It’s hard, in a nutshell, because no one wants to see their favorite programs defunded. The system encourages politicians to pander to these constituencies for votes. The result is ever increasing spending while both the public and the politicians claim to be for spending cuts.
A perfect example of the process can be found in microcosm in Chicago, where, to save money in the wake of intemperate government spending, the school system plans on closing 54 schools. The constituency affected are not going to let this go quietly. Even though the plan would save the city $600 million over 10 years and certainly help close the 1 billion dollar shortfall it suffers, the people (voters and teacher’s unions) who don’t want those schools closed are taking their protest to the politicians (aldermen) who depend on their votes.
The problem now being realized with the process described above is there’s a thing called “reality” that intrudes on this system of ever increasing spending to satisfy the demands of ad hoc constituencies. It’s called economics. And it has laws that resist being broken. Laws such as you can only spend more than you have for so long before you can’t get anymore to spend. And at a local level, where a city government can’t print money, that reality has come to bear on the process that the city of Chicago has indulged in for so long.
It can’t afford the process any longer. And that means the process and its cycle will, of necessity, have to be broken if the city isn’t to become another Detroit. In the case of the school closings in Chicago, the only question that remains is whether or not the politicians, in the face of opposition by a coalition of voters/unions/politicians, will do what is necessary or – as we see on a national level time after time – endeavor to find a way to satisfy the coalition and kick the can down the road?
To the story:
Chicago Public Schools officials ended months of speculation when they released the list of 54 schools the city plans to close, but the pushback against Mayor Rahm Emanuel and his schools chief is likely just starting to ramp up.
As word of the schools on the long-awaited closings list trickled out Thursday, parents, teachers and community members — some furious, some in tears — vowed to fight the closings. One group took a bus of people to protest in front of the homes of school board members, and some parents spoke of a lawsuit. The Chicago Teachers Union already had scheduled a mass protest march through downtown for next week.
"We are the City of Big Shoulders and so we intend to put up a fight," union President Karen Lewis said. "We don’t know if we can win, but if you don’t fight, you will never win at all."
Emanuel and schools CEO Barbara Byrd-Bennett say the closures are necessary because too many Chicago Public School buildings are half-empty, with 403,000 students in a system that has seats for more than 500,000. But opponents say the closures will further erode troubled neighborhoods and endanger students who may have to cross gang boundaries to attend school. The schools slated for closure are all elementary schools and are overwhelmingly black and in low-income neighborhoods.
About 30,000 students will be affected by the plan, with about half that number moving into new schools.
So 30k out of 403k will be effected in a school system that appears to have a declining population. Any sensible person would understand that even if money wasn’t a problem, at some point adjustments would need to be made.
But we’re a schizo population who somehow believes – even as our reality reminds us in our own lives daily that we’re delusional – that we can have our cake and eat it too.
This problem and the reality aren’t unique to Chicago:
Chicago is among several major cities, including Philadelphia, Washington and Detroit, to use mass school closures to reduce costs and offset declining enrollment. Detroit has closed more than 130 schools since 2005, including more than 40 in 2010 alone.
The problem is, however, pretty unique to cities who’ve followed that process I described above and, for the most part, have been “blue” strongholds for decades. Reality is weighing in on their misguided governance with a vengeance.
What’s interesting is it is pitting blue against blue (blue city government against teacher’s unions, etc.). And, it also has a coterie of politicians who refuse to accept reality because, well because it could cost them their jobs and the perks that come with it:
The issue has again pitted Emanuel against the Chicago Teachers Union, whose 26,000 members went on strike early in the school year, idling students for seven days. Chicago aldermen and other lawmakers also have blasted the plan.
Of course they have. Common sense and reality say the plan is the way to go.
But we all know, in the world of politics, common sense was killed off decades ago and reality is ignored as long as possible.
And look at the result.
Thought these two graphs illustrated part of it very well:
But remember — they want you to believe it is a revenue problem.
Because of their false agenda, that’s why. They’re still convinced that, despite 17 years of no warming (as recently admitted by the head of the IPCC), oil is bad and “green” is good and that they’re doing something to save the world. Disregard the fact that green is still unviable. Disregard the fact that everywhere it has or is being pushed, energy costs are skyrocketing. Nevermind the fact that we are sitting on a sea of fossile fuel products that we only need to access. Screw the fact that science can find no discernable warming. Their minds are made up.
