Thursday, February 24, 2011

Fear mongers stampede Americans

Bucks County Courier Times
February 24, 2011

I smell a rat. It's the same rat that panicked the American people and Congress into the Wall Street bailout.

You will remember, way back in 2008, night after night, day after day, really worried talking heads in the national media explained that, without the bailout, credit would dry up and the world would come to an end.

So Congress and the Federal Reserve bailed out the barons, saved their failed banks and personal fortunes - and credit dried up. Millions of Americans have been plunged into a slow-motion, long-term catastrophe, while the rich few get richer and everybody else gets poorer.

Now the rat is spreading a new alarm, the total collapse of state finances. But the rat's solution, like the bailout, is unrelated to the real problem.

Across the United States, state and municipal governments are struggling with large budget shortfalls and even larger pension liabilities.

The budget shortfalls were created by collapsing revenue, which in turn was created when the money center banks of the Federal Reserve failed under the weight of fraud, mismanagement, a lack of accountability and reckless risk taking, which the bailout sidestepped.

State budget shortfalls are short term and will be resolved through a combination of cuts in spending, increased taxes and increased revenue from an improving economy.

But the rat is screaming that's not enough and long-term pension obligations are plunging the states into bankruptcy. A figure of $3 trillion is thrown around.

But the more sober analysis of the non-partisan Center for Budget and Policy Priorities points out that the $3 trillion number is created by an accounting rule that states do not normally employ and puts the number at $700 billion.

This is still a big number. But as the center observes, whatever the estimate of unfunded liabilities, it does not mean that states and localities have to contribute that amount to their pension funds, "since the funds very likely will earn higher rates of return over time than the Treasury bond rate, which will result in pension fund balances adequate to meet future obligations without adding the full $3 trillion to the funds."

But the rat continues to spread fear, conflating the short-term and long-term problems, which are quite different. Once again, the rat says the sky is falling.

What's the rat's game? For the answer, you must take a close look at the legislation in the current battleground, Wisconsin.

Not only does the legislation call for wage and benefit concessions from state workers - which under the short- term circumstances may be fair - but it also takes away from those workers the right to negotiate for their future, which has nothing to do with the actual problem.

This is an assault on labor - union busting - the cherished dream of predatory Darwinian fat cats since the New Deal.

But the rat wants more than that.

An article in the London-based Financial Times explains what the rat is up to. The Times quotes Orin Kramer, a member of the council that oversees New Jersey pension funds: "One consequence (of the crisis) is that asset sales and privatization will pick up."

In other words, the cash wealth of America having been concentrated in the hands of the few, now they will go after what's left: public assets.

The Huffington Post and others now report that the legislation in Wisconsin to "save the state" contains a provision to allow the sell-off of state energy assets, such as power plants, to private corporations, "with or without solicitation of bids, for any amount (state officials) determine to be in the best interest of the state."

As the Post reports, "One of the companies that could stand to benefit significantly is Koch Industries. Koch already has several companies in the state, including a coal subsidiary, timber plants and a large network of pipelines. The Koch-funded group Americans for Prosperity has been standing with (Wisconsin Gov.) Walker throughout his budget battles, busing in tea party activists and launching the site, Stand With Walker."

Now can you smell the rat?

Building infrastructure like power plants is expensive. Let the people pay for that. The profits are in the operation. Especially if, like Koch Industries, you can supply your new coal power plant from your own coal mines. But you want to get those assets at fire sale, no bid prices, after driving down the wages of the workers whose contracts you will pick up.
Panic helps.

From Wall Street to Washington to Wisconsin, fear mongering fats cats are once again stampeding the American people, and cashing in.

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