happy exercise for any of us. Any savings will go to fill the deficit, and not to tax cuts. The loss of multiplier effect from these job cuts will ripple through the local economy, less money spent at local businesses for food, dining out, at the local drug store or hardware. Some communities hard hit by job losses may see declines in property values, and a higher vacancy rate than we have seen so far. Some communities like Ogdensburg will face a double whammy if the prisons close–they lost 630 manufacturing jobs this past fall. Everyone is going to know someone who has lost a job, and that may affect the willingness to spend, hurting the local economy and county sales tax revenues even more. NYS faces $40 billion in deficits over the next three years. This is only the beginning. It will take tax increases to close these kind of gaps.
Much will depend on the details of when and how this happens. I think in the long run weaning ourselves away from total dependence is a good thing however in the short run that process will not be good and also it will depend on politics. Will our politicians be able to ensure that we are not unfairly targeted that this is done in a just logical way?
We all know that the prison system will probably shrink but the question is how that happens and where that happens.
Much will depend on the details of when and how this happens. I think in the long run weaning ourselves away from total dependence is a good thing however in the short run that process will not be good and also it will depend on politics. Will our politicians be able to ensure that we are not unfairly targeted that this is done in a just logical way?
We all know that the prison system will probably shrink but the question is how that happens and where that happens.
“It isn’t right to place prisoners so far from their families.”
Prison is supposed to be punishment; it’s not supposed to be family time.
Family contact is important to reduce recidivism, this has been proven. I don’t know why the prison system and the prisons in the North Country have not done more to encourage support and help families from down state in visiting the inmates? They should have jumped on that long ago if they wanted to stay up here. It is one of the primary reasons that I have read for closing north country prisons and it does make sense.
Government jobs of various kinds account for about 1/3 of our jobs here in NNY. As for the private sector, our challenges have far less to do with the regulatory climate than other factors. The whole northern forest region from Watertown to Maine is in the same situation. The long arm of Albany isn’t a factor in Franklin County Vt, or Franklin, NH. The conventional economic development strategy of trying to lure a 500 job business to come to region has been a limited success. People keep looking for economic saviors and it never seems to work out. We need to encourage home grown entrepreneurs that won’t leave region after the tax breaks run out, and the rest of us need to buy their products and services. The time frame is longer, but we will be better off in the long run.
Funny, a few months back when I was saying “We’re all going to hurt, this isn’t sustainable” I was a nut job. Gee, I wonder what changed?
Well no kidding, everyone is gonna get hurt. This isn’t news, this is common sense. Downstate politicians and a NYC Governor aren’t going to care much what happens north of Albany. Get used to it.
Hey, most of you got it good. Your neighbors aren’t lining up to back the idea of stealing away the retirement you worked for. Try that one on for size and see how it feels.
Bret –
If I remember correctly, you collect a state pension. Generous pensions are one of the causes of NY’s near insolvency. Do you think it’s fair that you should share in some of the pain as we put our house in order?
I’m not accusing you of hypocrisy, but your message seems to be that it’s “common sense” when people lose jobs and services, but “stealing” when retirees absorb some of the cuts.
–Brian, NCPR
And, Bret, your pals ARE coming after our pensions (http://www.nakedcapitalism.com/2011/01/gingrich-touting-state-bankruptcy-bill-to-gut-pensions.html).
In November, 96% of New Yorkers voted for the Republican economic agenda. Once in a while, you DO get what you vote for.
“rison is supposed to be punishment”
Prisons are supposed to fill a public safety need, not a rural economic development need. The peril of the latter is that now with crime being down, something we should be happy about, it’s going to have a negative economic impact on the region.
Brian, my attempt at showing the frustrating position I’m in apparently failed. It’s diving me nuts! I’ve been saying for years we were spending too much, it’s plain to see. But yes, I did make a career choice that provided a pension, to which I am still under the impression I contributed to directly as well as with my taxes. I never thought that the pension fund that we were told every single year was doing very well in safe and solid investments would become the target of a State take over. What’s truly frustrating is DiNapolis annual report saying the Police and Firemans Retirement fund is safe and sound and his press conference saying just the opposite! What???!!!
