Paul Krugman on what’s become of America:
…A country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.
And a nation that once prized education — that was among the first to provide basic schooling to all its children — is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead.
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In effect, a large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble — literally in the case of roads, figuratively in the case of education — they’re choosing the latter.
It’s a disastrous choice in both the short run and the long run.
Read the whole thing, if you haven’t already. (If you have, send it to a friend.)
Tags: Education, state budgets, sustainable governance, taxes
Working America’s Kim McMurray writes in the Allentown Morning Call about the harm the recently-passed Pennsylvania state budget will do working people—and the many ways it lets big corporations off the hook.
Kim works with Working America members and every week sees stories like this:
A woman runs a day care business in Philadelphia. She has been working in the industry for more than 10 years. She built her business with the help of the Keystone Stars program, which provides resources so child care providers can enhance early education programs. The children in her care benefited directly from these resources and Lorraine was able to build her business, though she still has further to go. However, this and other early education programs were severely cut this year and will be forced to shorten their reach.
That’s who’ll suffer from budget tightening. And it’s not necessary:
The solutions are simple. Instead of cutting essential services that families rely on, our elected officials need to close the corporate tax loopholes that allow big businesses to get away with not paying their fair share. There are four main ways they can do this.
The first is to close the loophole that allows 70 percent of businesses in Pennsylvania to avoid paying income taxes. Multistate companies like Wal-Mart Stores Inc. avoid paying income taxes in Pennsylvania by setting up subsidiaries in tax-haven states like Delaware. These subsidiaries can be nothing more than a post office box. One address in Delaware is home to more than 14,000 of these subsidiaries. Closing this loophole would bring in more than $616 million to the state annually, which could go toward funding public schools, libraries, homeless shelters and mental health clinics, all of which experienced significant budget cuts this year.
The specifics are different from state to state, but the basic story is being repeated all over the country: programs that support jobs, provide education, and keep working families in their homes are being cut while corporations and the wealthiest individuals don’t pay their fair share.
Tags: state budgets, Working America
The city of Lawrence, MA has just laid off 23 firefighters, and closed a third fire station, in an attempt to balance the budget. This is especially alarming in a city that has been called “the arson capital of the world.”
The Los Angeles County Office of Education has just laid off 177 employees.
In Grand Rapids, Michigan the school board approved layoff notices to 71 employees.
The Miami-Dade budget, recently proposed by the mayor, includes 900 layoffs.
In New Orleans, 38 civilian members of the police department and 12 recruits training at the Police Academy were fired:
Twenty-three of the dismissed employees were communications operators, which are the people who staff the 911 lines that take emergency calls.
In a city troubled by violence and high murder rates, this is quite disturbing.
No word from the deficit peacocks on how having even more unemployed folks with fewer dollars will help decrease the deficit.
Tags: state budgets
I’m sure it’s partly my mood, but wow is the news depressing this week. I’m just going to do some quick links until I can wrap my mind around all this, accept that it’s actually where we are right now, and come up with something to say.
- State and local budget cuts don’t “trim fat,” they slash needed services and increase the unemployment rate:
In 2010, the Obama administration has estimated, school districts across the country might lay off as many as 300,000 employees, many of them teachers. That would be five times the number of layoffs in 2009, and ten times the number of layoffs in 2008.
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The teachers and other public-sector employees might be just the start. The CBPP has estimated that if states cut their spending from 2009 to 2010 the same level they did from 2008 to 2009, it might cost as many as 900,000 public- and private-sector jobs — swelling the ranks of the unemployed by five percent or more.
- And state and local budget cuts aren’t the only drag on the economy.
- This one deserves a deeper look, and we’ll get there, but right now the headline will suffice: Initial Jobless Claims Increase; Economists Fear for Tomorrow’s Jobs Report.
- Did you know the national debt would stabilize if Congress did nothing? Because nothing includes things like the Bush tax cuts for the wealthy expiring—and who thinks Congress will let that happen?
- And, of course, jobless workers around the country are still waiting for that unemployment extension we keep talking about. And they’re going to keep waiting. Thank you, Senate!
Tags: economy, state budgets, unemployment
Hershey Co. may be cutting 500-600 jobs:
The job cuts, representing as much as 5 percent of Hershey’s workforce, are part of a manufacturing and supply operations makeover aimed at decreasing costs. The 116-year-old maker of Kisses has closed seven plants in recent years and opened a facility in Monterrey, Mexico, in 2008.
The City of Lawrence, MA laid off 75 school dept. employees, including 32 teachers, but recently announced more layoffs:
Lawrence Mayor William Lantigua says layoff notices have been sent to 115 municipal employees, including 70 police officers and firefighters.
The city of Baltimore is looking at laying off police officers and closing fire stations:
The Baltimore police department has submitted to City Hall a list of 250 officers who would be laid off if the budget gap is not closed, officials said.
The cuts are based on union-mandated requirements that would result in the most recent hires being the first out. The patrol division would be the hardest hit, and the officers who could be laid off include 50 officers recently hired using $10 million in federal stimulus money, which officials say would have to be given back.