That said, there’s also the fiscal side of the house. The debt. The deficit. And the demand by Democrats to raise more revenue.
Unfortunately, because of their agenda, they’re likely to completely screw up a golden opportunity to bring in much more revenue and drive energy prices down, because their agenda is against fossile fuel. And we all know the party agenda comes before what is best for the country.
Enter the administration with a renewed plan to tax oil companies instead of opening access to the vast natural riches we enjoy. The result? Well this chart will help you comprehend the vast differences in the two policy choices (full size here):
So the either/or is “tax ‘em or open access”. The difference:
According to a 2011 study by Wood Mackenzie, increased oil and natural gas activity underpro-access policies would generate an additional $800 billion in cumulative revenue for government by 2030. The chart puts into perspective the size of these accumulating revenues – enough to fund entire federal departments at various points along the timeline. By contrast, Wood Mackenize also found that hiking taxes on oil and natural gas companies would, by 2030, result in $223 billion in cumulative lost revenue to government.
It only proves the old saw -”If you want more of it, reward it and if you want less, tax it”. Think about it – money to help run government and pay down the debt (not to mention the thousands, if not millions of jobs created) being passed up in the name of false science and agenda politics.
Meanwhile, we’ll be left in the cold and the dark, thanks to agenda driven policies with no foundation in reality.
State Farm, the nationally-known insurance chain headquartered in Bloomington, Illinois, has apparently had its fill of “The Land of Lincoln’s” confiscatory taxes. The 800 million dollar company is reported to have purchased “substantial workspace” in the Dallas, Texas area. The giant insurance firm’s workers are being kept in the dark reportedly to avoid “alarming them”; but is it their workers or the State of Illinois they would like to keep in the dark about this move? If this doesn’t signal State Farm’s coming dash out of Illinois’s clutches, what could it mean?
A knowledgeable Dallas real estate insider has called this impending move “a major business relocation” of record-breaking proportions. The numbers involved are approximately 2.5 million square feet of workspace and thousands of workers. No company in Dallas’ history has made a move this large.
Texas isn’t the only state State Farm is running to. There has also been a report that it has leased office space in Atlanta. The combined amount of both new locations roughly equals the 3.5 million square feet it has in Bloomington.
These moves should come as no surprise to anyone. In spite of (or maybe because of) raising its corporate and personal income tax rate by 67% in 2010, Illinois has seen its credit rating fall and its deficit raise. A review of the tax structure in Georgia shows the personal and corporate income tax is 4% as compared to Illinois’ 6.25%.
Texas has no personal or corporate income tax.
But, you know, the South has just replaced physical slavery with economic slavery – and all those Texans and Georgians who will benefit from employment with State Farm after the move know that only too well, don’t they? /sarc
I’m sure the taxes are just part of the reason. Most likely the complete business atmosphere in the South is more likely the draw. A welcome mat instead of a outstretched hand have to be appealing. The same thing is happening in a number of northern states – the difference being the fiscal mess of today coupled with the difference in Blue state remedies vs. Red state remedies has started to turn a trickle exiting Blue states into a flood.
If ever there was a load of crap on toast, it can be found today in Michael Lind’s atrocious piece in Salon.
He calls it “Southern Poverty Pimps”. I see a more apt name to be “Southern Cliches R Us”.
It is probably one of the more absurd attempts to make the economic success in Texas look bad that I’ve seen in quite some time. You would almost feel it was something Paul Krugman would hack out. One of my bets, concerning all the negative stereotypes Lind uses, is he’s rarely if ever been in the South.
Needless to say, private sector unions that pool worker bargaining power are anathema to today’s suave metropolitan successors to the slave-owning plantocracy. The whole point of the Southern model of economic development is to create a non-union region from Virginia to Texas, to which companies can be induced to move from states with unionized workforces. Besides, unions engage in collective bargaining, in violation of the Southern ideal of employer-worker relations, in which the master gives orders and the fearful worker obeys without question.
