Friends,
This is a very good article, but it misses the elephant hanging out in the corner of the room. The military budget, which is larger than the combined expenditures of all countries, is destroying us. In any legitimate discussion about a budget crisis, we must point out the absurdity of spending more then 50% of the federal budget on warmongering.
Kagiso,
Max
The Consequences of Our Tax Cowardice
If we permit public- sector workers to be scapegoated for
state and city budget crises, we all stand to lose
By Richard Wolff and Max Fraad Wolff
The Guardian/UK
January 28, 2011
http://www.guardian.co.uk/commentisfree/cifamerica/2011/jan/28/usdomesticpolicy-public-finance
A national campaign is now fully launched to make local
public-sector employees pick up a major share of the costs of
economic crisis. Years of rising spending and falling revenue
have carved a path of destruction through federal, state and
local budgets. Deficits and debts have mounted eroding
taxpayer support for government spending in general, and for
public employees particularly. In response to deep economic
pains in middle-class communities, major efforts are under
way, from
major cuts in services, wages, benefits and employment.
Federal, state and local governments are staggering from
reduced tax revenues because of unemployment, reduced
production, lower investment and the housing collapse.
Washington borrowed huge sums from foreign investors,
domestic big business and the rich. These funds went to
bailout select businesses and to help (partially and
temporarily) broken state and local government budgets.
Because Democrats and Republicans agreed last December not to
increase income, estate and capital gains taxes, broken state
and local budgets face declining federal support. This is
driving governors, mayors and state legislatures to raise
taxes and/or to slash payrolls and programmes.
Of course, some cutting and tax increases are required. The
real social decisions involve what to cut, how much, for
whom, and whose taxes to increase.
The pressure is on to shift the heavy costs of economic
crisis onto the middle- and low-income communities already
stung by unemployment, foreclosures, reduced job benefits and
rising job insecurity. The campaign to make the middle- and
lower-income Americans now focuses on public employees -
especially their numbers, incomes and benefits. Battles loom
over which state and local job holders get fired, whose
pensions/benefits will be reduced, and which public services
will stop being available.
Politicians will keep silent on the key alternative to deep
cuts - precisely because it would otherwise be on most
citizens' agendas. That alternative would be to raise the tax
share paid by leading firms and the wealthiest 5-10% of
citizens. In most cases, this means returning to the levels
of taxation in the 1980s. Whatever may be needed in the way
of reasonable rationalisations and savings in government
budget outlays, we will not exit the continuing economic
crisis by massive reductions in public service provision and
employment. Those only further depress the economic
conditions and wellbeing of middle- and lower-income
communities. This would be a more and more cruel version of
the track we have been on for decades. Sadly, this approach
is neither new nor likely to work.
The facts don't support the attacks on public employees. Last
year, total state and local public employment declined by
407,000 jobs. There are about 20m state and local workers in
details, see the figures here ). Until the last decade, the
numbers of public employees grew steadily as did the
population. Unemployment levels in our communities would have
been much higher had those workers not found public jobs.
State and local government would have spent and provided far
fewer and/or poorer public services had state and local
employment not grown. Of course, there are stories of waste
and corruption. Nonetheless, we all need and benefit from
many state and local services.
Over the last decade, state and local employment did not grow
very rapidly. As the
and local governments did not notably expand their payrolls.
Their economics did not spin out of control - as did our
financial industry and other parts of the private sector.
Some states and localities even trimmed their tax rates.
Assumptions were made about a lasting housing and equity
market boom. These proved false. In many cases, the pain
emerges slowly as properties are reappraised, sales tax
revenues fail to rise amid record unemployment, and huge
numbers of citizens do without healthcare coverage.
Some now paint public employees as "fat cats". In 2009 (the
latest available data), the average state employee earned
$23.67 per hour or $49,240 per year . The average local
government employee earned $21.68 per hour or $45,090 per
year . These are averages. There are considerable differences
among individual public employee earnings depending on
her/his location, age and job type. There are huge ranges in
pay by locality and union membership, as well.
By comparison, the national average earnings per hour for all
employed Americans in December of 2009 was $22.38 or $44,760
for a 2000-hour year. In other words, state and local
government employees earned about the national average in
2009 and 2010. Figure 3 below lists the most common jobs and
salaries for state and local employees, according to the BLS
Career Guide to Industries, 2010-2011 Edition . State and
local government employees' earnings were close to the
national averages in most occupations. Labelling all public
employees "fat cats" is an attempt to make mostly middle-
class earners and all social service consumers pay for what
the economic crisis did to state and local budgets.
Another part of the campaign against state and local workers
is aimed at their unions. But here, too, the facts offer a
more honest picture. State and local government employees are
more unionised than private-sector workers. Approximately
12.3% (or 14.7 million people) of the total US labour force
is represented by unions. That includes a 612,000 member
decline across 2010. About 36% of public sector workers were
unionised in 2010, as compared to 6.9% of private-sector
workers (local public employees - teachers, police and fire
personnel, and others closest to the communities they serve -
were the most unionised). The majority of state and local
public employees are, in fact, not unionised - just like the
vast majority of private-sector workers. Portraying public
employees or their unions as the primary problem is not
supported by the facts.
In conclusion, consider exactly who public employees are.
Equal
that 18% of full-time state employees are African American ,
while that number for local employees is 19%. Public
employment has reduced African American unemployment, reaping
social benefits for everyone. Because African Americans have
a higher than average union membership, attacking state and
local union jobs targets them especially. Veterans are also
significantly over-represented in public-sector employment at
both the state and local level. In 2009, nearly 13% of all
employed veterans worked for state and local government .
Third, public-sector employees tend to stay at jobs longer
and tend to be older than private-sector workers. Our at-risk
state and local workers are disproportionately likely to be
people of colour, in unions, older and veterans. Most
importantly, state and local employees provide vital services
to all. Our education, transport, protection, courts and
civic participation, rely on public sector workers. Over 85%
of Americans are educated in public institutions, from first
grade through university. Our police, fire, courts, social
workers and clerks keep all of us and our property secure.
Our roads, bridges, tunnels, ports, trains, buses and
security are public-sector work. Our diversity and our
veterans are well represented among our public-sector
workers. Cutting the public sector will worsen the economic
crisis, while deepening many social problems. No discussion
about real and serious budget adjustments should proceed from
ignorance about what public-sector workers do, who they are
and what they are paid.
No society moves wisely without acknowledging and factoring
the real lives at stake and the real effects of budget decisions.
(c) 2011 Guardian News and Media
Richard D Wolff is professor of economics emeritus at the
economics from 1973 to 2008. He is currently a visiting
professor in the graduate programme in international affairs
of the New
teaches classes regularly at theBrecht Forum in
His most recent book is Capitalism Hits the Fan
Economic Meltdown and What to Do About It (2009)
Max Fraad Wolff teaches economics in the
University graduate programme in international affairs. Max's
work can be seen at the BBC, NPR, al-Jazeera English,
Bloomberg TV and the Wall Street Journal, among others
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