You say austerity, I say prosperity
Reactions to New Jersey governor, Chris Christie’s cuts and privatizations are mixed depending on where you fall on the ideological spectrum. But one thing that irks me is the reaction that all these spending cuts “hurt” the poor, while not ratcheting up already high taxes on the rich somehow doesn’t hurt them enough.
I think we blur the conversation enormously when we talk about those from the lower income “suffering” because of spending cuts while not making the rich “suffer” enough through higher taxes, as though state spending is the only determining factor of society’s suffering. What about lost jobs because of increasingly high taxes needed to pay for enormous public pensions? What about lost investment in the private sphere due to ever bloated tax rates to line the pockets of teachers unions and other public workers? Spending cuts do not equal “suffering” anymore than higher taxation means that someone benefits. This may be the language we use to talk about all of this, but I think it’s a huge illusion.
“Austerity” is the wrong word altogether to describe what we do when we stop spending endless sums of other peoples’ money.
There are legitimate uses for tax dollars obviously – legitimate things for the state to spend money on – but any time we make cuts from public budgets, masking those cuts in the language of ‘suffering’ and ‘austerity’ seems a devious sort of play on words.
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I don’t really think too many on the left defend enormous state worker pension programs, certainly not the wonkish ones, anyway. I have no particular quarrel with messing with those benefits myself if necessary, and I say this as the sort of labor liberal that wished Obama would have pushed through Card Check within his first 100 days. But I recall reading that Christie deeply cut Medicaid in the state while vetoing a small tax increase on the rich, which is what gave me an extremely unfavorable opinion of the guy and is, basically, where his current reputation comes from. He seems competent enough, I’ll grant him that, but not much more than that.
I guess the equivalent on the left would be to criticize “the right” for ag subsidies, even though every conservative wonk seems to hate them. In both cases, the explanations are the same: intellectually everyone agrees with the inefficiency of what’s happening, but in both cases these are interest groups connected to the respective ideological movements, which is why this garbage never goes away. But while I’ll grant that not all spending cuts are equally bad (or even bad) as a liberal, the conservative tendency to exalt spending cuts or “shrinking government” can be just as problematic. I don’t think you do that here, E.D., but my point is that liberals have a legitimate beef with this guy that has little to do with unions. He really has prioritized keeping the wealthy as safe as possible while soaking the poor.
thelev – The tax on the ‘rich’ (which if I recall correctly included families making over $100,000 in an expensive state) is problematic because taxes at these income levels are already so high in New Jersey. You start to see tax avoidance which not only leads to decreased revenue, but pulls money out of the state into shelters, lawyer fees, etc. Rather than productive investment in the economy, you see higher income families doing their best to either leave altogether or have their funds hidden elsewhere. Either way, not good for jobs. I’m certain that on some issues liberals have legitimate beef with Christie, but their answer to the huge deficit is to keep spending high and keep public workers sheltered from the recession everyone else is suffering through. Then cloak this fact in the language of suffering! That drives me crazy.
In response to another comment. See in context »[...] This post was mentioned on Twitter by True/Slant. True/Slant said: You say austerity, I say prosperity http://bit.ly/cJwBaV [...]
“But one thing that irks me is the reaction that all these spending cuts “hurt” the poor, while not ratcheting up already high taxes on the rich somehow doesn’t hurt them enough.”
Pathetic. What kind of life have you lived that you can equate the physical suffering of the elderly and the destroyed opportunities of children with the inconvenience experienced when taxes are raised on the wealthy?
dave – see larry’s comment below. He sums it up nicely – even though I’m pretty sure he doesn’t agree with me 100%. The life I’ve lived, by the way, is a pretty normal one. I’m all for government spending on the right things. I think strong safety nets for the poor are vital. I think the federal government should take over Medicaid and try to manage it better than the states have. Hell – I’d even support Medicaid clinics set up by the federal government. But I don’t support these horribly entrenched public unions. I don’t support wasteful spending that – in the long run – will only hurt the poor the most.
In response to another comment. See in context »heyitsdave,
Your comment is an example of the subject of E.D.’s post. Fiscal policy is not about humanism, humanism is a budget item of fiscal policy. Discussing finance in emotional terms leads to these polarizing arguments. There is no viable metric for equating spending and suffering. There are other ways to mitigate suffering and create opportunities beside government spending. I would list these, but since you are dedicated to the cause, it shouldn’t be necessary. Now I have to go help put a roof on a new Habitat home.
Right on, larry!
In response to another comment. See in context »Yet again, you’re ignoring the fact that Christie HAS raised taxes.
http://www.northjersey.com/news/state/politics/97366509_5_ways_the_budget_affects_you.html
Quote: “The earned income tax credit for low-income residents will be scaled back.”
