By Alan
Caruba
Time to
start watching U.S. cities go bankrupt. Prior to Detroit, there was Stockton,
California, and, according to Stephen Moore, now the chief economist with the
Heritage Foundation, there are more than sixty of the largest cities that “are
plagued with the same kinds of retirement legacy costs that sent Detroit in
Chapter 9 bankruptcy” last year.
“Keep an
eye on ‘too big to fail’ cities like Chicago, Philadelphia, and New York,” he
warned. Among the twenty cities he listed in an August 2013 Newsmax article, he
cited Compton and Oakland, CA, Harrisburg, PA, and Providence, RI. What these
and other cities have in common is that “the vast majority are located in
states with forced unions, non-right-to-work states.”
As Steve Stanek, a research fellow with the Heartland Institute, reported, when a
federal judge, Stephen Rhodes, cleared the way for Detroit’s bankruptcy filing,
in December, the American Federation of State, County, and Municipal Employees
(AFCCME) immediately filed a notice of appeal, but Detroit has more than 100,000
creditors. As its emergency financial manager, Kevyn Orr, said, “The reality is
the city has no cash on hand to pay the magnitude of the debt we have, which is
$12 billion--$5.7 billion of which has to do with health care obligations, $3.5
billion has to do with pensions, and $2 billion has to do with bondholders.”
At the
time it declared bankruptcy, Detroit had 47 different public employee unions.
The Detroit Water & Sewer Department had a farrier (a horse-shoer) who
received $56,000 in pay and benefits every year even though the city had no
horses in the department.
As Moore
points out, “For at least the last 20 years major U.S. cities have been
playgrounds for left-wing experiments—high taxes on the rich; sanctuaries for
illegal immigrants; super-minimum wage rules; strict gun-control laws;
regulations and paperwork that makes it onerous o open a business or develop on
your own property; crony capitalism with contracts going to political donors
and friends; and failing schools ruled by teacher unions, with little
competition or productivity.”
The legacy
costs of pensions and health benefits to retired teachers and municipal
retirees force “city managers and mayors are forced to lay off firefighters,
police and teachers. Detroit,” Moore noted, “has three retired city workers
collecting a pension for every two currently working.”
Recently
published, “The Great Withdrawal” by Craig R. Smith with Lowell Ponte examines
the damage that progressive programs and policies have done to cities and to
the nation. A nation with a $17 trillion debt who’s President has only one
answer, raise the debt limit, will encounter a financial Armageddon if the
spending and borrowing is not sharply curtailed.
Craig and
Ponte point to 1913 as the year progressive, collectivist ideas “took control
of the United States government and began a ‘fundamental transformation’ of our
economy, politics, culture and beliefs that continues today.”
Citing
Detroit as an example of the result of liberal, progressive policies, Smith
said that “by 2013 (it) had become a war zone of urban strife, poverty, decay
and government profligacy.”
Recall
that President Obama claimed he had “saved” General Motors and Chrysler with
bailouts that cost taxpayers “at least $25 billion that will never be paid back.
At least a billion of these tax dollars went to improve GM facilities in
Brazil, and at least $550 million went to GM facilities in Mexico.” Chrysler is
now owned by the Italian automaker, Fiat.
Bond
holders are major investors in cities and corporations, but the GM bailout
denied payment to secured bondholders and redistributed their rightful share to
the United Auto Workers. “As a result, today’s bonds are viewed as an
investment with uncertain risk,” says Smith. In 2013, investors withdrew $80
billion from bond funds.”
As Smith
points out, “The progressive method of operation was, and is, that when the
economy is good, they raise taxes and expand government. When the economic
cycle turns negative, the politicians blame others, refuse to reduce government—and,
increasingly, use the bad economy as a reason for expanding government and
spending even more.”
This
describes what President has been doing since first elected in 2008. For the
entirety of his first term, he blamed everything on President George W. Bush.
“Put
simply,” says Smith, “most progressive cities are welfare city-states in which
a large percentage of the population lives on government money, either as
government dependents or government employees.”
This description fits the nation as well.
How bad
are the present times? “27 percent of Americans have no savings at all, 46
percent have savings of less than $800, and 76% of Americans now live paycheck
to paycheck.”
With the
passage and implementation of the Affordable Care Act—Obamacare—the
Congressional Budget Office released a report predicting that, over the next
decade, it will cost the nation about 2.3 million jobs and contribute to a $1
trillion increase in projected deficits.
Hans
Bader, a senior attorney at the Competitive Enterprise Institute, notes that it
contains massive marriage penalties that discriminate against married people,
huge work disincentives for some older workers, has slashed hiring, cut economic
growth, and induced employers to replace full-time workers with part-time
employees. In the process, millions have seen their healthcare policies
canceled or replaced with policies with higher premiums and deductibles.
There are
already 92 million Americans who are unemployed or ceased looking for work.
There are 47 million on food stamps.
The
ultimate progressive, President Obama, is impoverishing millions of Americans.
Unlike Detroit, America cannot declare bankruptcy. It can only collapse if voters
do not replace those Senators and Representatives that voted for Obamacare and
who refuse to take the steps to reduce government spending and borrowing. We
have three years in which to survive Obama.
© Alan
Caruba, 2014
Alan, right on!
ReplyDeleteNo government or public workers should be allowed to unionize UNLESS we, their bosses, get to vote on their wage and benefit increases! After all, we taxpayers pay their way.
Right to work should be a national law. I don't object to private unions (although I know they are inherently inefficient) because competition will keep them in check.
You will notice that the states that are profiting and growing now are mostly all down south and right to work states.
Happy Sunday.
Public employee unions have been bankrupting cities for a long time now and should, in my view, be eliminated. Thanks for your input.
ReplyDeleteThe good news is that America will survive Obama.
ReplyDeleteAfter all, Rome survived Caligula and Nero.
Alan,
ReplyDeleteThey are some grim numbers.
Here's what I see at the family level:
Hugh credit card debt. Married couples walking away from mortgages and homes that they can't afford.
Broken marriages and homes with their children walking the streets doing and selling drugs to survive.
Gas and heating oil costs eating away their dwindling pay checks.
Don't mention God, whoever you conceive him to be, it's not politically correct.
Abortion is ok, the government says so.
Couples sitting in front of a big screen TV bought with a over drafted credit card, getting fat eating junk food bought with food stamps watching stupid sitcoms.
Why even worry about health care, if they're sick, just walk into a hospital, they can't be refused treatment.(It's been going on for years).
But don't worry, Obama has everything under control.
But at what cost will we survive Obama?? In business you cut your losses and walk away, well, Obama won't walk but Americans need to cut him OUT of the White House and stem the blood loss...
ReplyDeletePainful? Maybe, but we either act and act soon or survival may be a moot point.. If there's nothing left to salvage we're ALL screwed..
Hey Alan;
ReplyDeleteTHe funny thing is all those government workers when they retire from the craphole they worked in, they move south to Florida where it is cheaper to live(wonder why) but they bring their leftist mindset and vote for the same kind of politicians that ruined the place that they came from. This would explain the democratic enclaves in Florida like Broward, Miami Dade and other places.