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On the Ground: Understanding the Drawdown in Afghanistan

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June 28, 2011, 3:51 p.m.

State Rep. Robert Bent­ley (R) “said it’s ab­surd to be talk­ing about his name” when 200K Alabami­ans “are out of work and a fed­er­al grand jury has in­dicted 11 State House fig­ures on charges of vote buy­ing on pro-gambling le­gis­la­tion.”

Want More On This Race? Check out the Hot­line Dash­board for a com­pre­hens­ive run­down of this race, in­clud­ing stor­ies, polls, ads, FEC num­bers, and more!

Bent­ley, on Ag. Com­mis. Ron Sparks‘s (D) latest ra­dio ad: “This is a des­per­ate at­tempt by my op­pon­ent to de­tract at­ten­tion away from the fact that he is on the wrong side of the is­sues that really mat­ter to Alabami­ans (Rawls, AP, 10/8).

Sparks’s ads “as well as Bent­ley re­cently call­ing Sparks the ‘most lib­er­al’” Dem who has “ever run” for gov “come after prom­ises from both Sparks and Bent­ley to run pos­it­ive cam­paigns and stay away from neg­at­ive tac­tics this elec­tion sea­son.”

Sparks: “Things haven’t changed at all for us and what we are do­ing. We have made a con­trast between Robert Bent­ley and us this en­tire time. He con­demns gam­ing, but he takes money from gam­ing sources.”

Sparks “said Bent­ley took money” from MS Gov. Haley Bar­bour‘s (R) PAC which Sparks “said has re­ceived money from gam­ing in­terests in­clud­ing the Choctaw In­di­ans.” Bent­ley “has taken money” from “ori­gin­al” Green­et­rack in­vestor Paul Bry­ant Jr and “used Bry­ant’s plane to travel to cam­paign ap­pear­ances.” Bent­ley spokes­per­son Re­bekah Ma­son “said the Bent­ley cam­paign paid for the use of the plane.”

Bent­ley “said he did re­ceive” a $10K “dona­tion from Green­et­rack, but re­turned it when he dis­covered it.” Bent­ley: “In light of Monday’s bingo-re­lated fed­er­al in­dict­ments … this is a des­per­ate at­tempt by my op­pon­ent to de­tract at­ten­tion away from his own cam­paign fin­ances” (Chand­ler, Birm­ing­ham News, 10/8).

Let’s get a few things straight about the eco­nomy.

First, noth­ing is fine. Not in re­l­at­ive terms. Not in ab­so­lute terms. That things could be worse does not make them fine.

Second, the pub­lic sec­tor is not sep­ar­ate from the private sec­tor any more than your arm is sep­ar­ate from your leg.

Third, the pub­lic sec­tor alone can­not re­vive the private sec­tor. The growth of pub­lic-sec­tor jobs can­not be and has nev­er been the en­gine of sus­tained eco­nom­ic re­cov­ery. In the Great De­pres­sion and the first stage of this Great Re­ces­sion, in­creased pub­lic spend­ing pre­ven­ted more dire eco­nom­ic con­sequences and provided a tem­por­ary life­line.

Fourth, private-sec­tor job growth feeds pub­lic-sec­tor job growth. You need the tax rev­en­ue to pay for all those teach­ers and cops.

Fifth, all of these truths will soon be over­shad­owed by un­fun­ded pen­sion li­ab­il­it­ies — the prom­ises made to pub­lic em­ploy­ees that can’t be met un­less more rev­en­ue is raised or more be­ne­fits are cut.

After telling the coun­try on Fri­day that the “private sec­tor is fine,” Pres­id­ent Obama back­tracked and his loy­al­ists de­con­struc­ted the gaffe by say­ing it needed con­text. Com­pared to pub­lic-sec­tor hir­ing, private-sec­tor job cre­ation has been more ro­bust.

That’s true. In the 17 cat­egor­ies of em­ploy­ment the Bur­eau of Labor Stat­ist­ics meas­ures, only three saw an in­crease in un­em­ploy­ment rate from May 2011 to May 2012: “in­form­a­tion” (7.3 per­cent to 7.8 per­cent), “ag­ri­cul­ture and re­lated private wage and salary work­ers”  (8.7 per­cent to 9.5 per­cent), and “gov­ern­ment work­ers” (3.9 per­cent to 4.2 per­cent).

