What Do You Think... About the Public-Sector Squeeze?

Here's what I think.

I think that there is indeed a “national campaign that is fully launched to make local, public-sector employees pick up a major share of the costs of the economic crisis.”

I think that this economic crisis, expressing itself in the rising spending and falling revenue of government at all levels, is indeed decimating state and local government budgets, not to mention the federal budget.

So, now there are major efforts under way in every single state, and every single city, in the country, to balance their budgets. And every single one of these efforts only consider cutting spending as the way to do so. None of them—not one—consider increasing revenues to balance their budgets. Why is that?

And that's how the national campaign to make public-sector employees pay for the budget shortfalls in their cities and states came to be: cut government spending on public-sector (government) wages, benefits, and jobs to balance the government budget.

Did the public-sector wages, benefits, and jobs cause the shortfalls in the budgets?

No.

Will cutting public-sector wages, benefits and jobs solve the budget shortfalls?

No.

They didn't cause the shortfalls. Reduced tax revenues caused the shortfalls.

What caused the reduced tax revenues? (1) High unemployment; (2) reduced production; (3) lower investment; and (4) the housing collapse.

You might call them the four horsemen of the (public-sector employees') apocalypse.

Even if public sector wages, benefits, and jobs didn't cause the budget shortfalls, cutting their wages, benefits, and jobs will not solve the shortfalls.

Without going into detail here, I simply submit that cutting public-sector wages, benefits, and jobs are offset, in their budget effects, by higher costs in other areas of the economy, and in the social sphere of American society (health, safety, education, infrastructure); and therefore, in the budget.

The demonstration of that is a subject on its own rights; and although it can certainly be demonstrated, it will not be in this space.

So, I argue that cutting public sector wages, benefits, and jobs will not solve the budget shortfalls in state, county, and municipal budgets. Not really. Not over any sustained period of time.

But even if the cuts were drastic enough to balance the budget for a given year--that would only be a fix, not a cure, for the shortfalls after that year. Or after those two years, if the cuts can accomplish that.

The real solution, I think, was partially put forth by the federal government--the only level of government that can effectively solve the present-day state and city budget shortfalls--in 2009 when it put forth the stimulus concept.

That was an economically analytic solution, based on the Keynesian axioms of economics. Anyone interested in delving into the specifics, can read any of the many articles in the New York Times, written over the past two years by Paul Krugman, the Pulitzer economist who has been consistently making the argument.

But after correctly putting forth the concept, the federal government miserably failed in two respects.

First, because of political posturing by both parties, the stimulus was too small to accomplish its mission, particularly given the size of the non-stimulating elements in the bill that were politically-driven rather than economically-driven.

Second, and this is even more egregious in its sabotage of the mission; the federal government gave a big portion of the (borrowed) stimulus money to big businesses, investors, and the rich. It gave pitifully little to any of the areas of the economy that would actually address any of the four horsemen.

I think that the focus on cutting public-sector wages, benefits and jobs is just part of the national campaign to make all middle- and lower-income Americans pay for the economic crisis facing America.

So, I agree with the authors: the facts don't support the attacks on public employees.

Also, based on the authors' able argument that a disproportionately high number of state and local workers are likely to be of color, in unions, older, and/or veterans; that those groups, in particular, should be mounting strong push-backs against the national campaign to cut public-sector wages, benefits, and jobs.

Furthermore, because cutting public-sector wages, benefits, and jobs is not a sound economic solution to the state, county, and municipal budget shortfalls, I think that all of us should stand up against them.

What do you think?