Fiscal Cliff or Slippery Slope
In Washington, D.C., a great deal of discussion surrounds competing conceptions of the fiscal cliff and what, if anything, the government should do to avoid going over it. As I have mentioned repeatedly in recent weeks, many cities around the nation find themselves on a slippery slope toward bankruptcy (or its equivalent) as they confront the lingering effects of the economic crisis and past political decisions by their elected officials.
This week another two California cities sought bankruptcy protection. San Bernardino and Mammoth Lakes join the likes of Stockton and Vallejo.
Such dire fiscal situations are not limited to California. Public employees in Scranton, Pennsylvania received unwelcome news with their pay packets this week when city leaders kept their promise to unilaterally cut pay to the federal minimum wage rate of $7.25 per hour in a desperate bid to meet payroll. This confrontation with public employees unions and among elected officials at city hall follows an arbitrator’s ruling that awarded public safety employees significant compensation increases.
As I read news of these developments, I wondered why these experiences do not seem more salient to others and what, if any, effect they have on the debate in Washington, D.C.
Evidence that they are beginning to influence the policy debate beyond the Beltway is abundant. New Jersey Governor Chris Christie was quoted recently as pleading with Capitol Hill to stop sending him federal assistance to pay employees he cannot afford to retain and will have to layoff. At the same time, others around the country are clambering for still more aid in any form they can get it.
Grants to help communities hire law enforcement officers, firefighters and EMTs have existed for a long time, in many different forms. They did not suddenly appear with the fiscal crisis. But what did change was the requirement for local communities to come up with plans to match a portion of the aid they received by sustaining these positions over time. Likewise, grant applications that help jurisdictions avoid layoffs receive priority consideration in making awards without regard for circumstances contributing to these sitiations.
In many instances, this approach creates the same kind of moral hazard that the European Union’s effort to help Greece avoid default. Bailing out a government that made bad decisions and citizens who stand complicit (or in most cases simply sat by and watched) does nothing to correct the situation or prevent it from occurring again. Moreover, it may present an incentive to continue making the sort of bad decisions that led to the crisis in the first place.
Normally, I find little to agree with Gov. Christie and his party about. But from where I sit, he’s right to question whether the federal government is doing anything particularly helpful by sending grant monies to local and state governments for police officers and firefighters they cannot afford.
Interestingly enough, I have seen at least one proposal floated recently to expand AmeriCorps to serve rural communities’ public safety needs. Some local officials rebelled against this notion suggesting without irony that it amounted to little more than socialism in the form of a federal takeover of local service delivery. This criticism, however, ignores the fact that many communities simply cannot attract or retain enough volunteers to meet their own needs even if they can afford to train and equip them. I know many of these same officials would hold their noses and accept money, not people, if they were offered it even though they oppose the taxes used to collect and disburse it.
I am intrigued by the suggestion of an AmericCorps expansion. It appeals to me on several levels. First, it encourages national service without requiring it. Second, it rewards community service by offering educational assistance to young people who commit to a period of national service in an underserved community besides their own. Third, it transforms what might otherwise be a deadweight economic loss into a positive externality by providing kids who are finding themselves priced out of the market for education with an opportunity to earn the money required to earn their degrees. It also manages to do this without forcing kids to compromise by dividing their time and attention between the two tasks — working and studying — at once. By reducing the future debt burden on these young people, it also reduces economic uncertainty and accompanying long-term risk associated with burgeoning student debt.
The idea of offering students education or housing incentives to volunteer as firefighters has long proven successful. It has also proven antithetical to the labor movement who see students stealing living wage jobs from people who neither need nor desire a college education. I might find it easier to accept this argument if I thought communities could afford to hire firefighters on the same terms as current employees but simply chose not to. IT might also be easier to swallow if firefighters in so many communities were not overcompensated for their labor compared to similarly skilled workers, including those engaged in risky occupations.
Many, if not most, other countries employ a two-tiered hiring system for firefighters. In some cases, the entry level positions are held by a combination of working class recuits and conscripts, much like our own military has operated in times past. The officer corps, on the other hand, tends to be stocked with managerial and technical professionals recruited from post-secondary educational institutions, which is most certainly not true of our own local fire service leadership. Many foreign fire service officers possess professional qualifications in engineering or scientific disciplines, which is rarely true here.
If every jurisdiction that enters bankruptcy exits in a fashion similar to Vallejo, such a course of action may not end up being such a bad thing. Somehow, though, I doubt this will be the case. Recent grand jury findings concerning the Orange County Fire Authority’s employee compensation arrangements and operational inefficiencies delivering emergency medical services suggest that particular community did not learn such lessons from their dance-with-economic-death in mid-1990s. (To be fair, their fiscal disaster arose from different circumstances entirely. Nevertheless, they formed the fire authority for the ostensible purpose of avoiding unsustainable fiscal circumstances that already affected many municipalities that depended upon the county for support if not service.)
If federal officials really want to help local communities, creating a win-win like the suggested AmeriCorps expansion just might work. But for that to be the case, local and state officials of both left and right political persuasions will have to lose their fear of their own public employees, abandon ideological posturing about for purely political purposes, and lose their learned indifference to accepting help that comes with strings attached. Here’s hoping more wake-up before hitting bottom.