Mitt Rom­ney sug­ges­ted on Fri­day that the “mes­sage of Wis­con­sin” (mean­ing Re­pub­lic­an Gov. Scott Walk­er’s re­buff of a re­call) was that the na­tion doesn’t need more fire­fight­ers, po­lice, and teach­ers. Or at least that’s the way Obama’s team has been char­ac­ter­iz­ing it ever since, ac­cus­ing Rom­ney of want­ing to lay off even more state and loc­al gov­ern­ment work­ers. Rom­ney’s sur­rog­ates have also pleaded for con­text, ar­guing as Rom­ney him­self did on Tues­day that he meant the na­tion doesn’t need more fed­er­al funds in­ves­ted in short-term state and mu­ni­cip­al hir­ing schemes.

But both Rom­ney and Obama haven’t ad­equately ex­plained the prob­lem. To his cred­it, Walk­er said the “mes­sage” of his pen­sion re­forms wasn’t that there should be few­er state em­ploy­ees. Just the op­pos­ite. Walk­er said his pen­sion re­forms al­lowed the state to keep more people on the payroll. “Our re­forms al­lowed us to pro­tect fire­fight­ers, po­lice of­ficers, and teach­ers,” Walk­er said on CBS’s Face the Na­tion. “That’s not what I think of when I think of big gov­ern­ment.”

Con­text, con­text, my king­dom for some con­text! The es­sen­tial ques­tion on the fu­ture of the state and loc­al gov­ern­ment work­force (87 per­cent of all gov­ern­ment work­ers, by the way) isn’t the num­ber of jobs. It’s their pen­sions. Walk­er saw that. Obama and Rom­ney bet­ter fig­ure this out: You can’t dis­cuss eco­nom­ic growth and state and loc­al payrolls (up or down) un­less you dis­cuss un­fun­ded pen­sion li­ab­il­it­ies and the tox­ic ef­fect they have.

Ac­cord­ing to the most re­cent data from Wilshire Con­sult­ing and North­west­ern Uni­versity’s Kel­logg School of Man­age­ment, un­fun­ded li­ab­il­it­ies for the na­tion’s 126 largest pub­lic pen­sion plans range from $3.2 tril­lion to $7 tril­lion. Why the wide vari­ance? The lower li­ab­il­ity total re­flects op­tim­ist­ic as­sump­tions by state and loc­al pen­sion man­agers on rates of in­vest­ment re­turn. The high­er es­tim­ate re­flects more-cau­tious in­vest­ment as­sump­tions. An­oth­er grim stat­ist­ic: The 126 plans cur­rently fund only 74 per­cent of their li­ab­il­it­ies. In 2001, they fun­ded 95 per­cent.

To fund state and loc­al pen­sions at their cur­rent rate (us­ing the pess­im­ist­ic num­ber above and as­sum­ing no re­duc­tions in cur­rent or fu­ture be­ne­fits), each house­hold would face a tax in­crease of $1,398 a year for the next 30 years. These high­er taxes would not hire an­oth­er teach­er or build an­oth­er fire sta­tion. And they would be on top of rev­en­ue gen­er­ated by his­tor­ic trends in state and loc­al eco­nom­ic growth.

Why does this mat­ter? Ask voters in San Jose and San Diego.

In San Jose, Cal­if., li­ab­il­it­ies rose from $73 mil­lion in 2001 to $245 mil­lion this year, so Demo­crat­ic May­or Chuck Reed had to lay off 1,592 work­ers. In San Diego, pen­sion costs grew from $137 mil­lion in 2006 to $231 mil­lion in 2012; this year alone, 1,500 teach­ers have been laid off.

Both cit­ies over­whelm­ingly passed ini­ti­at­ives to re­duce pen­sion al­loc­a­tions. San Jose voted to trim cur­rent be­ne­fits. San Diego voted to cut back on fu­ture ones. Court fights nat­ur­ally en­sued. But the polit­ic­al winds are clear and un­mis­tak­able. The fight is on.

What happened in Wis­con­sin won’t stay in Wis­con­sin. It won’t stay in San Jose or San Diego, either.

That’s the real con­text of the fu­ture of the en­tire eco­nomy — pub­lic sec­tor and private sec­tor.

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