Sunday, June 10, 2012

What they did not say

Everybody's still jabbing at President Obama after his Friday comments that the private sector is doing fine:
Keep in mind that the private sector has been hiring at a solid pace over the last 27 months.  But one of the biggest weaknesses has been state and local governments, which have laid off 450,000 Americans.  These are teachers and cops and firefighters.  Congress should pass a bill putting them back to work right now, giving help to the states so that those layoffs are not occurring.
Today on CNN, Obama adviser David Axelrod again sought to clarify:
We need to accelerate job creation in the private sector. One of the ways that we can do that is putting teachers and fire fighters and police back to work because those are good middle class jobs.
The pitch is for Congress to pass federal legislation to cover the gaps in local funding to allow retention or rehiring of  local government employees. But it would be a stop-gap measure at best.

Obama didn't say what's caused those layoffs of police, firefighters and teachers. Neither did Axelrod. Nor have any of the pundits I've heard harping over their comments. Local government jobs are being cut because wealth vanished when real estate values declined. Public payrolls were cut largely because property tax revenues dropped. In some communities, property tax digests have collapsed. And there's no sign real estate values or property tax collections are going to bounce back any time soon.

If you pass federal bailouts to keep local public employees on the job, you're going to have to pass another, and then another.

It's best if local governments learn to live with what their communities can afford, and create realistic spending plans based on local economies. Yes, it's painful. But the sooner they begin holding expenditures within anticipated local revenues, the sooner they set a new baseline for normal.

Having a deeply indebted federal government pretend to cover these costs only creates the illusion of fix. It fails to put us back on a sustainable path. It's just more of what we call  extend and pretend.

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