It's been fun watching Wisconsin's alleged budget battle, now in its second week, in that it demonstrates just how unserious the Republican party and their ball washers at Fox News and the blogosphere are about balancing budgets. It's really educational if you know what to look for.Before I go any further, I should restate that I'm against the unionization of public employees. On the other hand, I'm also against snow and organized religion. The fact that I'm against all of these things doesn't necessarily mean that they're going anywhere, or that they even should.
If you've been paying attention to half-witted, duplicitous Republican politicians or the gutless and ignorant curs in the media, you would think that American deficits were mostly due to the existence of the state and federal workforces. All things being equal, it makes for a pretty good narrative. The only thing that gets in the way is that the facts don't bear it out.
I'm exhausted by writing this over and over again, but the fact is that the United States - and by extension, the individual states - have been spending far more than they take in for about fifty years now. Most of that spending has come in the form of program spending and unnecessarily large ideological cuts, although U.S foreign policy and the military needed to carry it out has played a part as well.
Unaffordable tax cuts are no different than social programs and various subsidies in that they are examples of politicians bribing people with their own money. Americans have never been good at austerity. Certainly, they won't engage in the kind of serious and deep program cuts that Canada carried out in the mid 1990s until it's too late. Nor will they do anything to prevent the banks from creating bubbles that wipe out the stock market two or three times a year.
To be fair, there's no real reason to make politically hard decisions when you can scapegoat groups that aren't very popular, and there are few groups as unpopular as public employee unions. If you do that, you can continue to cut taxes and fund the monstrously expensive program spending that everybody loves while appearing to actually address deficits. And in politics, appearances are the only things that matter.
Last night, I watched Bill O'Reilly engage in a debate so mystifyingly wrong that it was actually hypnotic. Ol' Bill built his argument around two points that either had nothing to do with anything or were just powerfully dumb.
First, he said that public employee benefits are bankrupting the states, so they had to be repealed mid-contract. To ensure that it never happens again, collective bargaining has to be crippled.
I'll concede that the benefits governments, particularly retirees receive is unsustainable. However, that's largely because the federal and state governments spent decades engaging in accounting that would send anyone to jail forever. The benefits that governments were granting their employees weren't a secret to anybody. But instead of actually funding those benefits, they continued cutting taxes, expanding program spending and subsidizing farmers, corporations and sports stadiums.
The federal government certainly didn't help when they "ended welfare as we know it" during the Clinton administration. Yes, the federal government ended Aid to Families with Dependent Children, but that didn't "end" welfare as much as it dumped it on the states. And if you're really interested, you'll notice that state budgets started going into the toilet in the late 90s.
What Bill O'Reilly, Scott Walker and pretty much everyone isn't telling you is that the real sinkhole in state budgets isn't public employees, but the public itself. Medicare and Medicaid are barely funded from year to year at the state level, let alone in the outlying years when the Boomers are fully retired. The reason that no one is telling you that is because Medicare and Medicaid are very popular among people that vote in high numbers.
O'Reilly's second argument was almost incomprehensible. He said that Governor Walker has no choice but to pass a hundred million dollar corporate tax cut because "businesses are going to 'right to work' states and that the cuts will create jobs."
In fact, one has nothing nothing to do with the other. Right to work states tend to have lower taxes than the rest of country, but they're also still losing jobs or not creating them as much as they should. Furthermore, cutting taxes in this economic climate will accomplish absolutely nothing because of the paucity of consumer demand.
The fact that interest rates are at nearly zero can properly be seen as the biggest tax cut imaginable, particularly in a country fuelled by consumer debt. If non-existent interest rates aren't creating jobs, there's no reason to believe that corporate tax cuts will. Indeed, all further tax cuts will do is widen existing deficits, just as the extension of the Bush tax cuts has federally.
Almost no one in the United States will admit that America actually does have a revenue problem, and that's equally true at the state level. Everybody loves the big-ticket spending of Medicaid, Medicare, Social Security and defense, which is why most mainstream politicians never address any of them in a serious way. They just want to keep benefiting from those programs without actually paying for them. This is happening in the states as well.
The Battle of Madison makes no sense from a budgetary perspective. But it makes much more sense as a political matter. You see, the Democratic party would cease to exist were it not for unions generally, and public employee unions in particular. Not only do they give a lot of money to Democrats, they also provide crucial "Get Out The Vote" coordination that is invaluable in close races.
Once you hobble the collective bargaining power of those unions, you also undercut the case for mandatory dues from members. Without membership dues, the union effectively disappears and poses no political threat or benefit to anyone. That's what this is really about and if you bribe any halfway smart Republican with enough whiskey and nude young boys, they'll tell you just that. The Battle of Madison isn't budgetary as much as it is blatantly political.
So why doesn't your average voter see this? Easy. The average voter, as I've long contended, isn't very bright.
The great Dan Carlin addressed this beautifully in the current episode of his podcast, Common Sense. Once upon a time, there was a trade-off between the public and private sectors. You'd make more money in the private sector, but if you worked for the government, you'd get great benefits and job security. That's changed somewhat, as we see with all of the rhetoric about public employees "making more" than people in the private sector.
The only problem is that it isn't exactly true. Because the United States has outsourced so much of its economy over the last thirty years, private wages - particularly for the middle class - have stagnated in the last decade. It isn't that public employees are making more, it's that private employees are making less. And tax policy is never going to change that. You can cut corporate taxes to zero and that still won't make American workers competitive with their cousins in India and China, who will consider themselves exceptionally well-off making less than a third of the average American.
And not only can you not significantly downsize government, the overwhelming majority of Americans aren't interested in doing any such thing. If they were, you'd see an honest debate about what's causing the budgetary imbalances in the first fucking place. While you can send your tech support jobs or heavy industry to Mumbai or Shanghai, you can't send your teachers, cops, fire fighters and the bureaucracies that support them there. Well, I guess you could, but the results would probably be less than ideal if you're a crime victim, on fire or illiterate.
But you have fun explaining that to an unemployed Allentown steelworker. Demagoguery is one of America's few remaining growth industries for a reason. I expect that Republicans like Scott Walker and John Kasich to prevail in the short-term, but they're just as likely to get their asses kicked in four years when absolutely nothing changes.
The only problem is that they'll be replaced with equally childish and dishonest assholes who won't address the real issue, which is the unrealistic expectations of the American people themselves. And don't think for a second that they Democrats are any better. They spend most of their time denying that there's a problem at all.
My friend, The Far East Cynic, also a wrote an interesting, if different piece on this subject.
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