Layoffs notices have been sent or are being prepared for other city employees across departments, and fire officials released details on the three city fire companies that face closure if no new funds are found. City officials say they remain hopeful that the plans represent only doomsday scenarios as the council works on new revenue streams.
New York City may have to lay off 4,400 teachers.
In Wisconsin:
The Milwaukee school board has approved a budget that cuts more than 600 positions, hundreds of which would be teachers.
Even global financial services firm (a beneficiary of TARP) Morgan Stanley is feeling the pinch:
Morgan Stanley slashed about 200 brokerage support staff this week as the largest U.S. wealth manager further consolidates people and offices acquired from Citigroup’s Smith Barney one year ago, a person familiar with the situation said.
Several hundred jobs in support areas were cut, including marketing and product support, primarily in the brokerage’s headquarter offices, the source said. Morgan Stanley ended the first quarter with about 18,140 financial advisers and 870 offices, mostly in the United States.
Before we get all misty-eyed over poor Morgan Stanley:
At the same time, Morgan Stanley is expanding staff that works with ultra-wealthy customers, adding 150 private bankers, as well as 35 new securities sales and trading staff dedicated to working with the brokerage arm, the person familiar said.
Whew, what a relief! The ultra-wealthy won’t be suffering.
While we’re on the subject of bankers, this piece on how badly bankers have failed, by economist Dean Baker is well worth reading:
However, what the public may not recognize is that the same people who caused this disaster are still calling the shots. Specifically, there has been little change in personnel and no acknowledgment of error at the central banks whose incompetence was responsible for the crisis.
Remarkably, this crew of incompetents is still claiming papal infallibility, warning governments and the general public that bad things will happen if they are subjected to more oversight. Instead, the central bankers and their accomplices at the IMF are dictating policies to democratically elected governments. Their agenda seems to be the same everywhere, cut back retirement benefits, reduce public support for health care, weaken unions and make ordinary workers take pay cuts.
Given how much they have messed up, it is amazing that these central bankers have the gall to even show their face in public. They are lucky that they still have jobs — and very good paying ones at that. (Many of the boys and girls at the IMF can retire with six figure pensions at the age of 50.) Ordinary workers, like teachers, autoworkers, or custodians, would be fired in a second if they performed as badly as the world’s central bankers.
His point about the lack of consequences that these bankers have faced is well taken. Meanwhile, teachers, firefighters, and police officers who didn’t destroy the economy are getting laid off in droves.
Tags: Jobs, state budgets, unemployment
As we’ve been saying, the recession is taking a toll on state governments, most of whom have some serious budget deficits to cover. States have been closing down branch libraries, laying off employees, initiating furlough days; anything to save some money. The combination of decreased revenue and federal aid is putting most states in a terrible bind.
Some states are going for the last resort. They’re actually raising taxes:
Wisconsin, like many states, turned mainly to wealthier residents and businesses. The big-ticket item was a new top personal income tax bracket, which Gov. Jim Doyle said “wasn’t even that hard a call.”
“We were in a terrible spot, and the alternative was cut schools, universities and do long-term damage,” Doyle said. “So if you’re making over $300,000 in this economy, you can help out a little bit.”
and
In New York, the eye-popping change was a new top rate expected to generate $3.9 billion in income taxes in 2010. Among dozens of changes, the state made limousine rides subject to a sales tax ($25.6 million) and expanded bottle deposits to water and flavored water ($115 million).
A 1-cent sales tax bump in California could bring in $4.5 billion.
This week, Arizona’s Governor Jan Brewer signed a bill increasing the sales tax by one cent, in order to help ward off cuts to education and other services. She even did this in an election year:
Here, the sales tax increase, a temporary rise to 6.6 cents per dollar for the next three years, is expected to raise nearly $1 billion in the first year, two-thirds of which will go to education. It won approval by 64 percent of voters, though only a third of eligible voters turned out.
It does nothing to erase cuts already made, including the loss of all-day kindergarten, health care reductions for the poor, and the closing of several state parks and highway rest stops, precipitated by a 30 percent decline in revenue.
But Ms. Brewer, and a coalition of politically odd bedfellows, including the state teachers’ union, business groups and office holders from both major parties, sold it as a necessary evil to avoid teacher layoffs and cuts to public safety.
In Oklahoma the state Senate is looking at suspending a number of income tax credits that have been given to certain industries:
The bill approved by the Senate General Conference Committee on Appropriations targets 31 separate tax credits, including certain job creating investments that cost the state an estimated $14.2 million annually.
Three separate tax credits for aerospace employers total more than $3.5 million. Other tax credits were for the purchase and production of coal, investments in agricultural processing facilities and the construction of energy-efficient homes.
Rather than eliminate the tax credits entirely, the bill proposes a moratorium from July 2010 through June 2012.
That taxes are being raised in an election year shows how dire the economic situation really is.
Tags: state budgets, taxes
