Tuesday, January 12, 2010

The GMification of America

We can call this the GMification of America. When the federal government took control of a bankrupt General Motors, the automaker was said to be a giant retirement community that built cars on the side. (I think it’s one of Steyn’s.) Its internal welfare obligations had become so large—so generous to so many—that there was simply not enough productive base left to support it. Crash! As a result not only of the Democrats having their way with us for the past year, indulging a thousand pent up political desires, but also of governments of both parties at every level building what they think is a beautiful world with imaginary money, America is preparing the same crisis for itself, starting with the states (California is just the first to fall), and working its way to the national level. Stephen Goldsmith sets it before us in “Red-Ink Tsunami: Why Old Ideas Can’t Fix the New Government Perma-Crisis” (e21, Jan. 10, 2010).

Government at all levels now faces an inescapable reality – the promises of public services exceed our ability to pay for them – and will do so regardless of when the recession ends. The steady increase in the quantity and cost of public services, coupled with the needs of an aging population and public pension costs have produced a long term, structural deficit. ... Like it or not, fiscal crisis is the new normal.

The dark future for states:

Even before the crisis took hold, unfunded liabilities for state and local retirees topped $1.6 trillion. In Illinois alone future taxpayers are on the hook for over $80 billion for public employee pensions. ...

California, like the canary in the coal mine, is a harbinger of the nation’s fiscal future. In the past year, it has raised taxes by $12 billion and received $50 billion in stimulus dollars from the Federal government. Yet, this summer the state still had to issue IOU’s to its creditors. The latest projections have California staring up out of a $21 billion hole. ...

A December 2009 report from the National Association of State Budget Officers found that “Fiscal conditions significantly deteriorated for states during fiscal 2009, with the trend expected to continue through fiscal 2010 and even into 2011 and 2012.”

The dark future for the United States:

A new report from the Peterson and Pew Foundations found that: “Over the past year alone, the public debt of the United States rose sharply from 41 to 53 percent of gross domestic product (GDP). Under reasonable assumptions, the debt is projected to grow steadily, reaching 85 percent of GDP by 2018, 100 percent by 2022, and 200 percent in 2038. However, before the debt reached such high levels, the United States would almost certainly experience a debt-driven crisis…” Governments at all levels face a tidal wave of red ink.

Goldsmith then gives “5 Strategies of Yesteryear That Won’t Work Today.” For “The Road Out of the Crisis,” he has us waiting for future articles. And wait we shall.

Stephen Goldsmith is the Daniel Paul Professor of Government at Harvard’s Kennedy School of Government, and a former mayor of Indianapolis.


Here is a related reflection from Reason.com that Harold sent along. It is "Class War: How Public Servants Became Our Masters," by Steven Greenhut.

Bigger government means more government employees. Those employees then become a permanent lobby for continual government growth. The nation may have reached critical mass; the number of government employees at every level may have gotten so high that it is politically impossible to roll back the bureaucracy, rein in the costs, and restore lost freedoms.

People who are supposed to serve the public have become a privileged elite that exploits political power for financial gain and special perks. Because of its political power, this interest group has rigged the game so there are few meaningful checks on its demands. Government employees now receive far higher pay, benefits, and pensions than the vast majority of Americans working in the private sector. Even when they are incompetent or abusive, they can be fired only after a long process and only for the most grievous offenses.

It’s a two-tier system in which the rulers are making steady gains at the expense of the ruled. The predictable results: Higher taxes, eroded public services, unsustainable levels of debt, and massive roadblocks to reforming even the poorest performing agencies and school systems. If this system is left to grow unchecked, we will end up with a pale imitation of the free society envisioned by the Founders.

This is the beautiful world that our liberal overlords in the Obama-Reid-Pelosi government are fighting so tirelessly at the moment to help perfect.

1 comment:

Chris J. said...

As a Californian, one of the things that frustrates me the most is the Proposition system. Every year the taxpayer vote in more bond issues, driving up the debt even more. For instance, this last election a Prop was passed to build a high-speed rail system from LA to San Francisco. I live in Fresno, which is in the middle of the state. People here in Fresno voted for the Prop completely unaware that it would not stop in Fresno. I could go on and give many more examples of propositions that waste money, especially since literally half the money spent on a bond goes to paying off the interest.