Friday, 14 January 2011 00:00
Six years ago, I wrote at length about massive federal government deficits and the eventual possibility of slashed spending “cutting off not only the most vulnerable individuals but also every state and local government program that relies on Washington dollars.” Federal government debt at that time was just closing in on $7.4 trillion. This week it hit $14 trillion. The federal budget deficit six years ago was a mere $430 billion ($560 billion if Social Security funds were excluded). Child’s play.
Yet, if some members of Congress follow through on their threat and do not authorize additional debt beyond the current authorization of $14.3 trillion, there would be risk of an historic fiscal catastrophe. For a little while, maybe even for a few months, the feds can juggle existing funds and pay bills. Then, they would have to pick and choose which obligations are met. It would be our announcement to the world that investing in our government securities was no longer safe. It would be a bigger blow to the prestige and leadership of our country than was the loss of the thirteen colonies to the British Empire. Overnight, the market for public credit as we’ve known it since the 1910s would go soft. The reverberations would reach all the way down to your local sidewalk repair district.
Some people like the idea of government returning to a pay-as-you-go basis. Tear up the public credit cards. Some people who think this way were elected to Congress last November.
Our governments borrow all the time to cover temporary shortfalls until those property tax payments and other revenues come in. Dry up credit and you can’t risk deploying gas-guzzling plows and their drivers all night long to clear snow. Forget building or fixing anything big. For most of the time Long Island towns have existed, property owners along a road were responsible for the maintenance of that road. Pay as you go.
Part of America is about there already. Mayor Bing of Detroit has moved ahead with contingency plans to cease providing services to neighborhoods that have experienced significant population loss. About a fifth of the city, once America’s fifth largest, would go without police, sanitation, road repair and street lights. Detroit cut its budget 22 percent in 2010 and still faces deficits.
Someone needs to explain to me, slowly, why the disassembly of Detroit is not a national security issue.
Do you like dominoes? Detroit has withheld significant tax payments from properties shared with its little cosmopolitan neighbor, the city of Hamtranck, which has a population right in between that of the Village of Mineola and the City of Glen Cove. A decade ago, Hamtranck got an award from a national magazine as one of the “15 Hippest Neighborhoods in the U.S. and Canada.” Recently, they laid off their last school crossing guards. The city manager wants to cut a third of their remaining police officers and firefighters. They never saw it coming.
A lot of Long Islanders won’t see it coming. Take Medicaid. Politicians always talk big about reigning in Medicaid costs. Soon, people on your block realize that New York spends more on Medicaid than other states not because we pamper the undeserving poor, but because we decided to give middle class New Yorkers some breaks. These middle class eligibility loopholes paid for your neighbor’s emergency appendectomy when his new insurance hadn’t kicked in yet, and sends a worker to that elderly neighbor to help with bathing and housekeeping a few times a week. We have elected officials who don’t know what the phrases “spend down” or “look-back” mean. They only know that Medicaid doesn’t pay for itself on paper.
We have to grow our way out of this. Creating a situation in which more wealth is evacuated from the middle will exacerbate the spiral downward.
Our state leadership is myopically fixated with flat-capping property tax increases. Alone, they will provide no meaningful tax relief. There are better, fairer options that can mitigate damage, such as a “circuit breaker” that caps property taxes at a certain percentage of household income. We are short on time, and on will.
Michael Miller is a freelance writer, designer and strategic consultant who has worked in state and local government. Email: email@example.com