Monday, April 18, 2011

The Debt Limit

Unions have taken a back seat to the hassle over the debt limit. Both remain of interest and the topics are related.

I begin with the debt limit problem. The original purpose of the debt limit was to limit debt. I don't know what the purpose of the debt limit is now but that it must be constantly be raised so the nation will function, according to those in the know. A contradiction. Ultimately, the nation cannot function with too much debt, so the debt must be limited, like our founders intended.

It appears that Treasury Secretary Geithner is threatening no payments to seniors if the debt limit is not raised. The crass idea that our citizens will go wanting while moneylenders must be paid seems to dominate. The moneylenders must be paid so that they will lend more money so they must be paid. What is wrong with this picture?

Donald Trump might have the right idea about China when he criticizes sweetheart deals for Chinese interests and the Chinese currency manipulations. Perhaps some of the past disparities among the currencies could be remunerated with debt credits, as a beginning negotiation point for continued payments of any kind.

Time for real negotiations, like Mr. Trump says.

And on to the topic of unions, much in the news lately. Governors are concerned that union demands are bankrupting the state and local jurisdictions. It appears that the aura of corruption extended to politicos who signed deals with unions that were financially unsustainable but I got mine, so what? Responsibility must be laid at the door of those elected officials who caved into union demands without the financial wherewithall to maintain payments to individuals. Borrowing is rife and the unions support the borrowing culture because they get more jobs now and fewer later and overall but so what? Short term thinking seems to be the leader of this crew.

The idea that clerical workers for the state need do or die union representation is ludicrous. Miners need that kind of representation, not paper pushers. The hazardous occupations need union representation and collective bargaining should come in if the members voluntarily join a union in response to poor working conditions. Mining is one of those occupations where the workers need protection from poor working conditions, like unsafe shafts. Police and Fire might need union representation if chronically understaffed, for instance. Requiring workers to join a union is a violation of workers' civil rights. Unions should arise in response to a need in the workplace, not be mandated 24/7. As of now, unions are controlling substantial required contributions from workers, which is money workers might like to spend elsewhere if they had a choice.

Get rid of the government worker unions. I don't want unions controlling any aspect of the government, including when and where workers will strike and shut the government down. Public employees and others like teachers have a responsibility to keep the schools and government functions open. OSHA should be sufficient for job safety requirements.

Now back to how unions and the debt limit are intersected: government unions encouraged the growth of pay levels beyond that of the private sector while relying on tax money to pay for it. The more, the merrier, except that the recession hit and the tax take shrunk and each worker now takes a higher percentage of the whole than before. In other words, there are too many workers at too high pay working for the government. The SunTran runs empty buses instead of cutting the number of runs on a route because of an agreement with the union not to cut jobs. So now the fares are raised and the poor pay for the extra runs. Would they rather pay less for fewer bus runs?

This story could go on and on but the idea is there to extrapolate: The entire nation is debt ridden. Moneylenders rule and the tax money is earmarked for however long the funding source lasts. The cash is long gone but the debt remains. Encumber your income sources and you have less cash to work with. It seems so logical but now this debt service obligation has blown everybody's mind with the implications for our immediate future. How much of the borrowed money is squandered?

For example, the Regional Transportation Authority is a tax on the populace. This money is to be used for a list of projects, yet millions are being used for a purpose never listed on the voting descriptor. The voters never voted to spend millions of the RTA money on interest payments. The use of the RTA funding for any other purpose than is what is on the ballot material is not legal, yet millions are wasted on interest payments. The RTA will sunset earlier than intended because the income will be gone or tied up in interest costs. The Rio Nuevo revenue stream is committed from now until 2025, which sunsetted the economic activity more than a decade before the revenue stream ends. Politicians should not be allowed to encumber every revenue stream available to the government. Why are they able to indebt the tax money without a vote of the people? Tucson Water owes half a billion dollars yet borrowing continues with spending having little to do with improving water quality or service. Are there no limits to the use of money derived from borrowing from Tucson Water? They raise water rates in order to finance this borrowing.

The cycle of borrowing has to end somewhere. The myriad brokers, unions and hangers-on are getting too expensive and the moneylenders and gamblers rule the halls of government.

                                         Winter Storm over Tucson