Sold Out Futures by State:  The Sold Out Future Ranking For 2019

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.

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Sold Out Futures By State:  Public Employee Pensions from FY 1972 to FY 2019

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.

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Sold Out Futures by State:  Debt and Infrastructure for FY 1972 to FY 2019

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.

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Sold Out Futures:  A State-By-State Comparison of State and Local Government Debts, Past Infrastructure Investment, and Unfunded Pension Liabilities Through FY 2019

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.

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Bureau of Economic Analysis Local Income Data and Bureau of Labor Statistics Labor Force Data:  A Few Notes

The Bureau of Economic Analysis released its Local Area Personal Income data for 2020 last week.

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. 

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New Jersey Governor Phil Murphy Should Have Told the Truth About Generation Greed

Four years ago, I asked if newly-elected New Jersey Governor Phil Murphy would be the first to tell the truth about Generation Greed.

Telling his new constituents exactly what share of their state income taxes, local property taxes, transit fares and toll payments were going not to public services and benefits they were getting today, but rather to costs shifted forward to the present by past New Jersey politicians, and the older and former state residents and special interests they had pandered to.  Costs from past debts, inadequate past infrastructure investment, and underfunded and retroactively enriched public employee pensions.  The tell would be to reduce taxes, tolls, and transit fares to a level that only reflects the public services and benefits that the State of New Jersey and its local government are providing to New Jerseyans today.  So people would see what the public services they are now getting actually cost.  And then fund all the costs from the past with a separate, additional income tax, property tax, transit fare and toll surcharge that everyone could see. The Generation Greed surcharge.  It would be right in their face, not in some report no one reads, day after day and year after year.

Governor Murphy (like the rest of them) chose not to go that route.  And despite an economic upturn, stock market bubble, and gusher of federal money that the later-born will be sacrificed to pay back someday, that temporarily made his options and decisions much less painful than they could have been, and will ultimately be, he was nearly thrown out of office, barely winning re-election against Republican challenger Jack Cittarelli.  Meanwhile, Democratic New Jersey Senate President Steve Sweeney has apparently been ousted by a truck driver and politician novice running a low-cost campaign.

The top issue, according to pollsters, was taxes.  Even though New Jersey’s total state and local government tax burden, as a percent of state residents’ personal income, doesn’t come close to what we’ve been forced to pay in New York.  Even at their lower tax total, today’s New Jerseyans apparently don’t feel they are getting fair value for their money.  Well of course they aren’t. 

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All Tribalists Are Bastards

Former President Donald Trump promised to “Make America Great Again,” implying that it used to be great, but wasn’t anymore.  Former President Barack Obama said in response that as far as he was concerned, America was great right now.  Former New York State Governor Andrew Cuomo said that America was never that great, and isn’t great now.

Each was saying what they believed certain political supporters wanted to hear.  Governor Cuomo was saying what Democrats in New York wanted to hear.  Who was right?

I believe that the United States of America has been, and remains, a nation of great aspirations.  An aspiration to transcend the human tendency to aggregate in groups around some characteristic, and then be set against each other, and instead have different types of people share a society with mutual tolerance under a common set of laws.  And just because those aspirations were not fully achieved on July 5th, 1776 does not mean that ours is a worse society than those that never had such an aspiration to begin with.

And yet now you have politicians of both parties, and the media, using tribalism as a convenient explanation (for some an excuse) for our economic, social, political and psychological decline — after four decades of generational and interest group self-dealing and other sociopathic trends.  Using this base instinct to suppress the discussion of other issues, the search for other explanations, the raising of other questions.  Questions about generational inequities for example.  Or whether it has been fair for the executive/financial class and (in New York) the political/union class to take so much at the expense of everyone else.  Rather than face those questions, far better to have the serfs and the later born, to whom our institutions have less and less to offer and demand more and more in exchange for it, divided along tribalist grounds.  Since the self-dealers have had some success in that regard, a question has to be asked right now of every American.  Do you or do you not believe in the aspirations of the United States?  Do you even know what those are?

