Have you seen all those ads from candidates for Governor? I can’t seem to avoid them. You turn the channel and you run into another one. I’m here to tell you that if you are just a regular person living their life, what is said on the commercials doesn’t matter. What matters is:
Who paid for them?
What, during the real campaign that takes place in secret, were they promised in exchange?
How and when will you be made even worse off to pay for this?
I’m not in a position to answer those questions about the future. The deals are secret, and stay under Omerta for eternity. What we can do is see who the DeBlasio and Cuomo Administrations, with help from the state legislature and NYC council (always eager to cash in the future of the serfs) did in the past. At least to the extent that Comptrollers Stringer and DiNapoli didn’t completely fudge the data they reported to the Census Bureau, also in exchange for consideration, this post will attempt to find out.
A public chief executive has three jobs: policy, management, and leadership. With leadership being using one’s influence as a public figure, in competition with celebrities and marketing influencers, to change what people voluntarily do on their own, rather than what the government forces them to do or does for them. For state and local government, the key policy is the budget — who is made to pay how much, and what it is spent on, compared with the past and compared with other places. Management determines how much in services and benefits people actually get for that spending.
Mayor Bill DeBlasio and Governor Andrew Cuomo spent much of their tenures feuding. They would have you believe it was over policy and ideological differences. I believe their primary ideology is careerism, the advancement of their own careers to higher office, and this made them rivals — and the rest of us and our futures pawns. Perhaps that’s why both “President” DeBlasio and “President” Cuomo left office widely despised.
But what did they actually do? Even as we just had an election for Mayor, and are currently having an election for Governor, the media doesn’t seem to be talking about it, other than issues of the moment such as bail reform.
Most people can’t do it, but one ought to separate what the pols do from the broader situation. DeBlasio and Cuomo didn’t cause the opioid epidemic, the surge in homelessness, or the COVID-19 pandemic, or in Cuomo’s case, the long-term economic decline of Upstate New York. But they didn’t cause the economic boom and soaring federal debt that allowed them to pander to every special interest group without completely screwing anyone else except transit riders and the later-born (until the future) either. With regard to the budget, I’ve created some charts that make a fair and perhaps telling comparison. This post will briefly describe what I plan to do, with additional posts making the comparisons to follow.
Last Thursday the Federal Reserve released its 2021 Z1 data on, among other things, America’s debts. There is some good news. Sort of. For those who are not average workers, not paying rent, not hoping to buy a house, and not hoping to invest their savings for retirement and have it be worth more than what they put in years later when they retire, rather than less. Total U.S. credit market debt, after having soared from 330.3% of total U.S. GDP in 2019 to 374.6% of U.S. GDP in 2020, a shocking increase, then plunged to 361.1% of GDP in 2021. It is still higher by 30.8% compared with 2019, and by 192.6% of GDP compared with 1980, before the “buy now and hope someone else will be stuck paying later” era began. But the 13.5% decrease in debt as a percent of GDP is still the largest since at least 1953.
How was this accomplished? Did Americans, American businesses, and American governments suddenly start reducing their debts by a massive amount? Uh – no. In straight dollars total credit market debt increased 6.1%, financial debt increased 5.8%, non-financial debt increased 6.2%, household/non-profit debt increased 7.3%, corporate debt increased 5.2%, other business debt increased 3.6%, state and local government debt increased 1.9%, and U.S. government debt increased 7.2%. But in straight dollars, nominal GDP increased by 10.1%, even more, in part due to an expected snap back from COVID-19 shutdowns, but also in part due to soaring inflation. The Economist magazine said years (decades?) ago that Generation Greed had run up so much debt that the choice was to inflate it away, default it away, or face stagnation for decades as it is paid back. That was back when total U.S. debts were far lower than today.
No one is prepared to admit that today the goal is inflate away debts (and the buying power of wages and ordinary people’s savings). Then again, would anyone have predicted 10 years ago, or 20 years ago, or 40 years ago that the Federal Funds rate (controlled by the Federal Reserve) would be at 0.08% at a time when inflation has soared to its highest level since 1982?
I once wrote a post on how New York’s Medicaid spending, by age and by type of service, compared with the national average and nearby states, every couple of years. The “State Datamart” that allowed crosstabulations of the number of Medicaid beneficiaries and expenditures, by age and by type of service, disappeared after FY 2012, after fewer and fewer states had been included for several years. That data had allowed expenditures per beneficiary, by age group and by service type, to be calculated for each state, and the number of beneficiaries in each age group to be compared with the total population in that age group, and the population in poverty in that age group, by state.
