Blue Blights Empire State
by Walter Russell Mead at the American Interest
“Weekend readers of the New York Times got an eyeful yesterday; the Grey Lady took a long look at New York state, and the result is an article that could almost have appeared in the Weekly Standard or the National Review. While the Times carefully avoided drawing any indelicate conclusions that might upset its liberal readership, the review of government finance at the state and local level reveals an appalling picture of blue model thinking at its worst. New York state and local politicians, egged on by public sector unions, have dug the state into such a deep hole that it will be hard to emerge.
And the unions — along with the pro-bankruptcy wing of the Democratic Party — want to keep digging.
The reality is that from Long Island to Buffalo, New York cities and counties face severe and growing fiscal woes. The chief drivers of the crisis: blue sweetheart programs that are out of control: state pensions, Medicaid, and retiree health costs.
Example: New York City’s annual out of pocket pension costs have ballooned from $1.5 billion a year ten years ago to $8 billion today. This is the cost of the lies New York politicians have told their sheep like constituents for many years, promising fat pensions to workers while refusing to raise taxes to put enough money away for when the bills come due. According to the eye popping numbers in the Times, 3 percent of New York city property tax revenues went to pay pension costs in 2001; 35 percent of those revenues will go to pensions by 2015.
Meanwhile, the ratings agencies have been downgrading the debt of New York cities and counties as if we were on the Mediterranean: last month alone Rockland County and the city of Utica got downgrades, with Long Beach and Yonkers getting hit last year. Suffolk and Nassau counties are having to borrow to pay their pension fund contributions for this year; worse is likely to come even as the general economy slowly improves.
Read the whole piece to see both how a whole state can go down the tubes, and how a newspaper can report facts while tip toeing carefully around any implications that might make its readers unhappy.
The root problem is that New York elected officials lost sight years ago of the need to run the state and its cities on a businesslike basis. They made “investments” in social policy and educational spending that manifestly did not pay off in terms of enhanced productivity or economic benefits. They made pension promises that they neglected to fund. New York as a state has been committed to the belief that a high regulation, high cost, big government approach to state and municipal management would pay off in the long run: yes, government in New York would cost more than in Texas or Alabama or other benighted hell holes, but New Yorkers would be better educated and more productive. New York’s infrastructure might be expensive, but it would facilitate business growth. New York’s public sector labor force might be expensive, but it would be competent and motivated so that it would deliver more. New York could make a high cost, high regulation governance model work: that was the big bet.
It has failed.
It’s time for the state to take a long hard look at itself. The investments haven’t paid off — at least not enough to justify the costs. The government model is breaking down; the system doesn’t generate enough revenue to cover its cost.
Hopefully an economic recovery will provide a little breathing space, but New York can’t afford to waste any respite it gets. The state is on the wrong road and the outlook is grim.
When blue policy goes wrong, blue pols and their chorus of captive intellectuals sing for bailouts. If the city is broke, the state must pay up. If the state is broke, the feds must pay up.
But the feds can’t — and won’t — pay up. The feds are tapped out, the state is a mess, and there will soon no alternative to deep policy change.