June 16, 2010
Even lifelong Democratic pol Steny Hoyer, majority leader of the U.S. House, is balking at Barack Obama’s latest bailout proposal.
“I think there is spending fatigue,” said Steny. “It’s tough in both houses to get votes.”
Hoyer was referring to Obama’s weekend letter to Capitol Hill calling for a $50 billion bailout of state and city governments, to spare our elected politicians the pain of balancing their budgets with their own tax revenues.
Obama calls it an “emergency” measure to prevent “massive layoffs of teachers, police and firefighters.” Yet, none of the 20 million state, county or municipal workers can lose their job unless an elected legislature and a chief executive agree that they should go.
Obama is calling for a taxpayer rescue of the political class to which he belongs, to spare it the painful duty tens of thousands of business executives have had to perform. Private employees—25 million of whom are out of work, underemployed or have given up looking for jobs—may be expendable, but government workers are not.
As America is running a second consecutive deficit of $1.4 trillion, however, the U.S. government has no tax revenue to send to the cities and states. We would have to borrow the $50 billion from China, Japan and the Persian Gulf nations.
Obama is thus asking Congress to deepen America’s fiscal crisis and put the next generation on the hook for another $50 billion so today’s mayors and governors can get an exemption from their political duty.
Where is the justice here?
Government workers enjoy far greater job security than private-sector workers. At the state and local level, their average pay and benefits, about $40 an hour, far exceed the $27 per hour in the private sector. The federal worker has it even better, receiving $30,000 a year more in pay and benefits than the average worker in the private sector.
Obama’s proposal is thus about taking care of his own and the Democratic Party’s political base.
Consider. The American Federation of State, County and Municipal Employees, the American Federation of Teachers, the Transport Workers Union of America and other government unions in the AFL-CIO are all powerhouses of the Democratic Party.
Obama is proposing a $50 billion payoff for his own voters.
Democrats are the Party of Government. The more government programs and agencies there are, the more government bureaucrats and beneficiaries there are. As government grows—it now consumes close to 40 percent of the entire economy—the larger and more solid the base of the party becomes.
In Washington, D.C., the largest employers, far and away, are the U.S. and D.C. governments. They dominate the city, which is why city elections are so one-sided. The district has the only three electoral votes never to have gone for a GOP presidential nominee.
Richard Nixon in 1972 and Ronald Reagan in 1984, in their 49-state landslides, did not carry 20 percent of the district’s popular vote. John McCain got 6.5 percent.
As Democrats are the party of government, Washington, D.C., is the capital of the Democratic Party as well as the nation. When the rest of America suffers a depression and recession, Washington knows prosperity. An economic crisis for the country means job opportunities here.
But there is a more critical reason Congress should reject Obama’s “Save-Government-First!” policy.
The fiscal crises gripping Europe and America, which could portend a crisis of Western democracy, was caused by the unbridled growth of government. And it cannot be cured without a rollback of government programs and a downsizing of government workforces on both sides of the Atlantic.
As Greece is staring at unpayable debt because of government’s conferring of jobs, benefits, salaries, pensions and health care the tax base could not sustain, California and New York are in the same boat and headed for the same reef.
Once the richest and most populous of states, both now face a steady exodus of business and taxpayers. But, of the people coming in to enjoy the cornucopia of benefits these states provide, many lack the skills, education or earning power of those departing.
And why should states like Virginia, that said no to many benefits, have to bail out the spenders in Sacramento and Albany who could not say no?
For the U.S. government to bail these states out again, as Obama did with his $800 billion stimulus, would only be to postpone the inevitable day of reckoning, to deepen the federal fiscal crisis and to raise the odds further that America herself will one day have to default.
In the recession of 1981, Ronald Reagan, with his across-the board tax cuts of 25 percent, bet the ranch on the private sector—and won his gamble.
Obama, with his $800 billion stimulus, bet it all on the public sector. It appears not to have worked. Now Obama wants to double-down.