How Bill DeBlasio Can Earn My Vote

It won’t be easy.  For years – decades – I have generally stuck by a few simple voting rules.  Don’t vote for any incumbent New York State legislators of either party, based on what the state has done for the past 20 years.  Don’t vote for any Republicans at the federal level, on generational equity grounds among others.  And don’t vote for any Democrats at the local level, because they represent the self-interest of producers of public services (the public sector unions and contractors) at the expense of the less well organized, generally less well off consumers of public services and taxpayers, in the city with among the highest tax burdens in the country.  While being willing to cut a deal with wealthy business interests from time to time as well.  I’ll certainly give Joe Lhota a hearing, though I have some big issues with the generational equity of certain financial policies of the Giuliani Administration, back when he was its budget director.  And unlike many I’ll give Adolfo Carrion a hearing.  He’s the only candidate I’ve actually had a conversation with, decades ago when we were both junior city planners with the NYC Department of City Planning.

As it happens, the public sector unions generally endorsed Bill DeBlasio’s rivals in the Democratic primary.  Same with those in the financial and real estate sectors, and most of those in the private sector who make their living from government contracts.  But they’ll rush to endorse DeBlasio now.  If he wants to earn my vote, he can start by actively pursuing the support of private sector unions, who seem to be rushing to endorse him, but politely turning down the support of public sector unions, while promising to be fair to city workers.  And turning down or even returning contributions from contractor organizations, real estate interests, and the financial sector.  To send the message, or at least provide the illusion, that when labor contracts, development deals, and tax breaks are negotiated in the room, the people outside the room will be represented by someone too.

That may be the illusion that allowed him to win the primary.  DeBlasio told the wealthy he would raise their taxes.  Though he didn’t take the more radical step of telling them that perhaps quite of bit of that wealth may not have been earned to begin with, and facing up to the potential implications of this for the city’s budget if those unearned privileged are eventually reduced.  He also said his relationships with the unions would allow him to negotiate a fairer deal for others, with regard to public services and retirement benefits.  And later said that since the teacher’s union endorsed Bill Thompson, he would be free to negotiate with it on behalf of children and taxpayers, but Thompson would not.  The major newspapers cited the support of public sector unions in general, and the United Federation of Teachers in particular, for Bill Thompson as a reason not to him.  They endorsed Quinn instead and, at least in the case of the Times, made it seem as if DeBlasio was the number two choice.

I’ve often said that you have the executive/financial class, the political/union class, and the serfs.  The serfs, who I had believed wouldn’t matter in the primary because they wouldn’t come out to vote, seem to have voted for DeBlasio.

Like those in the executive/financial, who have their compensation set by cronies on the Board of Directors at the expense of shareholders, rather than an actual free labor market, New York’s public employee unions get to cut deals with their fellow political/union class members at the expense of the serfs outside the room.  Deals for contracts that give them money off the top, generally in retroactively enriched retirement benefits, even in tough times, with the serfs left to settle for whatever is left when money is scarce.  The tough times are generally deferred by asserting that the pension enhancements cost nothing, but that deferral just causes the cost to explode.  Basically what has happened is that New York City’s public employees have come richer relative to almost everyone else, so everyone else either has to pay more for them, or accept less from them because they can afford fewer of them.  Richer in enriched retirement benefits that the beneficiaries neither acknowledge nor appreciate, and that some of them don’t even get.

The public sector unions don’t even represent most of their own active members, since they continuously pursue – and frequently get – ruinously costly deals to benefit those cashing in and moving out, and then screw their own future members to pay for it a few years later, in the “screw the newbie, flee to Florida” cycle.  That cycle continued even in the Bloomberg Administration, who came in from outside the political class and claimed to be different.  Perhaps these were deals Bloomberg could cut because he realized that those who might object would have no one better to vote for, nowhere else to go, in his re-election campaigns.  Thus you get new DC37 workers paid 15.0% less than those hired in prior years, and new cops and firefighters paid 40.0% less.

We have every reason to expect that the “screw the newbie, flee to Florida” cycle to would continue in a DeBlasio administration.  Or a Lhota Administration.  With the unions pointing to the low pay and diminished benefits of their younger members to justify the poor services all of their members would have the “right” to provide, even in exchange for high taxes and high labor costs overall.

But if DeBlasio wanted to, he could take another course, albeit at the expense of his future electoral prospects in Florida or Suffolk County.  He could say that the retroactive increase in pension benefits for those who already had the richest retirement benefits, in 1995, 2000, the years in between, some years after, and (for teachers) as late as 2008, were unfair to other workers outside the government, who have been made worse off to pay for them.  Because the beneficiaries already had the richest retirement benefits to begin with.

That the “fix” the unions and politicians have agreed to – huge cuts in pay and benefits for younger generations of city employees – has made the unfairness even worse.

That the top priority in any future labor contract should be to get the pension funds out of the hole, so that New York City avoids the fate it suffered in the 1970s, and that other cities such as Philadelphia and Chicago are suffering today – an even greater  collapse of public services amidst even higher rising taxes.  Those who benefitted from the deals already got their raise, in higher pension benefits.

And that the second priority should be to put those public employees on a disadvantaged pension schedule, in Tier V and Tier VI, on a higher pay scale to make up for it, particularly early in their career.  So that total compensation is fair and equal between those hired at different times, whether those retired to Florida, those living in the suburbs soon to retire to Florida, or those younger workers living in New York City.

