Breakdowns in the States

Cover of 'Breakout' book by GingrichI just finished Newt Gingrich’s latest book, Breakout: Pioneers of the Future, Prison Guards of the Past, and the Epic Battle That Will Decide America’s Fate. As expected, it’s a great read. The selfish, stultifying attitudes and actions (or lack thereof) of the “prison guards of the past” that Gingrich writes about are incredibly aggravating. At the same time, the amazing discoveries and technological advances being made and opportunities to be taken are exciting and incredibly encouraging.

In the final chapter, he concludes:

“Our society, in this era of big government, is centered on bureaucracy, regulation, and law. This mindset makes breakthroughs difficult and general breakout almost impossible. To become breakout champions, citizens and elected officials need to think about society and government in a completely new way….”

Gingrich then proceeds to lay out eight key principles for doing so.

But, the particular topic I wanted to bring to your attention is from the chapter on “Breakdown in Government”. We often hear/read about the evils of today’s unions and how they can ruin a company (e.g., a car manufacturer) with their unreasonable demands. That is an example of a private-sector union “working with” a corporation to shoot themselves in the foot (feet?). But, here are a few examples of public-sector unions and local governments doing the same.

“It’s not just the federal government that’s breaking down. Many state and local governments, too, are falling apart in places where they have been disastrously mismanaged. Government at all levels is failing us. Meredith Whitney, a financial analyst, offers a startling example of the problem in her book Fate of the States. In the early 2000s, she recounts, the head of the Contra Costa County, California, firefighters’ union “negotiated a sweet new contract for his members.” The contract provided that “veteran firefighters could now retire at age fifty with an annual pension equivalent to 90 percent of their salary.” This deal was a great boon for the firefighters but not for the taxpayers.”

Sweet deal, yes! But, it strikes me as an unbelievably selfish and short-sighted one, too.

“Predictably, the weight of the pensions proved too much for the county to sustain. By 2012, in the wake of the recession, Contra Costa County could no longer afford to keep all its firehouses open and meet its pension obligations at the same time. When the director of the local taxpayers association looked into the matter, she found that there were 665 retired county employees with an annual pension of $100,000 or more and twenty-four who earned over $200,000, even in retirement. As Whitney puts it, ‘Everybody might still love firefighters, but what they did not like was retired fifty-five-year-olds taking home $100K a year at a time when many taxpayers were out of work and could not afford to put any money aside for their own retirements.’

The newspapers these days overflow with similar examples of excess. Whitney describes a California prison guard (the literal kind) who ‘with a base salary of $81,683 collected $114,334 in overtime and $8,648 in bonuses.’ This man ‘was eligible for an annual $1,560 “fitness” bonus for getting a checkup,’ and he ‘could retire at fifty-five with 85 percent of his salary and medical care for life.'”


bad math - teacher - 2+2=5“Such reckless management and outright corruption has left states broke. Illinois has roughly $100 billion in pension obligations, the vast majority of which is unfunded, and another $55 billion in unfunded obligations for retiree healthcare. In California, the debt story is even more alarming. State and local governments in the Golden State carry a $1.1 trillion debt. Yet California continues to spend big on goodies like a hundred-billion-dollar high-speed rail line from San Diego to Sacramento. Many of the major states — California, New York, and Illinois among them — behave just as recklessly as the federal government.”

Wow! It is simply amazing how these things just go on, year after year. Can they not do simple math? Are they in denial of economic realities? Do they not look more than 5 or 10 years down the road? Do they not care? Gingrich is gracious enough not to point this out in the book, but it occurs to me that these state and local governments which have such enormous debts due to profligate spending and ridiculous union contracts are, by and large, politically liberal and predominantly led by Democrats (and, maybe, the occasional moderate-to-liberal Republican). I’m gonna go out on a limb and state that there is a connection, there. Just sayin’….

UPDATE: 3/10/2014: This just in! Another one bites the dust…


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