Of course the fact that in the great North unions are losing members like water through a sieve would never see the light of day in a Lind expose, one assumes. That would run contradictory to his whole premise that the South has just shifted from racial slavery to economic slavery. No mention of the thousands upon thousands fleeing the horrible economic conditions of Blue states, no mention of Detroit, no mention of the rust belt. No mention of the urban blight found in Blue states or their failing economies.
You see, if the “Southern model”, aka the Red State Model” is allowed to exist, if it isn’t demonized and condemned, if all stops aren’t pulled out to include the usual racial and ethnic accusations the left loves to fling around, well, it might make people think that the Red States are on to something.
Of course, we already know they are, don’t we?
And so does Texas. You see, Texas’ success terrifies them.
Thus Lind’s pitiful attempt to use the divisive language of which the left is so fond. It couldn’t be that people actually are fine with their wages and tired of unions who take their money and really don’t produce much of anything but fat-cat union officials could it?
It’s all about “economic slavery”.
My bet would be on “then”, because in a moment of exquisite candidness, Paul Krugman – the man who has said “What? Me worry?” about the deficit and the debt, who claimed ObamaCare would do what Obama promised, – has apparently been drugged and finally told the truth:
Eventually we do have a problem. That the population is getting older, health care costs are rising…there is this question of how we’re going to pay for the programs. The year 2025, the year 2030, something is going to have to give…. …. We’re going to need more revenue…Surely it will require some sort of middle class taxes as well.. We won’t be able to pay for the kind of government the society will want without some increase in taxes… on the middle class, maybe a value added tax…And we’re also going to have to make decisions about health care, doc pay for health care that has no demonstrated medical benefits . So the snarky version…which I shouldn’t even say because it will get me in trouble is death panels and sales taxes is how we do this.
Gee … everything everyone who has paid attention has been saying all along. Middle class taxes (you have to shake your head at his “oh well” approach to a middle class tax. A sales tax. Perhaps the most regressive tax going). Death panels. Etc.
But it’s safe now … selling his credibility and being a hack has landed Obama another 4 years.
Apparently he’s on a “resurrect Paul Krugman’s professional reputation” tour.
Not that it’s working.
You don’t have to be a rocket scientist, brain surgeon, or even particularly smart to figure out that this trend means entitlements, as structured, will fail:
Last week, the Commerce Department announced that the gross domestic product shrank by 0.1 percent in the fourth quarter of 2012. And the Census Bureau reported that the U.S. birthrate in 2011 was 63.2 per 1,000 women ages 15 to 44, the lowest ever recorded.
Slow economic growth and low population growth threaten to undermine entitlement programs like Social Security and Medicare. Despite contrary rhetoric, they are programs in which working-age people pay for pensions and medical care for the elderly.
When Medicare was established in 1965 and when Social Security was vastly expanded in 1972, America was accustomed to the high birthrates of the post-World War II baby boom. It was widely assumed that the baby boom generation would soon produce a baby boom of its own.
Oops. The birthrate fell from the peak of 122.7 in 1957 to 68.8 in 1973 and hovered around that level until 2007. The baby boom, it turns out, was an exception to a general rule that people tend to have fewer babies as their societies become more affluent and urbanized.
So, when will our so-called “leaders” finally figure this out? My guess, in fact it really isn’t a guess, is they know but haven’t intestinal fortitude, politically speaking, to do what is necessary. That is cut them, privatize them or any of a host of other options they won’t even consider.
What they will consider, of course, is raising taxes and borrowing.
The fact of the matter is that both Social Security and Medicare are based in flawed models. The original models saw the base of the those paying into the system remaining constant, despite the “general rule that people tend to have fewer babies as their societies become more affluent and urbanized.”
The numbers don’t lie. Fewer and fewer workers are available to pay into these systems and continue to pay out at the rate at which they’re paying out now. This is no mystery. This is plain old everyday economics. It’s as plain as the nose on your face. Yet our so-called “leaders” seem unwilling and unable to face the facts. The facts are not going to change. We’re not going to suddenly have a baby boom again.
These are the sorts of problems elected leaders are supposed to face head-on. That’s why they’re elected, supposedly. Yet we continue to let our elected officials get away with malfeasance. So while it is easy to point at them and say they’ve failed, in fact we’ve failed. We have failed to gin up the courage to do what is necessary to fix these problems. To force our “leaders” to do the right thing. We continue to claim in poll after poll that entitlements must be fixed. Yet we continue to put in office, time after time, the same people who haven’t yet mustered the courage to do that (nor fund themselves held accountable for not doing it).
