May 7, 2009
Michael Morse's Budget Plan: What Civilians Can and Can't Do Budgetwise
Michael Morse has up a humorous post describing his personal household deficit reduction plan, but his intended point isn't quite clear. It's worth reading the whole thing for enjoyment, though, before making it a subject of discussion.
In some respects, he illustrates well the things that families actually do have to cut back, but that governments tend not to parallel:
... Wait staff in area restaurants will no longer receive the customary 15% tip, 8% will now be the norm. ...Charitable contributions will cease immediately. Also, all pets will be asked to leave. These pets will not be replaced until the current economic crisis passes.
But then, there appears to be a complaint about actions the government does take against public-sector employees:
All work performed at Morse's house will be subject to a 20% co-pay by the person doing the work. Plumbers, electricians and all other contract labor will adhere to these new cost saving measures until the economic crisis passes. This plan will save the Morse budget in two ways, the contractor will charge less for work performed because their co pay will also be less. Appliance repairmen with their gold-plated "service call" fees will no longer be tolerated, a set hourly fee will be paid.
Putting aside the odd use of the co-pay concept, the laugh comes from the fact that no contractors would accede to those demands. (Of course, when they really need work, they do drop their prices to the same effect.) Similarly, public sector workers are under no obligation to continue providing services that a government body requires.
And then, there are suggestions that are impossible for the individual family, but that would be very worrisome if the government were actually to attempt similar measures:
For example, Morse plans to stop paying co-pays for prescription drugs and doctors visits, and cutting his $100.00 emergency room payment in half with a projected annual savings of $2600.00. These fees are simply unsustainable. Supermarkets are being asked to lower their prices until this economic crisis passes, realizing an additional $1380.00 in annual savings.
When families feel the economic squeeze, they must do without, because they cannot suspend the laws of supply and demand. The government cannot perform that miracle either, although it does attempt to try more frequently than is healthy.
While the end game for RI families is quite clear, if painful for most, this isn't yet clear for the public sector.
Basically, the question of who goes under the bus has yet to be decided, even as the continuing plunge in tax revenues make that question ever more urgent.
Some trends, however, point to who the eventual winners and losers will be. Elderly taxpayers who are too loyal or old to move out of RI will continue to be milked, via the property and estate taxes. Many other taxpayers can just leave. So the odds that it will be the taxpayers under the bus -- more than they are today -- seem minimal. Even if the Feds raise income taxes, the issue for RI will continue to be how its non-federal taxes compare with those in other states, and I suspect that the comparison will continue to be unfavorable.
That leaves two groups upon whom the inevitable spending cuts must fall: either public sector unions or the state's "progressives" and the generous and expensive social safety net programs they support.
A number of current trends suggest that the latter will emerge the long-term winners, with the unions (and their members) going under the bus.
First, there is precedent -- Social Security terms have been changed more than once to reduce the size of the system's unfunded liability, and its cost to taxpayers.
Second, a rising number of municipal bankruptcies is likely to lead to the reduction of pension plans. All that social safety net spending is at the state level, and it is far more likely municipalities will declare bankruptcy than any state (though CA, RI, NY, and NJ may test that theory at some point in future, when the bond markets force the issue).
Third, the issue can easily be positioned as asking the taxpayers to support either the funding of pension and health care plans that are vastly better than those most taxpayers have, or the funding of social safety net spending that helps friends and neighbors who have fallen far in the current global recession. No contest there. Particularly, I suspect, in the nation's most Catholic state (though the progressives don't help their cause with Catholics by vocally supporting some other issues). And with a deep recession, there is no support for strikes by the affected public sector workers (in this environment, there would likely be a lot more support for a PATCO solution).
Fourth, the progressive wing of the RI Dem party has been slowly but surely targeting races and defeating the union wing's candidates. The recent GA fight over the supplemental budget shows that a threshold has been crossed.
Bottom Line: Sticking it to the taxpayers (again) isn't on in this end-game. Either the public sector unions or the progressives are going under the bus as a result of both this crisis and RI's structural problems (which reflect a long history of decisions, both political and otherwise, by RI's Democratic Party). And at this point, the progressives look to be holding the higher cards.
Of course, that also suggests that the current situation in the teachers' unions, with their very progressive leadership, can't last much longer -- maybe that's why Crowley has taken up a second career as a blogger...
Posted by: John at May 7, 2009 10:37 AMI wrote this as a parody while reading Mayor Cicillini's proposed supplimental budget plan. (bad habit, writing while reading) It works better with the mayor's press release fresh in mind. If interested, the Providence Journal ran the budget in four nearly exact versions last week.
I wasn't thinking as a public employee as I wrote this. I was thinking of everybody I know who if facing layoffs, benefit reductions and worse, public and private.
Posted by: michael at May 7, 2009 5:08 PMExplanation please . . .
"Fourth, the progressive wing of the RI Dem party has been slowly but surely targeting races and defeating the union wing's candidates. The recent GA fight over the supplemental budget shows that a threshold has been crossed."
Examples?
Posted by: Bob at May 7, 2009 6:57 PM