So here I sit with one kid out of work and ineligible for UE, another barely scraping by with Dad paying large portions of her bills, a wife that teaches looking forward to retirement someday (I don’t breech this subject with her, she’s got enough on her mind), trying to build a business and a farm enterprise and depending on my retirement to fund all this. I know the state and Federal gov’t spend too much, I’m in total agreement with cost cutting measures. And then over the past few months I find that all the sudden I’m a leech on society, someone who did nothing and yet wants a living from the tax payer! You can see my frustration, I worked over 20 years, paid ridiculous taxes, doing a job most people wouldn’t touch with a ten foot pole and now I’m sucking off the teat of the taxpayer? Frustrating.
Yeah, it’s gonna get tough, we’re all gonna hurt and as long as it’s the other guy taking the hit most of us don’t care! It doesn’t matter that retirees worked in good faith, we need funding for State land purchases or arts programs or grants or free tuition for minorities or whatever your pet project is. So screw over the retirees that took jobs no one else wanted 25 or 40 years ago, that’s the easiest thing to do. I have zero faith in receiving Social Security and I give myself a 30-70 chance of keeping all of my retirement. I have a 100% chance of paying much higher taxes and fees and costs. It’s gonna HURT. Me, you, everyone. I see voiding contracts made in good faith as wrong, no matter who is affected. It was wrong when Enron and the airlines did it, it’s wrong now. That’s a contract, same as my mortgage, and the State and it’s liberal mindset didn’t plan for this. Well, at least I can say I told you so.
It is frustrating Brian, and I can see where it would seem to be hypocrisy for me to feel as I do. But I don’t think it’s hypocritical to see new land purchases, grants, funding, programs or entitlements as unnecessary and stupid when the State can’t meet it’s current obligations! Same at the Federal level with health care, ethanol subsidies, arts programs, NPR/PBS/CPB, foreign aid, grants, subsidies, etc., etc., etc.
We’re past the tipping point folks. My best guess is that the economy isn’t going to recover like we think-ever. Were done, toast, fini. There is no leader on the horizon that will rebuild our manufacturing industrial base, our production of goods vs services, our trade balance. You can blame it on whomever you wish, but all the “Yes, we can!” or “Repeal Obamacare!’ bumper stickers isn’t going to fix it. Meanwhile the masses continue to talk about the need for more state land, a rooftop highway, universal healthcare plans, clean (very expensive) energy, no bars to illegal immigration, climate change, etc. They take joy in UE numbers of “only” 10.7%! Good Lord, talk about a religion based on pure faith with no evidence to back it!
The heck with it, I’m gonna take up drinking and watching football. What? Me worry?
Brian Mann, you have to be realistic. Sure paying lower pensions to folks already receiving them could help but that isn’t practical. Maybe poor decisions were made in the past on how to fund and maintain that pot of money, but that is water under the bridge. These obligations are protected under contract law. The only way to have these on the table as far as what we could cut would be through the state declaring bankruptcy. As good as that sounds it ain’t gonna happen. Under the US constitution states are considered as somewhat sovereign entities, they cannot declare bankruptcy, and would certainly not be entitled to the protections offered through bankruptcy laws anyway. So I suggest folks focus on the future and discuss what is on the table.
Bret, as far as the economy never recovering, and us being “toast” that is ridiculous. It may seem that way at times, but I think you know history well enough to know that we are no where near “toast”.
There is a real lack of information again here. Recently, it was about government workers wages being higher than private sector wages. Now it is about pensions. I can’t speak to the state system as a whole, but a friend who is a teacher shared information from the NYSTR system that 86% of the pensions over the last 20 years have been paid out of pension fund investments, with the rest coming from contributions by employees over the years and taxes. Those obligations have been ongoing, but school districts have had a reduced burden because the fund is well run, solvent and investments. There are three ways to deal with debts and obligations, inflate the currency, pay our bills, or repudiate them. Paying our bills will be a long austere slog, but we would be ptter off int he long run. Repudiation is about tearing the social contract, and if we do that, there will be no end to the pain.
