© 2008 – 2020 John T. Burke, Jr.

How States Can Save Billions

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We’ve been reading a lot about fallout lately.  The Fukushima power plant disaster is now providing a lasting legacy all over the world.  This animation from the French national meteorological service, Météo-France, illustrates how the spread of the Fukushima fallout is migrating.

For the past three years, we have been living with the fallout from a financial “meltdown”, which resulted from deregulation, greed and the culture of “pervasive permissiveness” at the Federal Reserve, as discussed in the Financial Crisis Inquiry Report.  The fallout from the financial meltdown has also spread across the entire world.  Different countries have employed different approaches for coping with the situation.  In Ireland, the banks were bailed out at taxpayer expense, crippling that nation’s economy for generations to come.  As a result, the Irish citizens fought back, went to the polls and ousted the perfidious politicians who helped the banks avoid responsibility for their transgressions.   On the other hand, in Portugal, the government refused to impose austerity measures on the citizens, who should not be expected to pay the price for the financial mischief that gave rise to the current economic predicament.  Given the additional fact that Portugal, as a nation, was not a “player” in the risky games that nearly brought down the world economy, the recent decision by the Portuguese parliament is easy to understand.

In our own country, the various states have found it quite difficult to balance their budgets.  High unemployment, which refuses to abate, and depressed real estate valuation have devastated each state’s revenue base.  Because the states cannot print money, as the Federal Reserve does in order to pay the federal government’s bills, it has become necessary for the states to rely on creative gimmicks to reverse their misfortunes.  Most states had previously deployed numerous “economic development projects” over the years.  Such projects are taxpayer-funded subsidies to attract corporations and entice them to establish local operations.  Rex Nutting of MarketWatch recently took a critical look at those programs:

And yet, study after study show that these subsidies create few, if any, net jobs.  For instance, California’s Enterprise Zone program – which is supposed to boost business in 42 economically distressed communities – has cost the taxpayers $3.6 billion over 27 years, but to no avail.  A legislative analyst report in 2005 found that “EZs have little if any impact on the creation of new economic activity or employment.” Read more from the legislative analyst report.

California Gov. Jerry Brown has proposed to kill the EZ program and the even-more expensive redevelopment agency program, but he faces an uphill fight in the Legislature.  Such subsidies are popular with the legislators who receive boatloads of campaign contributions from businesses lucky enough to find a government teat to latch on to.

Nationwide, such giveaways from state and municipal governments amounted to more than $70 billion in 2010, according to Kenneth Thomas, a political scientist at the University of Missouri at St. Louis, who has specialized in studying these subsidies.  That’s more than the states collect in corporate income taxes in a good year.  Read about Thomas’s book: “Investment Incentives and the Global Competition for Capital”

And that $70 billion is twice as much money as would be required to fully fund the pensions owed to state and local government workers, the very same pensions that budget-cutting politicians across the country claim are responsible for the fiscal hole we’re in.

What Rex Nutting has suggested amounts to the elimination of a significant number of corporate welfare programs.  He has also dared to challenge the corporatist mantra that corporate welfare “creates jobs”.  We are supposed to believe that the only way states can balance their budgets is through the imposition of draconian austerity programs, designed to force the “little people” to – once again – pay the tab for Wall Street’s binge.  Because the voters have no lobbyists to protect their own interests, venal state and local politicians have set about slashing public safety expenditures (through mass layoffs of police and firefighters), closing parks and libraries, as well as under-funding public school systems.

Never mind that state and local governments could save $70 billion by cutting just one form of corporate welfare.  They would rather let you watch your house burn down.  You can’t afford that house anyway.

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Back To Work

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July 8, 2008

As 4th of July weekend drew to a close on my home world Sunday night, I was harshly reminded of our nation’s true economic condition.  I’ve seen Sunday nights in Chicago, when you could find more people walking around in 8-degree weather, with a good wind.  As Independence Day weekend wound down, Michigan Avenue saw few pedestrians except for some street hustlers and that rare, lost tourist  —  the “meal ticket” for most street hustlers.  In any previous year, there would have been a line in front of the Underground Wonderbar by now – people waiting to see authentic Chicago blues.  It was midnight.  Everyone wanted to get back to work.  The tourists just wanted to make sure they got back on their sold-out flights, lest they face a re-booking penalty.  These conditions, suitcase restrictions and new, invasive scanning technologies defined the summer travel experience for 2008.  Those who could afford it, seemed more than ready to go home.  Those who couldn’t were more than ready to get back to work.

Monday morning gave us some forced exuberance about the fate of the equities markets.  I saw a guy on TV practically dancing, while being interviewed on an exchange floor in New York because the Dow Jones industrial average was up “almost 100 points”.  (Those of us who could read the little numbers for ourselves saw an increase of 72 points.)  We were supposed to believe the “bottom” had passed and we were to immediately contact our brokers with some “buy” orders.  At my hotel’s check-out time, as I prepared for the return flight to my present-day existence, the Dow had crapped out to 120 points less than the previous close, only to regain 63 of those points by the close of Monday’s trading.  Another would-be firework had fizzled out.

Those with jobs had all the more reason to get back to work.  They were lucky to have jobs in this economy.  Those working in the financial sector were damned lucky.  Those with control over their retirement money seemed ready to give up and go back to the Acme Hopeless Crapshot Fund.  Misleading information from prognosticators and market analysts had inflicted significant damage to their portfolios this past year.  The best tip for investors seemed to be that old maxim from “The X-Files”:  Trust No One.

The evening news gave us the anticipated campaign invective, although the Fox News failed to provide me with the conspiracy theory that thirsted for validation.  As the Associated Press reported earlier in the day:

The airplane carrying Democratic presidential candidate Barack Obama made a precautionary landing in St. Louis on Monday after the crew had a problem keeping the nose up on takeoff from Chicago.

The plane, an MD-80 Midwest charter, struggled to keep the nose at the necessary angle, as it left for Charlotte, N.C., the pilot said. Later, Midwest Airlines said the problem developed because an emergency slide located in the tail cone of the plane deployed in flight and never threatened the safety of the flight. The National Transportation Safety Board said it planned to investigate the incident.

I was hoping that Fox News would tell us that the plane had been chartered from Vince Foster Memorial Airlines.  I was hoping (and I continue to hope) for a tie to the Hillary Clinton campaign (or at least someone for whose antics the Clinton campaign is attempting to establish “plausible deniability”).  What good are the Fox News people when you are counting on them to do what they do best and they come up empty?

I was reminded of the remark (or should I say: possible self-fulfilling prophecy) made by disgruntled Clinton supporter Carmella Lewis to Hillary herself, as quoted by Maureen Dowd in the June 29 New York Times:  “You’re going to be the next President.”  Ms. Lewis went on to tell the Times: “But I have a gut feeling,” … “that something’s going to happen so that she becomes the nominee.”

Fox had all the ingredients for a wonderful conspiracy story here but they completely dropped the ball on all of us conspiracy fans.  Could it have been because Hillary Clinton’s recently-unemployed advisor, Howard Wolfson, found a job at Fox News?