By Kevin D. Williamson
Thursday, May 14, 2020
David Dayen of The American Prospect is not very
much impressed by Nancy Pelosi’s latest dog’s-breakfast spending bill:
The bill is modeled after all the
pre-pandemic omnibus legislation that bundled together dozens of ideas
(remember H.R.1?),
sent over to Mitch McConnell’s legislative graveyard and immediately forgotten.
It’s not a particularly good public relations strategy because there’s nothing
to latch onto, just a jumble of ideas. And it hasn’t worked as a negotiating
strategy either. It reflects the real incoherence of the Democratic position;
they don’t have any organizing principle about how to fight the economic crisis
other than to throw a bunch of words on a page.
I hope Mr. Dayen will forgive my saying so, but he isn’t
wrong about that.
The so-called HEROES Act — and, please, please, please,
can we finally stop with the sophomoric acronyms? — is another wish list from
the House Democrats. It contains the usual Democratic wish-list items, one of
the more expensive of which is a proposal to shunt vast streams of federal
revenue into badly managed states and cities in order to buy them out of their
self-inflicted financial troubles. More than $1 trillion of the $3 trillion
package would be in the form of aid to state and local governments, with almost
all of that money — $915 billion of it — in unrestricted cash. This will be a
great boon to states and cities (largely but not exclusively Democratic) that
have hamstrung themselves financially by promising government workers fat
pensions and retirement benefits without actually spending the money necessary
to fund those programs. States and cities generally cannot go into debt to
finance regular operating expenses such as salaries (they do borrow money for
infrastructure projects and the like), but they can effectively borrow from
their pension systems by promising benefits in the future but using the cash
today for other purposes.
That creates real problems. But those problems have
almost nothing to do with the coronavirus epidemic and the subsequent economic
shutdown. The cities and states have taken on some extra expenses during the
public-health emergency, but the biggest effect on their finances will come
from lost revenue. There is a case to me made (a reasonable one if not a
completely persuasive one) for helping cities and states backfill some of that
lost revenue in these extraordinary times, though leaders in states with more
responsibly managed finances and well-maintained rainy-day funds object to
subsidizing their spendthrift neighbors. That’s a question of “fairness,”
which, in politics, means . . . whatever anybody wants it to mean.
The basic problem is financial, not ethical. Many states
already are spending more on their retirees than they are on current priorities
such as higher education. So out of whack are the state pension systems that
the Pew Trusts estimated their 2018 liabilities at more than $1.5 trillion.
That doesn’t mean that $1.5 trillion would solve the states’ pension problems —
it means that $1.5 trillion would get them to the point where their pension
systems are broke rather than laboring under $1.5 trillion in unfunded
liabilities. Even with those liabilities gone, the states would be required to
continue to make ongoing pension contributions that are heavy today and only
getting heavier. The question is: How much do you want to shortchange today’s
first-graders and college freshmen in the service of tomorrow’s retired DMV
clerks? Round your answer to the nearest trillion dollars.
Uncle Stupid could put off the day of reckoning, but the
reckoning is coming. The states are going to have to renegotiate their pension
and retirement-benefit plans — even in states that have purported statutory or
constitutional guarantees that pensions cannot be reduced. The money isn’t
there, it isn’t going to be there, and stamping your feet isn’t going to
exnihilate that money into existence.
Again, very little to do with the virus.
But that’s true of most of the so-called HEROES Act. For
example, the bill would put federal student-loan repayments (and interest
accrual) on pause and make it easier for certain government employees to get
their student loans forgiven in exchange for those workers having engaged in
the selfless public service of receiving inflated compensation in
accountability-free jobs from which they effectively cannot be fired. (How
much porn can a government worker watch while on the clock without getting
fired? A lot.) The Democrats were pushing for student-loan forgiveness
before the coronavirus. They’ll be pushing for it after the coronavirus. The
proposal is evergreen.
Student-loan debt is a lot like those unfunded pension
liabilities. For one thing, it comes to around the same figure, about $1.5
trillion. For another, it is the result of political money-laundering. Student
loans are a way for politicians to spend money on a favored constituency
without having to collect taxes, vote on appropriations, or balance a budget.
That constituency isn’t young people who want to learn. (Ha.) It is the
burgeoning administrative ranks of the U.S. higher-education system, an
archipelago of full-employment programs for mediocrities and hacks who can be
parked on college payrolls and trusted to vote the right way. Rather than spend
money on education and account for the spending, government offers subsidized
loans to students, which lets politicians pretend that their spending is an asset,
which is how loans show up on the books. It’s nonsense, and it’s obvious
nonsense, but it’s how we insist on doing things.
David Dayen of The American Prospect is too kind
in calling this a “jumble of ideas.” It is a jumble, but these aren’t ideas.
It’s a jumble of ordinary, naked political opportunism, with Pelosi et al.
looking for a good opportunity to maximize the transfer of wealth to their
constituents and do their allies in Springfield and Sacramento a solid, along
with the usual assortment of public-sector union bosses and other
special-interest groups.
Find a cure for that virus, and you’ll be on to
something.
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