Whose fault is that?
UPDATE: Here’s a perfect and timely example of part of the point:
John Kasich, the fiercely conservative governor of Ohio, announced Monday that he’s going to expand Medicaid dramatically using federal money — a 180-degree turn from what conservative groups swore their allies in governors’ mansions would do when the Supreme Court gave them an out last year.
This makes John Kasich a big, fat liar.
Republicans should be the ones circulating recall petitions. He should be drummed out of office, out of politics and never again hold any office higher than dog catcher. But they won’t, because despite this, he’s “one of ours”.
Electricity prices are rising in Germany – and citizen with a low-income are suffering particularly. They are at risk of fuel poverty. 10 to 15 percent of Germans are now struggling to pay their energy bills. 600,000 households have the electricity turned off every year.
Remember, Germany ran scared after the Fukushima disaster and dumped nuclear power (because, you know, German has so many earthquakes and tsunamis). They then went “green”. Result? See above?
The CEOs of manufacturing industries are warning that production in Germany is at risk because of low energy prices in the United States. The energy prices there are now only a third of those in Germany. “Many industrial companies are planning to build new factories in the U.S. and not in Europe because of low energy prices there,” said Gisbert Rühl, chief of steel trader Kloeckner. “We are now reacting to this development and plan new business units in the United States.” To move production to the U.S. is especially attractive for companies in energy-intensive industries such as steel and aluminium or chemistry.
That would seem to be good news for us, no?
Well, it should be … except for the Democrats plan to raise taxes on the oil companies. And Obama’s new wave of regulations. Oh, and the Obama desire to see fuel prices “skyrocket”, ably aided by his Secretaries of Energy and the Interior. And the EPA.
Remember, this “tax fairness” was something which was going to solve our fiscal problems, if you listened to the left’s claim that is. However, reality is fairly brutal and usually doesn’t much pay attention to rhetoric based in lies and stupidity. Case in point:
Congress is poised to clear the final $50 billion chunk of emergency aid for Superstorm Sandy relief Monday — and in one vote, it will have used up all the new tax money President Obama won by raising rates on the wealthy in the “fiscal cliff” deal.
The “cliff” … well they’re busily engaged in trying to see if they can kick the can nearer the edge and, by the way, make the “cliff” a little higher while they do that by raising the debt limit … again.
Meanwhile, let’s talk about immigration, gun bans and whatever else our “leaders” can think of to distract us from this pending disaster.
One of the more frustrating things I observe is our apparent unwillingness, as a country, to learn from the mistakes of other countries. For instance, we’ve watched the effects of the welfare state in Europe and its fiscal impact, yet we continue down the same road toward the same cliff they’re now getting ready to go over.
More specifically, we’ve watched other countries raise taxes higher and higher and subsequently watched them lose their native talent. France is in the process of doing that now. And Britain? Well, they’ve been suffering from it for a while:
Nick de Bois, secretary of the 1922 Committee of backbench MPs, said that Britain needs a “culture change” to stem the flow of talented emigrants by encouraging success.
“Our most economically active are leaving to apply their talents elsewhere,” the MP said, warning that talented Britons are being lured away to “growth economies” elsewhere in the world.
Office for National Statistics figures obtained by Mr de Bois show that in the ten years to 2011, a total of 3,599,000 people permanently left the UK.
Contrary to the perception of the typical emigrants being older people retiring to a life in the sun, the figures show that 1,963,000 of those who left were aged between 25 and 44.
By contrast, only 125,000 people of retirement age emigrated.
Note what is “luring” them away? “Growth economies“. And what does one usually find is anything labeled a “growth economy”? Economic opportunity. A chance to better your own situation without being punished and vilified for doing so. You’d think that might be something our “leaders” would understand and appreciate.
But it’s about culture, isn’t it? About the culture our leadership fosters. And that culture in this country is “class warfare”:
“Government must help lead a culture change in this country that competes with the new economies, one where competitiveness and success are valued and personal achievement and personal wealth are respected, not pilloried,” he said.
That’s not at all where this particular government is headed, is it?
And the result? Human Nature 101. See Britain.