Off the Cuff: August 2012

It’s as if a disease is spreading coast to coast, popping up in villages and cities in every state: Profligate spending by our politicians and unions, who are locked in an unhealthy symbiotic relationship, is bleeding the country dry. Recently,deep economic trouble hit Scranton; Pennsylvania’s sixth largest city is broke,and had to cut all city workers’ pay to minimum wage, on the heels of Harrisburgdefaulting on a payment due bondholders earlier this year. In California, it’s now an epidemic, with Stockton and Mammoth Lakes and San Bernardino in financial free fall. In the greatest of ironies, Chicago mayor Rahm Emanuel- in the city where his former boss, Barack Obama, cut his sweet tooth for spending- would just love to get rid of all government workers except for firemen and police. Philadelphia- well, we all know that story. Our municipal-worker contracts hold the city hostage, sucking up nearly a fifth of our budget just in pension expenses.

If there’s one thing our ongoing economic problems have taught us, it’s that we have to think differently about how we spend our money. All of us have made necessary changes in our lives, and in our businesses- we’ve had no choice. But generally, Americans don’t seem to give a damn that our government hasn’t done the same, that our elected officials are so oblivious to the signs of financial trouble. And that includes government on the smallest levels, in our towns, suburbs and villages. It, too, has to fundamentally change.

My town, Margate, is a prototypical example of public-sector waste. Margate is really a small town calling itself a city, with about 6,000 year-round residents; it’s a whopping 1.4 square miles, yet has two fire stations, a police force of 27 (15 of them superior officers), and three public schools (one of them shuttered for lack of students) with countless teachers and administrators. Everyone in Margate knows that waste and corruption run rampant here, but very few are willing to take on the public sector.

In Philadelphia, the annual city pension payment has grown by a third in the past five years, with no end in sight. Why? Because it was very easy for politicians to cave in to the demands of unions when that bill wouldn’t come due for a long, long time-in other words, when the politicians themselves would be long gone. It seems to be the American way.

In Philadelphia, that shortsightedness goes back to James Tate in the ’60s, followed by tough guy Frank Rizzo. City-fed unions demanded that our mayors meet their every desire or suffer at the polls. Worse yet–at least in the short term–was the threat of strikes. Every mayor withers at the possibility that trash won’t be picked up or heat in city buildings will get cut off. So they cave in.

Several months ago, city finance director Rob Dubow told Philadelphia magazine that he used to compare our pension problem to the Blob, the gelatinous, victim-enveloping star of the 1950s sci- fi film. “It just keeps consuming more and more and more,” Dubow said, “and eventually you will find everything’s gone, the town’s been eaten and destroyed.”

And that, I’m afraid, is what we’re watching now, in big cities and small towns all over the country. It actually makes me feel sorry for Chris Doherty, the mayor of Scranton, who is between the rock and hard place squeezing many mayors.

A judge told Doherty he couldn’t break union contracts. The state won’t let him declare bankruptcy. But he couldn’t afford to pay more than minimum wage. Unions have sued.

This is what we’ve created, and now we’re living with it. The question is, who has the guts to change it?