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September 16, 2011

WSJ Op-Ed Writer: Obama's "Jobs" Plan "a Blue-State Bailout In Disguise"

Obama referred to ponying up even more dollars to prevent teachers from being laid off.

Where would they be laid off? Only in states whose governments, in league with the teachers' unions, continue escalating teachers' salaries beyond the point the public is willing to pay.

That creates a shortfall. A perpetual one. An always-growing one.

Well, Obama's from the government, and he's here to help.

Last Thursday, the president urged Congress to pony up roughly $200 billion in taxpayer money to "provide more jobs for teachers [and] more jobs for construction workers" and more money to carry out other state and local activities. He urges Congress to spend this money even after handing out hundreds of billions of dollars for similar purposes as part of the 2009 stimulus package, as well as a score and more billion dollars again in 2010.

These vast contributions to the coffers of state and local governments, though pitched as a jobs bill, are in reality the latest in a series of bailouts for debt-ridden state and local governments. They are of special benefit to states in the blue regions of the country where the president's most fervent supporters reside.

In many blue states, legislators have copied the politicians in Washington by running up state debts to extraordinary levels. Nationwide, state debt is running around $3 trillion. If unfunded pension liabilities are factored in, estimated liabilities leap forward by another $1 trillion to $3 trillion, depending on the optimism of the assumptions made.

The bond market has taken notice....

In a new study at Harvard's Program on Education Policy and Governance, we discovered why the Obama administration is so interested in helping out the states. States with a bluish hue—that is, states with legislatures that are heavily Democratic and have a highly unionized public-sector work force—must pay interest rates that are often an extra half a percentage point higher than states with a reddish coloring.

Specifically, a 20 percentage-point increment in either the Democratic share of the state legislature or a comparable increase in the share of the public work force that is unionized drives up interest rates by nearly a half a percentage point on a five-year security note. That amount is nontrivial. In Obama's home state of Illinois, it is costing governments over $700 million annually.

And because this costs these states' more than they can afford (at acceptable rates of taxation), they need a new revenue source, one that doesn't vote in the state... and that source is you, of course.

Only one thing can correct these states' bad prioritization of values: Having to face their own voters, confronting voters with the choice of ever-more-generous pay and benefits for public employee unions or massive tax hikes.

Someone, in these states, is going to get a salary increase, and someone is going to get an effective salary cut (as more dollars are siphoned away to pay for others' salaries).

There's no way to square this circle... except the one way, which is dragoon the citizens of other states into paying for the excesses of the blue states' governments.

Which is precisely what Obama demands.

Because: "jobs."


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posted by Ace at 02:41 PM

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