Today there is a different set of data that has been posted, and I plan to tabulate what is available and write a couple of posts. The PDF report is here.
And the data is at http.//macpac.gov/macstats.
It isn’t what I was once able to get, but it is more than I’ve been able to find for many years. A quick comparison of total Medicaid expenditures in 2020, as a percent of the personal income of residents of each state, and what it cost those residents in state and local taxes, follows.
Over the past three posts I’ve documented how today’s and tomorrow’s Americans have had their future sold out and cashed in with regard to state and local government debts, inadequate past infrastructure capital construction, and retroactively increased and underfunded public employee pensions. Over and above the generational inequities at the federal level in government, in the private sector, and even in many families. Plus climate change, which some have claimed will be so bad I should stop worrying about other aspects of generational inequity.
These aren’t technical issues to be discussed one at a time, as if they were independent of each other. They are a single ethical issue to be discussed and understood as a whole. Look at any issue, any institutional decision in government, business and the professions, any social trend of the past 40 years, and examine how it has affected those in different generations – who benefitted, and at whose expense. And you will find the same thing.
That is why our society is in decline, something all those crazed about the tribalist cultural issues that consume out geriocratic politics apparently understand, and are desperate to find someone else to blame for. The Sold Out Futures by state ranking, based on the state and local government part of it, is my contribution to the bigger story, one that remains under Omerta.
Adding it up, on average today’s and tomorrow’s Americans have inherited a Sold Out Future due to past state and local government deals and non-decisions equal to 47.0% of their personal income in FY 2019. That is virtually unchanged from the 47.1% I found when I did the same analysis for FY 2012, despite a much stronger economy and another asset price bubble.
Unlike the other generational inequities in our society in the wake of Generation Greed (and more like the differences between families), the state and local government burden is not the same everywhere in the U.S. It is greater or smaller depending on where you live. It attaches to the people there now, unless they move away from it, and may eventually attach to each place’s real estate, since real estate cannot pick up and move. This final post in the series will rank states, and New York City and the Rest of New York State separately, based on how sold out their futures are.
Even another stock market bubble, in fact an everything bubble that has temporarily inflated the price of every asset to historically high levels relative to income, has not been enough to get the average U.S. public employee pension fund out of the hole. But it has been enough to knock the public employee pension crisis out of the news, and give politicians an excuse to shift even more of the cost to the future. As I showed here…
When asset prices bubble up, future investment returns are going to be lower. If the bubble is big enough, future returns could be negative for decades, as they have been in aging countries like Japan, and countries that try to inflate away their debts like Argentina, two (hopefully but not necessarily extreme) versions of our own future. Predicted future return returns should be reduced as asset prices rise, as ERISA requires private pension funds to do by tying future returns to current interest rates. But in the public sector, which was exempted from ERISA, when asset prices bubble up public unions cut deals with the politicians they control to increase benefits in Blue States, and while anti-tax politicians slash pension contributions to cut taxes in Red States. (Actually, they do both things in both types of state). Then, when asset prices correct to normal, somehow it’s nobody’s fault. Wall Street stole the money!, PBS Frontline claimed in an investigation of the problem. That’s why nobody is talking about pensions now – that lie temporarily unavailable.
Thus far the federal government, at great cost to ordinary people in disadvantaged later-born generations, has managed to keep paper asset prices – and housing prices – inflated, to benefit the rich and seniors. Even so in FY 2019, despite sky-high asset prices and the passage of more than a decade since the problem was acknowledged (by some), my back-of-the-envelope estimate is that U.S. state and local government pension funds were $3.65 trillion in the hole, more than ever before. A more sophisticated analysis by the Bureau of Economic Analysis, using the assumptions private pension funds are required to use, put the hole at $4.54 trillion in 2018. But in which states is the problem the greatest? Read on and find out.
The federal government just passed a $ 1 trillion “infrastructure bill” that, for a while, will increase the amount of federal funding for infrastructure. Most of the actual spending, however, will be continue to be done by state and local governments, just as has been the case in the past. The modest increase in spending, adjusted for inflation, is intended to address a backlog of needed projects. But federal funding is only one source of money for state and local infrastructure. State and local taxes are another, and bonds, usually paid off over 30 years, are a third.
The extent of infrastructure varies from place to place. In rural areas the only public infrastructure might be a county or town road, supplemented by power supplied by a rural electrification co-op, and telephone and postal service cross-subsidized by those in cities. Instead of paying for public water, sewer, and solid waste collection, people provide these for themselves. In cities, on the other hand, there may be mass transit, public sidewalks, airports, seaports, public water, sewer, solid waste collection, and in some places public electric utilities. So do low-density rural states spend less on, and receive less in federal funds for, infrastructure? Do states with low past infrastructure spending also have low debts? How are the estimated $1.4 trillion infrastructure spending shortage and the $3.2 trillion in state and local government debt distributed around the country? Read on and find out.