Brian Mann you sound like a bit like the propaganda coming from the likes of E.J. McMahon and the Manhattan Institute. The goal of these conservative think tanks and conservative Republicans is to promote class warfare by pitting middle and lower class union workers against middle and lower class non-union workers. They release a steady stream of press releases focusing on isolated pension abuses and the supposedly unsustainable NYS pension system. The fact is, NYS has one of the highest rated (funded) pension systems in the country. The current crunch relates to the annual payments that NYS and local government contribute for the future pensions of current workers. The problem is the rate of contribution is adjusted according to economic conditions in a perverse fashion. During the stock market boom years the rates were reduced dramatically – providing State and Local Government with an unrealistic windfall that now, no surprise, has to be paid back at the worst possible time – when the economy is struggling. If contribution rates had remained the same during the boom years it would have created a “surplus” in the pension system and there would be no need to raise rates now. The lowered pension contribution rates the past number of years essentially allowed NYS and local government to borrow money from the pension system which allowed them to keep taxes lower than they would otherwise been. It is everyone’s responsibility and obligation to pay that back.
Yes there are isolated pension abuses where absurd amounts of overtime are included in a pension calculation. But for most State and local government employees that is not an option or even prohibited by their Tier. Yes, several North Country legislators just “retired” and continue to collect their paycheck. I think we all can agree these abuses must be stopped. But keep in mind the average public employee retiree receives only a modest pension. This promised pension was an integral part of the work contract between the employee and government and there is a moral and legal obligation for government to fulfill its part of the agreement.
Paul,
I agree with you, states are currently prohibited from utilizing bankruptcy to deal with financial troubles. However, there is a discussion in Congress exploring that option:
http://www.nytimes.com/2011/01/21/business/economy/21bankruptcy.html?scp=1&sq=state%20bankruptcy&st=cse
http://www.nytimes.com/2011/01/25/business/25muni.html?sq=state bankruptcy&st=cse&adxnnl=1&scp=3&adxnnlx=1295971936-oqDPxr11uU2p7YgcVuMDyQ
Well said Myown. Let me add some more information about the teachers pensions that was shared with me. 80% of the annual payout, or $4 billion goes to retirees living here in NYS. The economic impact of that $4 billions supports 137,000 jobs statewide.
As Myown points out, there has been much conservative scare-mongering on pensions, as well as on Social Security. A great Op-Ed on that today is here:
http://www.nytimes.com/2011/01/25/opinion/25herbert.html?_r=1&adxnnl=1&ref=opinion&adxnnlx=1295950404-KNSbza+01x/mCT2HDAn8UQ
Paul, with respect, I qualified my statement with “…the economy isn’t going to recover like we think-ever. ” I mean in the sense that most of America seems to think- that 2-4% growth annually, the easy credit and lots of gov’t handouts for every special interest under the sun, when you could simply walk into a Walmart or Target or Lowes and land a job, or turn it down because someone else is begging you to come elsewhere. I don’t see that coming back, not in my lifetime. And if you can find a period in history where we had a majority of similar events and situations would you please point it out to me? Find an era where we had the public obligations (entitlements included), nation debt and deficit, trade imbalance, dollar vs gold value and a population that produced so little in tangible goods. Find anything close to that and you’re doing better than I am. This is unprecedented. The Great Depression is out because we didn’t have the trade imbalance, debt and certainly the public obligations even after ’38 and ’39, then War saved us. The Antebellum period is out because we were still expanding across the continent, we have no known lands to gain or exploit as far as I know. I can think of no time frame that mirrors what we have today. I know that probably sounds incredibly pessimistic, but I think it’s accurate. There is no “magic bullet” on the horizon for the US.
