Government Spending Run Amok - Part One

PART ONE: Unbelievable deficits and obligations.

There was an eye-opening article in the Wall Street Journal this past week (9/5/09, p A11), entited "Warning: The Deficits Are Coming!" (with shades of Paul Revere warning about the British invasion....) The alarm is being rung by David Walker, an economist and former head of the General Accounting Office (GAO) under President Clinton, who was responsible for auditing the government's books. He now works for the Peter G. Peterson Foundation, which educates the public about the need for fiscal prudence.

Walker has estimated that our obligations as a country exceed $56 Trillion Dollars (yes, you read that right), which works out to about $483,000 for every household in the U.S. In short, we owe or are obligated to pay more than our collective net worth. And this figure was calculated BEFORE President Obama's federal stimulus package, which is furthering our deficit. And it doesn't include the expansion of health care either.

What the heck is going on? What happened to responsible management? How did we get into this mess?

I don't know how this situation will resolve itself, and perhaps when you look at deficits and obligations like this, it really doesn't matter what we in Acton do locally. Our town budget deficits are nothing compared to this one. But I suppose it is our obligation to budget in a fiscally responsible manner, even if our state and federal elected officials abrogate their responsibilities.

What appears to be the problem is something that seems to happen on all levels of government. We have politicians who are beholden to an electorate that is highly motivated to re-elect incumbents, give overly generous pay and benefits to workers, and is simply unable to make the tough choices for the good of our society as a whole.

The #1 "special interest" appears to be government unions. They contribute heavily to candidates at all levels, having learned that by controlling the politicians, they control the budget. This increases long-term deficits and promises for future obligations that we simply cannot afford.

We could talk about all the pension abuses and double-dippers (of which Acton has its fair share) but if you look at how the system works for everybody, the incentives are there for government workers to maximize their payments at the expense of taxpayers.

For example, public employees in Mass. who retire get 80% of their highest salary. This is simply outrageous. They also get half (or more) of their health insurance covered, and they are able to work another job and get another full-time salary after they retire if they so choose.

We know that insiders are also able to "game the system" by figuring out ways to boost their pay during their last three years (upon which their retirement is calculated) to maximize their future benefits.

Many of our former high-level school administrators participate in these schemes. They "retire" with full benefits, then get another job out-of-state (which preserves their full retirement income) or, instead, ask for and receive a special waiver from the state to work and get paid full benefits because there is some local "emergency." We must be having a lot of emergencies around here, judging by how many double-dippers we have.

Why is this wrong? First, how many of these "insider" appointments represent some quid-pro-quo favor of which the public is unaware? That is exactly why the "appearance of a conflict of interest" must also be avoided just as strenuously as an actual conflict of interest. Second, we might not be getting the best candidate when we choose an insider. Third, why should one person be able to get what effectively is a double salary and someone else gets nothing? I'm sure we could over-analyze this, but the simple fact is that someone shouldn't be paid over $200,000 a year to be an interim elementary school principal. It just doesn't pass the smell test.

Unfortunately, this is merely symptomatic of the underlying problem. We have fallen into a union-driven culture of excessive government worker expectations, and the taxpayers are going to be left holding the empty bag. Whose job is it to control this spending and reign in these future obligations? That would be our elected officials.

They have dug us into a very deep hole and they don't even have the decency to be straight with us so we can do something about it. That's because that would require making some of the tough choices which won't be looked upon favorably by their masters, the unions. So they pretend like everything is fine, and they ask President Obama to print more money so we can cover our bills and not face these problems squarely.

$56 Trillion Dollars.

Perhaps President Obama can solve this by taxing the wealthy Americans who make over $350,000 a year? Didn't he promise not to raise taxes on anyone below that level?

Unfortunately for the government mindset, our problem clearly is not lack of taxation but too much spending. But our politicians are rewarded for spending, not cutting. And therein lies the problem.