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Bailout Lite


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With his grandiose jobs package having foundered in the Democrat-controlled Senate, Pres. Barack Obama now hopes to pass it piecemeal — and he has, predictably, invited government workers to go to the front of the line. The public-sector jobs bill to be considered by the Senate today is another installment of “bailout lite,” President Obama’s plan to ensure that no bureaucrat is left behind.

In announcing his plan to move the bill forward, Senate majority leader Harry Reid (D., Nev.) declared: “It’s very clear that private-sector jobs have been doing just fine.” That Senator Reid can say this with 14 million Americans unemployed is remarkable.

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As Michael Tanner argued persuasively at National Review Online on Wednesday, the talk of austerity measures afflicting state and local government is overblown. In fact, spending continues to increase, and in many cases to increase quickly: Total state spending is up 10 percent this year, and general-fund spending is up 5.2 percent. We do have a crisis of state- and local-government finances, but it is not a crisis of revenue: It is the critical failure to make hard choices about spending priorities.

Consider the case of Camden, N.J., a.k.a. Murder City. The crime-ridden New Jersey municipality routinely tops the charts when it comes to homicide rates. Incredibly, the city has elected to lay off a significant portion of its police force. This fact naturally has commanded the attention of Vice President Joe Biden, who has been, in his usual cracked fashion, declaring that Americans face a choice between passing this jobs bill or facing an epidemic of murder and rape. “The police chief of Camden has lost half of his force,” Biden said, “and crime has gone through the roof.” But what does austerity look like in Camden? The vice president might want to consult the city’s own budgetary figures, as summarized by CamConnect, a nonpartisan government-transparency group: “The total size of Camden’s operating budget has grown 26% after inflation, from $134 million in 2001 to $169 million in 2010, an average of 2.62% per year.” (Lest you think that this is because Camden is undergoing a population boom, note that the city’s population has in fact declined by thousands in the past decade.) CamConnect soberly notes that “an increase of $35 million is large in absolute and per capita terms.” That spending growth is, however, slightly slower than that of the typical New Jersey city. In Camden, as in most cities, the largest expense is personnel, and government employees’ paychecks continue to get bigger — by an average of 2.72 percent a year in Camden. Police- and civilian-compensation costs both have climbed faster than the inflation rate. On top of that, Camden’s police department is 20 percent larger than the average for comparable cities, its fire department 17 percent larger, and the city has little to show for it.

Similar stories have played themselves out across the country: Topeka, Kan., has decided that it cannot afford to prosecute some misdemeanor cases, meaning that incidents of domestic violence, some of them quite serious, are going unredressed. But surely Topeka could afford to pay a junior prosecutor with the $456,434 a year it spends on performing arts, or the nearly $1 million it spent on salaries for its P.C. czars (the “human-relations commission”) from 2008–10. We know that lawyers and diversity engineers don’t come cheap, to say nothing of the thespians of the Topeka Star-Struck Players theater ensemble, but in this wobbly labor market, surely they could have managed something — a hundred grand goes a long way in Topeka. If Topeka would rather subsidize performances of Our Town than prosecute wife-beaters, and if Camden decides not to pay police out of its growing budget, those are poor choices indeed. But why should such poor choices be subsidized by taxpayers in more prudent jurisdictions? We have local elections for a reason.

The operative politics here are twofold: One, the Obama administration, facing a nearly unprecedented unemployment crisis, wishes to appear to be doing something — anything, really. Second, government employees are, by and large, reliable Democratic voters. The public sector is President Obama’s core constituency, and that of congressional Democrats as well. The top spender on “independent expenditures” in the 2008 election was the American Federation of State, County, and Municipal Employees, and the second-largest was the American Federation of Teachers. The two groups are perennially at the top of the list of largest campaign donors, and their donations benefit Democrats almost exclusively (94 percent and 91 percent, respectively).

President Obama’s economic thinking is exactly backward: It is the private sector that creates wealth and drives the economy, thereby sustaining the public sector. The public sector does not and cannot sustain the economy, though it can and does provide necessary services, such as those of police and firefighters. The problem is that our public sector is a great deal larger than is necessary, and the Democrats’ plan to transfer even greater amounts of wealth from the productive private economy to the bureaucratic class will in the long term, and possibly in the short term, inhibit economy growth and job creation.

Bear in mind that we are talking about tens of billions of dollars here. Vice President Biden has been particularly disgraceful in this debate, declaring that, unless the Democrats’ jobs bill is passed, “murder will continue to rise, rape will continue to rise, all crimes will continue to rise.” In other words, Give us the money, or else. In truth, rates of crime will likely rise to the extent that municipalities and states fail to set proper priorities and to dedicate needed resources to law enforcement. Likewise, the American economy will continue to suffer to the extent that Washington fails to set proper priorities nationally. We can keep bailing out spendthrift states and cities only until Washington runs out of money. But then who bails out Washington?



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