What probably will happen- there will be drastic cuts and limits and the infighting at the State and Federal level will be endless as each interest group fights for the dollars, and yet at the same time there will be pushes to create new entitlements and broader powers for gov’t- for the good of us all of course. At the first sign of any recovery the politicians will immediately move to increase spending to whatever group they owe the most to and the whole cycle will start over again. History does teach us that. It’s also entirely possible that there will come a turning point, a very prominent one, that pushes us into wholesale socialism, although it probably won’t be called that. It’ll be easier, it’ll remove the risk for the common man, provide secure jobs, just sit back and let us do it for you, even one will get a more equal share. There is a part of me that thinks this is all engineered to lead us to that. Maybe not a grand scheme, but a lot of smaller pushes and nudges that combine to make that seem like the easy, simple and only workable answer. Taxes will rise as will costs. No way around that.
I hope I’m completely wrong. But at this point I really don’t know why anyone paying attention to things isn’t wrapping their heads in duct tape and running into the streets screaming that the sky is falling. There seems to be a national disconnect between reality and what the smoke and mirrors show us. I may not “understand” high finance, but I do understand obligations and your ability to pay them back and still maintain growth or services. You can’t do more and more with less and less no matter how you juggle the numbers. You can’t spend and borrow with no ability to pay it back in sight, much less take on new debt and spending.
Bret – you are probably right on most of the above except that the state of NY cant do socialism.
myown,
What about the fact state employees don’t have to contribute a penny to the pension fund after they have 10 years of service?
I know what you mean bret but maybe what we are looking at is not a sky is falling event. What we are looking at is a moderate, consistent decline. I don’t think the state has the political will to actually reduce its total budget so it will have to be tax increases or more borrowing plus some window dressing cutbacks. But I see the cutbacks as only reducing the rate of growth not actually shrinking the actual budget number.
This will cause NY to continue to decline and lose competitiveness upstate.
Scratchy,
The new Tier 5 that took effect Jan 1 requires employees to pay 3% from their salary to the pension fund for their entire career. The prior 10 year limit you mention was around for only about 10 years. Many Tier 3 workers had paid 3% for many more than 10 years before that provision took effect. In addition, Tier 5 members can not retire without penalties now until they are 62 (57 for teachers).
Why is retirement age for a teachers lower than the rest. 57??
Retirement age should be when you can afford it, official pensions should not start until you are 65 unless there is underlying health and safety issues involved.
I don’t think we should jump on state employees as the bad guy they are not. The problem is NYS government; in general we do too many things and we have an entrenched system which supports this cycle. Other states have lower rates of poverty, lower rates of childhood poverty, higher economic growth and have smaller governments and lower taxes.
At some point government no longer helps people no longer serves a public function beyond its own protection, we have probably reached that point in this state.
There are different retirement systems and sometimes slightly different rules. There is the NY State and Local Employees Ret System for state and municipal workers and the NYS Teacher’s Retirement System for teachers. Most of the Tier 5 rules are the same for both including paying 3% into the pension fund until retirement.
Here is another study concerning government workers; this one specifically included NYS. and bears out the work of Jeffrey H. Keefe I mentioned in comments for the another posting.
Both studies also showed that government workers generally have more education and training than private sector wages which accounts for what has been perceived as high pay.
Cuts may be necessary. We may simply no longer be able afford the level of services we have had. Let’s just say so and leave it at that.
Study: State and local government workers underpaid
8:38 AM, Apr 28, 2010 | by William Petroski |
Comments
Wages of state and local government employees nationally are lower than those for private-sector employees with comparable education and work experience, according to a report issued today.
State workers typically earn 11 percent less and local workers 12 percent less, according a study commissioned by the Washington-based Center for State and Local Government Excellence and the National Institute for Retirement Security. The report was authored by economists Keith Bender and John Heywood of the University of Wisconsin-Milwaukee.
“The picture is clear. In an apples-to-apples comparison, state and local government employees receive less than their private-sector counterparts,” Bender said.
The study did not include wage and benefit data specifically relating to state and local government employees in Iowa.