In two years of the COVID-19 pandemic, with society under stress, we have seen increasingly strident political fights over whose cultural attitudes and preferences should be imposed on others, who should get to contribute less to the community, and who should get to take out more. In the shadows, however, is a bipartisan consensus as to who should be made worse off and be sacrificed the rest of their lives to pay for it all. Ordinary people in later born generations, those who will be living in the United States in the future. The pandemic has given politicians of all alleged views, and the interest groups that back them, an excuse to do, to an even greater extent, what they have done for 40 years. Cash in the common future to address the perpetual “emergency” of the present.
So it was in Washington in 2020 when The Donald and the Republicans, having already sent the federal debt soaring to cut taxes for the rich and then ran a federal deficit equal to one-quarter of the U.S. economy.
And so it is in Washington today, where Biden in the Democrats claim their plans will be “paid for” – meaning the burden shifted to the future would only be as great as it was under Trump and the Republicans.
It is in this context that for the fifth time, I have reprised an analysis of state and local government finance data from the U.S. Census Bureau, for all states and for New York City and the Rest of New York State separately, with data over 49 years, to determine the extent to which each state’s future had been sold out due to state and local government debts, inadequate past infrastructure investment, and underfunded and retroactively enriched public employee pensions. You’d think that the extent of disadvantage for the later-born, and who benefitted from creating it, would be the number one issue in every state election, and the number one topic of debate in the media. Instead, it remains under Omerta, especially here in New York. Shouted down under the comforting culture war issues that Generation Greed prefers. So, although standing up for the later born and common future may amount to nothing more than standing on the beach shouting into a hurricane as a social tsunami heads for shore, over the past month I have updated the “Sold Out Future” analysis with data through FY 2019. This post, a national summary and explanation of where the data comes from and how it was used, and the next three, will show what I found.
Last year I produced a two-part analysis of the data, going back to its earliest availability in 1969 through the peak of the recent boom in 2019.
But thanks to the COVID-19 pandemic 2020 was an odd year that is not indicative of any long-term trend in our economy and society. Or so we hope. But since I had to download the data anyway for another purpose, I’m going to present a few notes on just how hard New York City was hit economically by pandemic, following up on the Current Employment Survey data at I wrote about earlier this year.
Then answer is pretty damn hard.
In addition, since it is in the national news, I’ve also downloaded, and made some charts from, data on who is and who is not in the labor force. For all the talk about the “great resignation,” “lying flat,” and people loafing on unemployment insurance, the decrease in people working or looking for work is actually an inevitable consequence of demographics. With more and more members of the relatively large Baby Boom generation hitting retirement, and no more members of the also relatively large Millennial generation hitting the workforce at the same time.
Back in late 2019, I published a tabulation of data from the employment and payroll phase of the 2017 Census of Governments. The data included full-time equivalent (full time workers plus part time workers converted into full time workers based on hours worked) state and local government employment, by function (police, parks, schools), per 100,000 residents of each area. The population data was taken from Local Area Personal Income spreadsheets from the Bureau of Economic Analysis. For the population of the rural areas of New York State as a whole, I subtracted New York City, the Downstate Suburbs, and the Upstate Urban Counties from the state total. All this sort of data usually gets revised as new information becomes available. But when the new population data was released, soon after I had completed the entire effort with spreadsheets, tables, charts and posts, what I found was a shock.
Somehow the population data for New York City had been altered – and inflated, thus reducing apparent NYC government employment per 100,000 residents. This wasn’t the usual correction. It turns out that in the old data, all the state’s counties combined didn’t add to the New York State total! Since I had gotten the population for the rural Rest of New York State by subtraction, the population of that region was underestimated by a significant percent, causing the region’s population losses, and its government employment per 100,000 residents, to be exaggerated.
I immediately published revised versions of the large spreadsheets with data for all government functions. And now, I have gone back and altered the spreadsheets on individual government functions, the tables, the charts, and the posts on those functions, as well. The changes aren’t great enough to alter any conclusions. I changed many numbers, in the tables, charts and text, but very few words. Right is right, however, and the data linked here has now been fixed for that BEA error.
Having made that effort, I have decided to publish a graphic summary of the employment and payroll phase of the 2017 Census of Governments, along with links back to the more detailed (and now corrected) posts.