. . . When management airily assumed 8-9% annual rates of return on investment to fund its benefit obligations. Excuse me, that’s Old General Motors, the one that soaked up several billions in outright taxpayers’ money (and was stolen from its creditors to be handed to the UAW in payoff for its electoral support), as well as about $16 billion worth of tax subsidy created by rifle-shot in the tax code (fuller details here).
Mayor De Blasio has presented his first city budget to the New York City council. In true leftist fashion, he “balances” it by grinding his seed-corn, specifically reserves left from Bloomberg’s tenure. I don’t carry a brief for li’l Nanny Bloomberg, but you have to give some sort of respect to a mayor who can squire a city through the upheavals of the September 11 aftermath, the implosion of the industry whose epicenter it is (the financial services industry), as well as five-plus years of general economy-wide decline and stagnation . . . and leave his successor a surplus at the end of the day.
I know that De Blasio is too “progressive” (he used the word something like five times in his presentation) to look back for reactionary purposes like seeing how his notions have played out for others who tried them. He really ought, I suggest, to ponder the lessons of the Holodomor. When Stalin announced compulsory collectivization, the peasants did the only thing they could to get at least some benefit from their generations’ toil. They slaughtered and ate their livestock. Then came the requisitioning commissions, and they took everything, leaving nothing even to plant for the next season. How’d that work out? Read about it, if you have the stomach, here. Or here.
Also in true leftist fashion, he cranks up spending by 6% while “paying” for it from fantastical assumptions about unknown future revenues and unspecified, unenforceable “promises” from the city’s unions to cut healthcare spending — in the future, of course — by $3.4 billion. Without any premium increases passed on to the rank-and-file. This is in a world of “Affordable” Care Act plans the uniform feature of which is they cost fabulously more than what they’ve (compulsorily) replaced, because they’re mandated to cover a smorgasbord of benefits that earlier plans typically didn’t. Like maternity care for 63-year-old males. We are told not to worry, though, because if the unions don’t voluntarily comply with that pie-in-the-sky $3.4 billion promise, the cuts are going to happen forcibly. Actually, the article’s paraphrase of De Blasio’s promise to respect them in the morning is “the city reserved the right to enforce some of the terms.” Some; get it?
Left unmentioned is how they’re going to fit any of the “Affordable” Care Act’s Cadillac-plan tax burden into that $3.4 billion savings. Dear Leader can utter executive orders all day long, but unless Congress actually chops that provision from the statute, eventually a large number of those union plans are going to get popped, and hard. At which point they’ll discover something that the rest of us have long since figured out: Taxes like that work out to be dead-weight losses.
The provision of the budget that really makes my head spin, however, is the bit about the hand-outs to unions (only the teachers are specifically mentioned, but there may be more). They’re going to get — pay attention closely — retroactive pay increases. That’s right; their contracts said they’d get paid $X. They got paid $X. Their contracts had expired, and they continued to get paid $X. But now, after the fact and for no additional performance of any nature, they’re going to get paid $X+Y. Of course, the teachers union vigorously supported Comrade De Blasio in his campaigns. But This is Not a Payoff of Money for Votes, you understand? No!! Pay no attention to the man behind the curtain.
And while the teachers are going to get their money up front — while the Bloomberg surplus lasts, at least — “Much of the cost of retroactive pay for city teachers would not to be paid until the last years of Mr. de Blasio’s theoretical second term.” Hand the money over now; figure out where it’s coming from eight years from now. Because we’ve got “more ‘accurate’ forecasting,” you see, so we know what the world, national, and local economies are going to be doing eight years from now. Eight. Years. From. Today. You heard it there first, people; the city government of New York City is officially basing its long-range financial commitments on possession of a crystal ball.
On a final note, there’s a line in there about adding in $20 million for “student aid” programs at City University of New York. For those who don’t recall, CUNY’s original mandate was to provide free or very-low-cost quality higher education to the city’s less-well-off. For years it did pretty much exactly that. Oh sure, it’s had its moments of comedy, such as Leonard Jeffries, but by and large it did what it was supposed to, and for many students did an outstanding job. Those days appear to be ending, if they’re not already over.
Now CUNY is morphing into a comfy slush fund for sinecures, place-men, and political payoffs. Recently former Enron advisor and populist mountebank Paul Krugman got hired by CUNY to . . . well, that’s the point. For his entire first year he’s been hired to do pretty much nothing. Thereafter, he’s obliged to do only nearly nothing. And for this he’s getting a base salary of $225,000 per year (with summers off, thereby increasing the annualized lick to an even $300,000), plus $10,000 for “expenses.” So that’s $235,000 (plus payroll taxes, plus other benefits) cash out the door, each year. Which means that over 1% of that $20 million in “student aid” is actually going to one man. Who has been hired to do as close to nothing as you can imagine.
This is progress, folks, with a vengeance.