That, of course, would violate the law of Omerta that the public employee unions impose on anyone who wants their help in advancing their careers in the future.  Never speak of those past pension increases when discussing the sacrifices required to pay for them, and deciding who will be worse off. Be quiet despite the propaganda that the public service producer interests put out, pretending that actually care about their own future unions members and all workers.  Negotiate in secret, so the losers either don’t know they are the losers or can convinced that someone else is to blame.  “Why talk about the past?” when allocating the related sacrifices in the future, those who got the benefits in the past always say.  And not just in public sector labor negotiations.  Wall Street wants to pretend the run up to 2008 has nothing to do with the economy today too.

But just as Mike Bloomberg was free to sell out the future of the city to participate in the “screw the newbie, flee to Florida” cycle, because his constituents had nowhere else to go, so Bill DeBlasio would be free to object to that cycle, for the same reason.  What would the public unions and contractors do?  Endorse Lhota?

In fact, DeBlasio could even tweak Lhota, based on a couple of Giuliani-era deals.  In 1995 Giuliani cut a deal to allow public employees to retire at age 57 instead of 62 in exchange for an additional 1.85% contribution to the pension system.  At that time, he also cut a deal to allow older public employees to retire immediately, years early, without contributing an extra dime.  The claim was those deals were “free,” and they certainly were free while Giuliani was in office, because the city didn’t pay for them.  But we’re paying for them now, with interest.  After Giuliani’s generation retired and perhaps died off or moved away.  How about that Joe?

Under Tier IV, at the time they were hired, most NYC public employees were required to contribute 3.0% of their pay to their own pensions, throughout their careers.  But in 2000, when Giuliani was gearing up to run for Senate and wanted some money to throw around, he cut a deal to allow public employee to stop contributing to their pensions after they had worked 10 years.  For New York City teachers, for example, that has reduced their career pension contributions by 75 percent.  In exchange, the unions agreed the city could cut its own contributions to the pension funds for a few years – by not “smoothing” out the purported gains from the stock market bubble the way the city and state would later “smooth” and “resmooth” the losses from the later busts.  That, too, was described as costing nothing.

But we are paying for it now, in higher taxes and service cuts.  And public employees hired after 2012 will have higher contributions in exchange for lower benefits.  Not just lower compared with the pension benefits Generation Greed will get after the retroactive pension increases, but lower than the pension benefits Generation Greed had been promised when they were hired.  Why is that fair?

I’ve got quite a few of these decisions and non-decisions that might indicate values and priorities.  Then again, Lhota could say that he wasn’t the Mayor, Giuliani was, that he didn’t agree with his boss in these cases, and that he would not do similar deals as Mayor.  And DeBlasio would.

So there will be a lot to think about.  But the bottom line is that he state and local tax burden has already surged under Bloomberg.  It is more than half again as high as the national average, compared with the income of city residents, and most of those city residents aren’t getting any richer.  They are getting squeezed by their employers with lower inflation adjusted wages, generation by generation, squeezed by their landlords to those from whom they might want to purchase homes, as NYC housing costs remain inflated, squeezed by advertizing that holds they have to spend ever more money they don’t have to remain in what used to be the middle class.  And squeezed by higher costs for the public services, the collective consumption, that once made the mass middle class possible.

Everyone who controls our public and private institutions has a contract that says they get theirs first, and the serfs who weren’t even represented when the contracts were negotiated have to make good.  Even though they don’t have contracts themselves.  Does anyone care about them?  We’ll see.

DeBlaiso should refuse public union and contractor support because it isn’t just about winning the election.  It is also about governing.  When the inevitable fiscal realities hit, and it is necessary to hand out sacrifices rather than just goodies, candidate Thompson would have been vulnerable to the following outraged cry:  “Why are union and your union buddies doing this to us!”  Attempts to shift the blame, perhaps to Bloomberg policies in the past that shifted costs the future, wouldn’t have gotten very far for a man who was Comptroller and refused to block them.  And the assertion that taxes are too low wouldn’t have sit well if for the past four years Bill Thompson has been living off a pension that was free state and local income taxes, as is likely the case.  Why is THAT fair?

But Bill DeBlasio could be vulnerable to the same outrage.  Outrage that those inside the room are getting better off by making those outside worse off.  Outrage that certain other powerful interests will be looking to stoke, right or wrong or somewhere in between.

Ultimately, the Mayor has to be trusted.  If I am made to pay higher taxes than I would elsewhere, is it because I’m getting more and better public services and the poor are being taken care of, or because I’m being robbed by powerful, manipulative and entitled people?  If I donate to our local park, and my friend and I pick up the garbage down the Greenwood Playground before playing paddle ball, does that make us good citizens or suckers, losers and fools?

The latter is the sentiment that could arise very easily, about any social institution and even the family as well as local government, in the era of Generation Greed.  If you trust and put in more, will others just suck more out?  Are any institutions worth saving and capable of being saved?

In any event, after the circus of celebrity and deception that was the primaries, I wonder if Mr. DeBlasio, Mr. Lhota or Mr. Carrion would consent to be interviewed about the information in the spreadsheets that follow?

Local Government Finance 2011

State and Local Taxes FY 2011

Census Public School Finance Per Student FY08 FY11

Public Pension Data 2011

Census2002To2011PublicEmployment

Debt Capital Pension AllState

Total Credit Market Debt Outstanding Stat Abst

Advertisements