I suppose the difference is that he’s raised taxes on the poor, so that doesn’t count.
Also, he’s cutting funding for public transport: I thought you were a huge supporter of massive spending on that kind of stuff.
Mr. Epstein,
You are quite correct, taxes have not been lowered, they have been redistributed, from the State to local government, to individuals. This has been the entire history of the Republican Party’s “Tax Cut” strategy, an endless shell-game of moving taxes from the federal to state, state to county, from county to cities and special districts and then back up the federal government. When one level of government was in too much trouble, a different level could patch together a temporary fix. Now we are in a crisis exactly because all levels of government are now simultaneously bankrupt.
In response to another comment. See in context »And it’s going to be necessary to raise taxes, more than likely, especially in the classes of people who don’t actually pay taxes. The EIC is a credit. Lowering a credit isn’t quite the same thing as raising taxes but it serves a similar purpose. 50% of the nation can’t keep not paying taxes, plain and simple.
In response to another comment. See in context »Mr. Kain,
You asked:”What about lost investment in the private sphere due to ever bloated tax rates to line the pockets of teachers unions and other public workers?” The linked article indicated how a hand full of senior public employees made millions in pension payments. While that does indeed occur it is entirely atypical. The vast majority of public employee retirement payments are entirely modest. Taking the California Public Employee Retirement System (PERS) as an example, the largest public employee program in the US, there are 1.6 million members including 492,000 retirees. The average retirement payment is 2,101 USD. Indeed, 78% of all retirees earn less than 36,000 USD. Sure, there are retired fire chiefs, school district superintendents, senior executive appointees who retire on six figures, however they are a tiny minority who are not at all representative of the general situation.
Public employee who are retired not living in yatchs on the Côte d’Azur.
Now mind you, most public employees have already seen reductions in their retirement programs. The data above is from current retirees who came into the system with a more generous program. In California, State employees used be in a program that was “2% at 55″ (a formula for calculating retirement benefits based on age and years of service) but was reduced to “1.5% at 60″. On top of that, current state employees are being furloughed three days a month, which means they are contributing 15% less to their retirement. When these employees retire, they will be receiving on an inflation corrected basis, less than current retirees.
The problem is not the size of the retirement payments being received by former public employees. Part of the problem is of course that people are living longer after retirement, but that is only a small part of it.
The main problem has be the disastrous performance of the stock market over the last ten years. All retirement programs, public and private, work on the same principle, employees and employers contribute a portion of the employees income to a fund which is invested and returns profits. Consider an employee who works for 40 years and contributes 10% of his income to a retirement fund. Without correcting for inflation, at retirement, that individual will have 4 years of income. Even correcting for the fact that the individual needs less income at 65 as compared to 25, that is not going to keep a person afloat for the rest of their life. The difference has historically been the profit from investment. The retirement fund invests the retirees money and earns profits which increase the total value of the fund and allows the retiree to withdraw payments for the rest of his or her life. This is how PERS has been doing it since 1932.
However the last decade has been poorest performing decade in the entire 200 year history of the US stock market. Retirement funds across the country, both public and private, have been devastated by the first the “Dot.Com Bust” of 2001 and then the “Great Recession” of 2008. Investors call this the “Lost Decade”. As a result of the financial lassitude of the stock market, retirement funds have not been recovering the profits needed to meet their financial responsibilities. State legislatures, local governments, school districts, &c have had to contribute the difference, resulting in skyrocketing costs to tax payers.
The crisis in funding of public employee retirement costs is not the result of “greedy public employees living/retiring in luxury”. The crisis is the same crisis gripping the rest of the economy, the collapse of profitable investment opportunities. The failure of Wall Street to generate returns on investment over the last ten years (and counting) is the core problem. It is quite unprecedented and investment / retirement fund investors were caught completely unprepared, as was everyone.
There is a single fundamental economic crisis that has gripped this nation. It has many manifestations, falling real estate values, declining tax revenues, raising bankruptcies, bank collapses, &c – including but hardly limited to funding of public employee retirement funds.
John Dillinger understood the situation. When asked why he robbed banks, he replied “That is where the money is”. You are entirely correct, it is irresponsible to discuss this personal terms of “pain and suffering”, that simply produces emotional response. If we are to have government, it has to be funded. The wealthy have the money to fund it, they need to be taxed to get it. It is just that simple.
Chris Christie is awesome! Thank God for this guy. Man, we need him for the country in 2012.
Register your support:
http://www.draftchristie2012.com/