The study found:
– Jobs in the public sector typically require more education than private sector positions. State and local government employees are twice as likely to hold a college degree or higher as compared to private sector employees. Only 23 percent of private sector workers have completed college compared to 48 percent in the public sector.
– Wages and salaries of state and local employees are lower than those for private sector employees with comparable education and experience.
– During the last 15 years, the pay gap has increased with earnings for state and local workers declining compared to comparable private sector employees.
– The pattern of declining relative earnings remains true in most of the states included in the study, although there is some variation from state to state. The states in the report included California, Texas, New York, Pennsylvania, Illinois, Michigan and Florida.
– Benefits make up a slightly larger share of compensation for the state and local government sector. But even after accounting for the value of retirement, healthcare and other benefits, state and local government employees earn less than private-sector counterparts. On average, total compensation is 6.8 percent lower for state employees and 7.4 percent lower for local employees than for comparable private sector workers.
Elizabeth Kellar, president and chief executive officer of the Center for State and Local Government Excellence, said the study sheds light on a recent survey of government hiring managers.
“Hiring managers told us that despite the economy, they find it difficult to fill vacancies for highly-skilled positions such as engineering, environmental sciences, information technology and healthcare professionals. The compensation gap may have something to do with this,” she said.
As a highly educated NY state employee, my impression is that we, at the higher end, are paid slightly less than we would be in a private situation, but the blue collar state workers are paid slightly more than they would be (mainly because they are unionized.)
Myown,
I have no confidence that any tier V employees will ever after to contribute after 10 years. The legislature could very well repeal the contribution requirement once the economy improves, which would bring us full circle. I also believe 57 is too young of an age for teachers to retire at public expense.
DBW,
I found this passage to be particularly relevant:
“The pattern of declining relative earnings remains true in most of the states included in the study, although there is some variation from state to state. The states in the report included California, Texas, New York, Pennsylvania, Illinois, Michigan and Florida.”
I also wonder how accurately they account for the value of retirement and health benefits, seeing as many retirements plans are underfunded. Keep in mind that a contingent of highly compensated private sector employees in Manhattan will skew any statewide data. Also, what about compensation per hour worked? Teachers , for example, work about 180 days a year, considerably less than many private sector employees. And then of course there is the issue of job security. Very few private sector workers have an equivalent to tenure.
It is important to remember that government, at any level is not operating in a vacuum. While our manufacturing base is not what it used to be, companies like Kodak, Xerox, Carrier, GE, etc. have all paid generous wages and benefits. Over the years, the state has had to be competitive in wages and benefits.
The school year is set by the state education department. Despite all the perceived benefits of teaching, the average career is about four years. It used to be teachers could start teaching with a BA but would have to have a Masters within five years, taking up evenings, summers at their additional expense. Not many private sector employees face those kind of requirements as part of their job. While many teachers don’t stay very late, they do take home hours and hours of correcting and planning. Most teachers put in far more than the equivalent of 180 8 hour days. Tenure is not ideal, but like democracy is better than the alternatives. Tenure is offered in public schools after three years, and in SUNY after seven years–plenty of time to identify underperforming teachers and professors. But tenure isn’t there for the benefit of teachers anyway, it s there to protect the education system from undue influence of local politics, giving it a stability and continuity necessary for a quality education system. Good teachers are not being dismissed over a personality conflict, or so someone’s else’s brother in law can have a job.
Finally, it is important to remember that the private sector and public sector are very different. Corporations and business are less about service than profit, whereas government is providing needed human services; education, social services, mental health,etc.
I think this discussion is proving my original point – that organizations like the Manhattan Institute, which are funded by wealthy conservatives, denigrate public service and try to create wedge issues between private sector and public sector employees so we peons will argue with each other. A CEO runs a corporation into the ground in 5 years and walks away with a golden parachute retirement package. Yet we begrudge the modest pension a teacher, who educated our children for 30 years, hopes to receive. A Wall Street banker creates toxic investments and when they go bad, not only is he not held accountable, but public money is used to bail him out and he gets a bonus. Yet we don’t think the guy who plows our roads is entitled to a decent salary and benefits.
