Friday, December 4, 2009

The Next Stimulus Arrives; Just Don't Call it Stimulus & Public Workers Continue Living the Good Life in New Jersey

Don't want to pat ourselves on the back too hard, but we almost nailed this one to a tee.  Just as we immediately said post Bush spring $190B 2008 stimulus there would be another one coming in 2009.... (and the $787B was even bigger than the $500B we imagined)... we said immediately after the spring 2009 stimulus there would be another one coming. And they will keep coming as we claim we are nothing like Japan....except for the fact we have repeated almost every action..

Now as you recall we were sold on the last stimulus by such things as "spending on infrastructure", "it will stop unemployment from going over 8%", and it will "create or save 4 million jobs".  Well since that last stimulus was (a) mostly a political favor pork barrel package with only a fraction going to actual infrastructure and (b) a back door bailout to the states, guess what we are going to do this time again? 

Wait for it....

Spend on infrastructure and do another back door bailout to the states.  This sounds so familiar.  No offense to any readers who happen to work in the public sector and who constantly are shielded from market forces, but really... it must be nice.  We have not talked much about the state budgets with so many other things going on, but after being early on the case predicting the disasters that would come [Dec 16, 2007: California in a State of Fiscal Emergency - Coming to a Theater Near You] [Apr 25, 2008: Shoes Beginning to Fall in the States] [July 25, 2008: WSJ: States Slammed by Tax Shortfalls] well, the disasters are here.  And will get worse next year, hence the need for ANOHTER round of bailouts of the states .......without calling it that of course.

And please don't call it a stimulus... politicians say it is not part of their talking points because 'stimulus' now has a bad ring to weary taxpayers.  Hence its a "jobs bill".... much more soothing language. 

Behold! Stimulus/Bailout/Handout #72!
  • Democrats are looking to tap as much as $70 billion in unused funds from the Wall Street bailout to pay for new spending on roads and bridges and to save the jobs of firefighters, teachers and other public employees, officials said Thursday.
  • House Speaker Nancy Pelosi, D-Calif., said money from the bailout should be used to pay for jobs legislation that would funnel billions of dollars to road, bridge and other infrastructure projects and also help struggling state and local governments retain public employees.
  • Most of what Pelosi described were ideas included in February's $787 billion economic recovery bill.  (indeed.... weren't we just here 8 months agoI guess we can recycle the same talking points)
Again, if we are going to be Keynesian... I think infrastructure is the right place to do it.  But I thought we were just promised that was going to be a major focus of the stimulus just 8 months ago?  Where did that $800B in "shovel ready" projects go? And weren't we told just 2 months ago that we were not even halfway through that last stimulus so of course no new stimulus was on the drawing board.  Ah, lies.

As for the public workers, I don't know when this bridge collapses.... asking the 2/3rds of the populace to constantly offer money to save the 1/3rd of the populace who works in government or pseudo government (healthcare / education) can only work until we stop hiding it via borrowing against future generations and actually ask someone (anyone) who is alive today to pay for it via increased taxes.  It's really becoming 2 classes of Americans... one subsidizing the lifestyle of the other.  We are already at the stage the federal government (i.e. TAXPAYER) is being asked to be the TOP REVENUE source for the states [May 5, 2009: Federal Aid Surpasses Sales Tax as Top Revenue Generator for States]  It's all so circular to have become laughable.  There is no real push to realign cost structures at the levels necessary in the state and city level, because the implicit backstop of federal taxpayer handout always is out there... no different than our financial oligarchs.   We know when push comes to shove... the American taxpayer will be called on.  As long as we can borrow, print, borrow, print ... nothing changes.  One could devote an entire blog to the mess that is all levels of government finances.

