September 20, 2010
For Whom Bell, California Tolls
It tolls, of course, for public employees and for Democrats, the party almost exclusively linked to big labor, big government, and big labor in big government.
Bell, California, a small municipality in Los Angeles County with a population of 40,000, has come to symbolize public employee rot. Bell's average resident earns under $30,000 per year, and its unemployment rate hovers around 16%, even higher than the high statewide rate for California (over 12%). Yet we learned from the Los Angeles Times that Bell was run by Chief Administration Officer Robert Rizzo (D), bringing down a salary of $800,000, and by Police Chief Randy Adams, earning $457,000. There must certainly be a lot of streets being swept and drunk drivers being ticketed in this clean and orderly piece of America.
If Ronald Reagan's vision of America was Winthrop's "city upon the hill," Bell, California elicits the image of a city upon a cesspool. Bell's government is fiscally the worst of all cities in the worst of all states in a country, all but bankrupt. Bell is an example of the closest thing we have to a law in politics: if Democrats and their public union cronies run something -- city, state, or country -- it is either dead or dying.
Robert Rizzo might be a particularly egregious example of bureaucratic compensation, but he has lots of company, both among other Bell officials on the city council and in other California cities including El Segundo, San Ramon, and Simi Valley. But firing Rizzo and the others will do little to quell our outrage, because these mandarins are merely symbols of the corrupt, unionized, overcompensated kleptocrats who devour our taxes. Rizzo made an indefensible twenty-seven times the average Bell resident's salary. But that excess does not make it easier for the average American worker to accept the fact that the typical public-sector employee enjoys twice in pay and benefits what he or she does.
Our ruling political class can spot third rails everywhere they look -- Social Security, Medicare, and public pensions -- and they seem incapable of offering real reform to reduce government spending, though huge swaths of Americans, especially in the Tea Parties, are clamoring for government austerity. Reducing government employee compensation, in all its forms, would be a terrific and visible place to start.
To begin to bring government spending under control, every government employee (excluding the military) should have his salary immediately slashed by 10%. In a recent column in the Wall Street Journal, Indiana's governor Mitch Daniels cited executive impoundment power as the basis for such emergency action. While some might call this action dramatic, most of us outside Washington would call it a start and demand that the reductions be made permanent. In addition to a salary reset, every federal employee pension will be frozen at current levels and workers required to relinquish their defined benefit plan immediately in favor of a defined contribution program which will be unmatched by the federal government.
A combination of dramatically lowered salaries and radical federal pension reform should continue until the point is reached where the average total compensation for government workers is reduced by 50%, in line with average compensation in the private sector.
This, or the less draconian proposals of New Jersey's Chris Christie, are sure winners for conservatives. If conservatives nationally followed the Christie model, they would become instantaneously allied with the vast majority of struggling Americans that has grown nauseated by the glaring inequities between the secure public-sector worker and the insecure private-sector grinder. Indeed, any initial anger directed toward conservative lawmakers would soon be dwarfed by battles between private and public and union and non-union workers. And this is a battle worth waging, for a favorable outcome will save our country.
By championing systematic, structured reductions of government worker compensation, conservatives can automatically counter liberal accusations that conservatives propose only tax reductions for the rich but have no courage to propose real spending cuts. If Americans saw these types of government spending programs enacted, with government workers suffering the first blow, they would be more than willing to accept the inevitable entitlement reforms each of us knows is the only way out of our fiscal predicament.
There might be a public union cry across the land about the cruelty of these proposals, but union whimpering will fall mostly on deaf ears. Those of us working in the private economy have lived under these unforgiving market rules all of our lives. We're tired of supporting government workers, generally less skilled than we are but living and working with much more security and much less stress.
Government spending must be cut brutally. As a country, we have reached the exhausted end of the welfare state and its associated indebtedness. A simple, normal legislative remedy can no longer work to rescue us. Jim Rogers, the legendary hedge fund manager of several decades ago, has expressed it succinctly: "We have to cut spending so dramatically that it would make people's ears burn."
The conservative political class must be ready to stand firm against the angry claim from government workers that they have been promised certain benefits that are now being denied them. Unfortunately, the simple reality is that past politicians and governments have made criminally generous promises to government workers in exchange for their campaign contributions and votes. These promises can no longer be kept.
Many cities, many states, and the country at large are broke. We can longer afford our government and its workers. They can keep their jobs, but only if they are willing to accept a haircut in their overall compensation. Of course, workers are always free to leave their government cocoon and join us in the creatively destructive private maelstrom called free-market capitalism.
In challenging times, in that harsh but rational domain -- when business models implode, revenue bookings decelerate, and technological innovations fail to deliver their expected advantages -- private businesses cut back in expenditures and staff and attempt to reform.
Most government employees have to accept the unflattering truth that they differ from the Bell, California city government only in degree. Governments everywhere at all levels have become too massive and too expensive. We want a lot less government, and we expect to pay a lot less for it, too.
Claude can be reached at email@example.com.