Why aren’t all of us peons focusing on why the rich are getting richer and poor poorer? Conservatives like to criticize Liberals for favoring redistribution of income and wealth. What a joke. For the past 40 years Conservatives have engineered the greatest redistribution of wealth. The disparity in the US between the rich and poor has grown dramatically and is now back to where it was in the late 1920s. And we all know how that turned out. The endless tax cuts for the wealthy and favorable tax policies for Wall Street and large corporations have decimated the middle class. And without a vibrant middle class the US will become more like a banana republic.
Yes it is time to talk about tax increases for the wealthy. No one gets wealthy in a vacuum. Government and public sector employees provide stability, standards, security, law enforcement, an educated workforce, infrastructure like roads and communications, rule of law, public health, monetary repositories, and an army to defend the country. Without these essential public services, it would be difficult to achieve and maintain wealth. We need to stop berating the teacher, DOT worker and policeman and it is time for the wealthy to start paying a greater share for the public services that are a necessary component to creation and preservation of wealth.
It is a necessary component to any civil society. I do think though that a balance is needed. If we look at high tax states with large unionized public sectors such as New York are they really getting the job done? We can talk about raising taxes in NYS, but we are already the highest taxed state in the union and the question I would have is who will end up paying those taxes?
Saying the rich will pay sounds good but rarely happens, much easier to pass an excise tax or cigg tax or property tax. Keep in mind that the government is in bed with the wealthy, government in general does not really serve the lower incomes, if that were so high tax states such as New York would not have such a high rate of poverty.
Myown- I ahve to agree with some of what you say-
” Myown says:
January 25, 2011 at 5:38 pm
Scratchy,
The new Tier 5 that took effect Jan 1 requires employees to pay 3% from their salary to the pension fund for their entire career. The prior 10 year limit you mention was around for only about 10 years. Many Tier 3 workers had paid 3% for many more than 10 years before that provision took effect.”
(Wish I knew how to make something bold on this system) That is as I remember it, that we contributed for some time. I cannot determine exactly when things changed or if I was affected. What I would note is that even if we didn’t contribute way back when, it was part of the contract and salary, State wages didn’t used to be anything spectacula, even up here in the north. It balanced out. Just because it wasn’t paid to you and them taken away in the form of retirement contributions doesn’t mean the contribution wasn’t there in effect, if you follow my meaning. Every job has it’s perks, I never knew a person that didn’t get some form of perk at their work, whether it was using company equipment on the weekend or a reduced rate for whatever they sold/made, etc. It all figured into the consumer cost/taxpayer cost.
Hope that made sense.
Where I disagree, or at least take issue, is with your portrayal of certain conservative groups as feeding class warfare. I’m sorry, but isn’t that the pot calling the kettle black? You name a few conservatives as feeding a union/anti-union form of class warfare, which may well be true. But what about the century old liberal class warfare of “rich” vs “poor”? Or the more recent minority vs white class/ethnic warfare? I’m not a union guy and I have no great love for “the rich”, but class warfare of any kind usually ends up being the result of political maneuvering by one group or another for their benefit and nothing more.
I don’t mean to be contrary but when I read the writings of someone with a very liberal bent speaking of class warfare from the right, I instantly picture mega wealthy people like John Kerry who speak of the plight of the poor while docking his new yacht in another state to avoid taxes!
Mervel says:
January 25, 2011 at 4:59 pm
I know what you mean bret but maybe what we are looking at is not a sky is falling event. What we are looking at is a moderate, consistent decline.
