Northern Colorado Gazette

by Mike McCune –

As individuals, as a community, as business owners and workers, and as public employees we each have some difficult decisions to make in the near future. The unassailable problem is debt, public and private, that is threatening to overwhelm America. The problem simply cannot be moved down the road any longer, bankruptcy is coming at all levels and will affect everyone.

The current media obsession with the woes of Scranton, PA, are just the tip of the iceberg. Mayor Chris Doherty had no choice when he slashed employee wages to the minimum allowed. The alternative was shutting down the city almost completely by eliminating emergency services; leaving streets, parks, and other municipal responsibilities unattended because 92% of all municipal jobs would have been eliminated if the Mayor and city council had balanced the books any other way.

Union leaders among firefighters and police are up in arms because of the drastic wage cuts but would they have preferred 92% reductions in manpower? These public employee unions don’t realize this is a battle fought daily in the private sector. You either produce more than you cost or your job is eliminated. The Mayor took least harmful road–in his mind–and tried to salvage something for all concerned.

But the ripple effect over the next 90 days will be interesting to follow. The majority affected will be eligible for food stamps, assisted housing and the like from state and federal coffers. But the hard part will be when the current debts these employees accumulated, expecting to have a full paycheck, are no longer able to be serviced.

Expect home mortgages to become delinquent, expect a major increase in foreclosure actions, expect a drop in property values and expect a number of businesses to simply go under because with less income from 400 citizens they cannot pay their debts. That ripple effect is at least 90 days out but it is a very real tsunami heading towards everyone in the Scranton area.

The bad news is this tsunami is heading for your hometown as well. Government has simply promised more than it can handle in this struggling economic era. Most cities and states have pension plans which cannot be maintained without major increases in revenues. These entities are actually paying more for retirement plans than in current paychecks in many cases.

The problem Doherty and other leaders are encountering is: these benefits were paid for by past employees with unrealistic growth forecasts built into the systems. Over the years pensioners have, on average, received more than they have paid into the system, leaving the system to borrow from current contributions to maintain past promises. So Scranton’s dilemma will be repeated over and over.

The concern is many of these systems were patterned after the national Social Security system. National resources will go farther but the end result will be exactly the same–the system will be bankrupt before all the pensioners receive what they were promised because their contributions went to pay previous retirees and there is nothing left to pay them.

All these systems were built on a model that projected ever-increasing population and income bases. The builders, in order to gain acceptance for these plans, skipped the lessons from the 1930s. The consensus was: “This can’t happen again!”

Will someone please show me where the base of those projections had any fact built into it? Pie-in-the-sky promises mean nothing when the economy goes sour. Natural cycles of business promised the current situation was probable if not inevitable. Military strength merely meant a longer period with minimal interference from external sources which helped promote longer periods of economic success.

Our government never acknowledged the lack of solid basis for these programs that spread across the country 60 years ago. Today we are reaping the bitter harvest.

As is typical, those who missed out on the promises are suing. So you win, what is going to come of it? The city or county or state or federal government is belly-up financially, how are they going to pay. You get yours but your neighbor–whom you piously promised to serve when you entered public employment, is going to have his tax base rise which will cut into his disposable income which will mean more debts are unaddressed.

This is why I have continually berated the system. It has to be severed completely, now, without concessions to disability, age or “stolen wages” from the past. It has to be restructured in a realistic way where the elderly are more reliant on family but at greatly reduced standards of living for every man, woman and child until the economy can rebuild itself.

Prosperity from production will never again be what is was during my lifetime of the 50s, 60s, 70s, 80s, 90s, 2000s and 10s. But if we don’t bite the bullet now by choice, the bullet will bite us by its choice. Just ask any of the municipal workers of Scranton.

Scranton was faced with a $16.8 million debt and only $5,000 in the bank after the June payroll was paid. America has a $15.8T debt with almost nothing except a printing press projected for this year. But soon America’s percentage of debt will surpass Scranton’s.

The fact is the majority of us are ordinary citizens. History teaches us whenever there is a crisis, the ordinary people are tossed to the wolves first. But history also teaches us kings and emperors aren’t immune from the wolf’s bite. Washington, state capitols, county courthouses and town halls across the country are in for a surprise.

This time the upset citizenry mob is going don the wolfskin and will target the inept leadership first simply because outside wolves don’t exist or matter. The question then will be: Are we smart enough to elect leadership who will abstain from taking the same path? Probably not.

“I have sworn on the alter of God eternal hostility to every form of tyranny over the mind of man.”–Thomas Jefferson

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