The Homa Files

Honestly, excluding the military and first-responders, what’s your view of government employees? 

How many fulfilling experiences have you had with the IRS,  the DMV, the tax assessor’s office, the planning board, etc. ?  My bet: not many.

In the old days, most folks got annoyed but gave passes because they thought the inefficient bureaucrats weren’t getting paid very much.

Recent news reports have burst those myths: revealing high pay relative to private sector employees and outrageous benefits packages.

For sure, the next couple of years will have spotlights shining on government employees and their candidate-contributing unions.

Blue states (think NY, CA, IL) will get hit particularly hard now that fiscally responsible red states are refusing to bail them out.

Since the unions won’t budge, expect higher state taxes and cuts in services …   

Compared with many sectors that have suffered grievously from the slump — housing, automobiles, finance — state and local governments have been relatively sheltered.

One reason is President Obama’s  “stimulus” packages … have provided about $158 billion to states.

As these transfers dwindle … local governments may be less lucky. They rely on property taxes for about a third of their revenues, and because property appraisals are done every few years, “the decline in house prices implies that collections will probably fall in the coming years.”

The truly bad news lies in the future with massive retiree pension and health benefits that haven’t been prefunded. How big are the shortfalls? All estimates are huge … the gaps are about $3 trillion for states and almost $600 billion for localities.

Whatever the ultimate costs, they threaten future levels of public services.

The generous benefits encourage workers to retire in their late 50s or early 60s after 25 years of service. The health benefits typically provide coverage until retirees qualify for Medicare at 65.

To pay for unfunded benefits, either government services must either be cut or taxes raised.

So support for schools, police, roads and other state and local activities is undermined by careless — or corrupt — bargains between politicians and their public-worker unions.

Promises of generous future retirement benefits were expedient contract sweeteners, with most costs conveniently deferred. Even when pension contributions were supposed to be made, they were often reduced or postponed when budgets were tight.

If these arrangements look familiar, they should. The U.S. auto industry adopted the same model; the costs helped bankrupt General Motors and Chrysler.

RCP,Cheating Our Children (Again), December 20, 2010
http://www.realclearpolitics.com/articles/2010/12/20/cheating_our_children_again_108288.html

This entry was posted on December 21, 2010 at 6:59 am and is filed under Gov't Waste & Inefficiency, Taxes, Unions - UAW. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.