Mervel, does it matter what the definition of “the sky is falling” is? The point is the vast majority of people seem to be placing a lot of faith in a “return to normal”. I think this IS the new “normal”. I think the new normal is going to be a lot less rosy than it is even now. I don’t mean 1930’s Grapes of Wrath/ Depression not so rosy, todays people will not work like that. I mean a constant 8-12% (reported) UE rate, a long period of inflation/deflation, a continued intentional devaluing of our currency, long periods of job losses. I’m sure you remember when having a BA in Liberal Arts was a ticket to a great job. Now it’s 4-6 years and a Masters and then you still end up flipping burgers if you can get the work! IIRC 60% of last years college grads were unemployed- I don’t mean not working in their field, I mean without any employment of any kind! The old full time minimum wage job is giving way to the part time, zero benefits minimum wage job for a lot of people. Meanwhile, we continue to grow our entitlement class, to create new entitlements, issue new grants and subsidies, more spending. Sorry, I guess the new word for spending is “investment” if you live in the White House. Odd, I thought the word investment implied some sort of return in time.
Hey, I hope I’m wrong and it’s just this flu and the weather talking. I doubt it since I’ve felt this way for about 10 years, but that’s what I hope.
myown,
Well, maybe, the Empire Center has a point. The business community is not the reason for us leading the nation in taxes, spending, and people leaving the state. The old approach of taxing, spending, and borrowing doesn’t seem to be working that well, except for the moving van companies. Maybe it’s time for a different approach.
Bret,
You have to stop imagining John Kerry in all your Liberal fantasies – his wife will be jealous :-).
OK, let’s forget the term class-warfare. But consider this – the wealthiest 1% of Americans now possess a greater collective net worth than the bottom 90%. The last 30 years have seen a dramatic increase in inequality for income and wealth in the US. Between 1979 and 2006, the average post-tax income for the wealthiest 1% increased by 256%. For middle class households the increase was only 21% and that includes the change to where both spouses are working to get by. A number of deliberate policies benefitted primarily the wealthy including voodoo economics, income tax cuts, tax breaks, financial deregulation, etc. I don’t know what you would call it but it is my opinion both parties are responsible for the screwing of the middle class the past 30 years. And what’s worse, the money to finance this huge redistribution of income to the wealthiest 1% had to be borrowed and now we are stuck with the bill. It is time to reverse this obscene transfer of wealth from low and middle income households to the ultra-rich and rebuild the middle class with fairer policies.
Hope you get over that flu soon.
“And what’s worse, the money to finance this huge redistribution of income to the wealthiest 1% had to be borrowed and now we are stuck with the bill.”
Friend, if you can provide anything like PROOF that our budget deficit and National Debt are the product of the tax rates over the past 30 years then I suggest you run for office asap! Our problems are the result of SPENDING, not tax rates. And this myth that only the rich have gotten richer is entirely bogus. Every study out there verifies per capita income is up over the last 30 years.
Spending your time worrying about people with lots of money making lots of money while you and I are stuck in our lives of quiet desperation IS class warfare.
When tax rates are cut in half how can you say the loss in revenue does not contribute to our deficits? When those cuts were made no one said “and we will also cut spending in half”. The tax cuts were sold on the bogus premise that lower taxes would spur economic growth and tax revenues would actually increase. It never happened. Instead of raising taxes back up we started borrowing to cover expenses and now have a large deficit. I am not saying we shouldn’t cut spending but we are not going to get out of the deficit hole without reversing some of those tax cuts.
Yes, per capita income has gone up. As I said above, in the past 30 years the average increase for middle class households was 21%. However, the average increase in income for the wealthiest 1% was 256%. That is 12 times more than middle class households. Did the wealthiest 1% work 12 times harder than you? I doubt it. And a lot of that income is not from actual work – it is from playing the stock market and other non-labor intensive activity which has lower tax rates than our work pay.
The class war already happened. It started with Reganomics with both parties participating. The rich got huge tax breaks and became ultra-rich while the middle class got some crumbs and mostly screwed. The fact is the disparity between the wealthy and the rest of us is as high as it has ever been. And most economists agree that is not a good thing. Every time wealth disparity has grown to these dimensions the results are not pretty. Most recently was 1928 and there was much social unrest and of course the stock market crash and Great Depression. Will history repeat itself?