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“Defunding” the Minneapolis and Portland, Oregon Police

I recently read an article about the the controversy over “defunding” the Portland, Oregon police department.

Minneapolis has a measure on the ballot to eliminate its police department and replace it with something else that would include fewer police officers.

The debate over police funding is strictly tribalist, culture war, and fact free.  To the extent that the actual current level of police staffing is discussed at all, the police say they have staffing shortages, and the anti-police say there are too many police, but no one provides any numbers compared with other places and other times.  I happen to have those numbers – and comparable numbers for the U.S. average, New York City and other places– sitting on my computer and posted on my blog.  Does anybody care?

If so, read on.

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New York City Local Government Employment and Payroll:  Could That Have Actually Happened?

Over the past few years, and especially during the pandemic, we have heard the same thing over and over again.  New York City public agencies and public contractors can’t possibly provide New Yorkers with decent public services because they are understaffed, underpaid, underappreciated.  And city residents are undertaxed.  You heard it from the cops as crime jumped during the pandemic, and from the teachers who needed more staff for hybrid learning – and now need even more without hybrid learning.  You hear it from the Department of Corrections, the judges, the public defenders and DAs.   You hear it over and over, and rarely does anyone threaten their own career by objecting.  Cheated out of $billions!

So I was shocked to learn that according to Employment and Wages data from the Bureau of Labor Statistics, from 2016 to 2020 New York City local government employment increased by 36,627 (8.1%) while local government employment in the rest of New York State decreased by 35,991 (6.2%).  That New York City local government payroll increased by fully 44.1% in four years!!!  Compared with an increase of 7.8% for the rest of the state.  I checked this against data reported to the Governments Division of the U.S. Census Bureau.  This source reports a mere 7.5% increase in “full time equivalent” employment (full time plus part timers converted to a smaller number of full timers based on hours worked), compared with a 1.1% increase for the U.S.  March local government payroll, according to this source, increased 22.0% for NYC, and 10.8% for the rest of the state.  Despite these differences NYC local government payroll, as measured by the two sources, ended up in about the same place — $40.4 billion for annual payroll based on employment and wages, and $38.8 billion for the monthly Census Bureau data multiplied by 12.  Which makes sense due to raises that might have occurred during the year, and seasonal employment in the summer.

All this makes me wonder – just what have two politicians seeking higher office with public employee union support:  Mayor Comptroller Scott Stringer, and President Governor Mayor Bill DeBlasio, been doing?

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NYC Sanitation: Stop Trying, Stop Lying, Pursue Alternatives

As you can read at the end of this post on infrastructure employment and payroll, based on the 2017 Census of Governments…

The mean earnings (including benefits) of metro New York private sector workers (including the self-employed, excluding Wall Street) was 21.4% above the U.S. average in 2017.  As of March 2017, however, the mean payroll per NYC FTE local government Solid Waste Management worker was 73.0% above the U.S. average.   Multiplied by 12 it equaled $92,912 per FTE, well above (for example) the mean payroll per private sector worker in the NY metro area Construction sector.

Well, OK.  Picking up the trash is a tough job, and New Yorkers might want their neighbors to be well paid for doing it.  

But the NYC Department of Sanitation also had four times as many employees per 100,000 residents as the U.S. average, even though NYC’s private solid waste collection employment was nearly at the U.S. average by the same measure.  Meaning the average NYC sanitation worker is not only better paid than the vast majority of NYC’s workers, but also doing much less work than the average sanitation worker in the U.S.

I’ve tried to come up with some explanation for this, other than New Yorkers once again being ripped off by those working the system, for what now amounts to decades.  Does the number employed on street sweepers explain the difference?  Nope, not nearly enough of them. How about the fact that NYC staffs its own landfills?  Not anymore, they are closed.

Now I have a new possible explanation – and a new proposed solution.  One can find it in the title.

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