So the beat goes on.  Again, nothing comes free and I ask you to prepare for the European style VAT within 2 major election cycles.  Until then we have some interim steps, right Cook County? [Jul 2: Cook County, Chicago ---> Highest Taxes in the Nation: 10.25%]  This is just and right, as it is only fair that a portion of our society can retire at age 54 with full pensions.  [Aug 11, 2009: LA Times - Amid Cost Cutting, Los Angeles City Pensions Continue to Soar


On a VERY related note - if you live in New Jersey (of which I know has some of the highest property taxes in the nation), you might want to read through some of the latest findings out this week on the benefits some of your cities are handing out to the public workforce... 1 town actually is paying for 1 day of Christmas shopping to all city employees.  Must be nice.  If you do NOT live in New Jersey don't ignore this story - you probably think it's something for New Jersey to deal with.  But this is why this story of these stimulus plans is so important to understand... now EVERYONE is on the hook for these benefits.  You (and your grandchildren) are paying for these benefits through the repeated backdoor bailouts including the one Congress will be working on in the next month.  So Joe 6 Pack in Nebraska is helping to pay the good public workers to donate blood, or for "wedding days"... or to go Christmas shopping.
  • They receive paid days off for Christmas shopping, donating blood and weddings.
  • Extensive taxpayer-funded benefits for some local government employees are straining the budgets of New Jersey municipalities, according to a report the State Commission of Investigation released today.
  • Despite a recession that has depleted tax revenue and forced layoffs, the report says, municipalities continue to spend tens of millions of dollars on big payouts to retiring workers.
  • "The gravy train continues to roll without impediment for select groups of employees on the public payroll," it reads. "Startling amounts of taxpayer-funded booty continue to be dispensed across New Jersey without regard for the common good."
  • The SCI, which examines crime and corruption and reports to the Legislature, said it discovered $39 million in extravagant payouts after reviewing 75 towns, counties and local authorities. (no problem - that's just a rounding error when we are handing out $100 billion of taxpayer money here, $787 billion there, $190 billion 2 years ago... just put it on the bill with everything else)
  • Many of the workers’ benefits were included in policies and contracts written years ago, sometimes shrouded in bureaucratic language.
  • (one egregious example - trust me, your state and local cities have identical stories) Robert DeNardo, who retired as chief of the approximately 20-officer Bradley Beach police department in 2006, left with $194,069 for unused sick daysin addition to his $95,592-a-year pension.  DeNardo also took eight months off with full pay and benefits leading up to his official retirement day, according to the report, which called the practice "terminal leave.
  • SCI Chairman Cary Edwards said the contracts are "absurd" and drive up property taxes.  The SCI report is a black eye for municipalities who have clamored for more state assistance to help cope with the recession.
You know, with over 5000 posts I sometimes forget what I have written the past 2.5 years.... but I found these two as I was scrounging through "state budget" archives last night.... I believe it's an approrpriate time to reference them.  Boo Yah! [Feb 18, 2009: Bloomberg - New Jersey's Budget Shortfall Reaches $3.6 Billion] [Dec 4, 2008: Bloomberg - Hoboken New Jersey Increases Taxes 47%]  Nothing another stimulus infrastructure program cannot fix. 

I've said this throughout 2007, 2008, and 2009.  If your child asks you a good profession to go into... if they are not going into the upper reaches of finance, answer anything in the public sector.  (that includes psuedo government i.e. fully or highly subsidized education and health care) These groups are mostly protected from the "free market" (i.e. reality), have almost no wage degradation as seen by private sector peers, and benefit packages almost not seen at all in the private sector anymore.  Based on our reaction the past 2 years - I can think of no situation that will stop this from continuing short of popular revolt by the taxpayers... who still appear comatose.

So until then.... on with more stimulus bailouts job programs! 

Now, who wants to go Christmas shopping... cmon, it's paid for my fellow citizens!? Boo yah.

[Feb 17, 2009: Kansas Joins California in Budget Woes]
[Dec 6, 2008: How Bad is Minnesota's Budget Deficit? Mega-Bad]
[May 8, 2008: It Pays to be a Firefighter in Vallejo]

[May 7, 2008: Vallejo, California Votes for Bankruptcy]

Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012