Can We Grow Up?

I wrote my most recent IBJ column the weekend before the election, not knowing the results, or the sorts of national policies likely to be pursued over the next four years. I addressed the looming crises of state and local government funding.

Having relied upon the polling, I was significantly more optimistic than I have been since. But even assuming the restoration of more traditional and far less corrupt approaches to governance, the victors—at all levels–will be constrained by the prevailing, dishonest political culture.

At the state level, there’s quite a bit of variance in those cultures; nationally, and no matter which party has been in charge, it has been characterized by an immature focus on immediate gratification. Members of Congress have been fixated on policies that will be perceived as positive by their bases in the “here and now”—policies that will benefit them personally when the next election rolls around. When Republicans are in control, we can see the result in such things as huge subsidies for fossil fuels (despite their environmental impact); and so far, no matter who is in charge, there has been unforgivable neglect of infrastructure (let the next guy worry about the highways, bridges and national electrical grid).

Long term, as the political saying goes, is until the next election.The pandemic presents officials with an urgent challenge to this national disinclination to connect the dots, to recognize that enlightened self-interest must be both informed and defined long-term.

Nowhere is this challenge more dire than in America’s cities and states, where tax revenues are in the toilet.

Local governments depend heavily on sales taxes, but Americans aren’t spending as usual—which means they aren’t generating sales taxes. (Transit authorities are facing similar problems.) Businesses are hurting badly, translating into lower income taxes in jurisdictions that impose them. Dramatically declining income is forcing local governments to curtail vital services, lay off employees and postpone critical infrastructure repairs.

As Ryan Cooper pointed out in a recent article in The Week, the federal government could rescue states, cities and transit authorities with only a small fraction of the money that has been spent on rescuing businesses and individuals so far. That would help the national economy by keeping public employees in their jobs, and by maintaining those “socialist” public services that everyone relies on to some degree. As Cooper says, when local governments have to gut their budgets, potholes proliferate, garbage piles up, water mains break, already inadequate transit becomes worse. When state and city workers are laid off, they become part of the unprecedented burden being placed on our already insufficient social safety nets.

Despite the Child-in-Chief’s sneering disinclination to help “mismanaged blue cities,” the current crisis is a result of the pandemic, not incompetent governance. And as Cooper points out, this crisis isn’t limited to Democratic jurisdictions. Wyoming is evidently facing a budget deficit of a quarter-billion dollars, even after making severe cuts to public services. State governments in general are facing budgetary woes that are worse than at any time since the Great Depression.

If the federal government fails to help, we will see the effects for a generation or more. Three hundred and fifty thousand teachers were laid off in September alone. Bus drivers, sanitation workers, DMV clerks, road repair crews, public health nurses, food safety inspectors and thousands of others are truly essential workers; they make the country function.

Liberal and conservative economists alike confirm that austerity during a depression is the definition of insanity.  Failure to shore up city and state finances, like failure to pass another pandemic relief bill, will be far more costly long-term.

To pursue austerity now would be childish– the epitome of penny wise and pound foolish. But don’t count on Republicans in the Senate to understand that–or to act on it if they do.