Congressional committees have revealed that executives of various banking and financial firms who ran them into financial disasters have already received over one billion dollars in bonuses and “expenses.” It appears likely that the various bailout plans will cost well over a trillion dollars, and it’s not even certain how effective they’ll be. In the meantime, states and local governments are cutting budgets right and left, because most states have constitutions that prohibit deficit spending, and most state politicians have an incredible aversion to maintaining reserves for hard times when state revenues are solid. They’d rather splurge or offer tax reductions. This idiocy, of course, means that when the national economy turns bad, matters get even worse on the state level, because the states don’t generally have recourse to deficit spending, and increasing taxes during economic bad times usually only decreases total revenues.
Here in the great state of Utah, for example, the legislature is talking about slashing the budget by over 20%, five percent since October, and fifteen percent next year. The single largest cuts will be in education, needless to say, despite the fact that Utah is dead last in per pupil spending on the elementary and secondary level, despite the fact that 13,500 new pupils are expected to enroll in school next year, and despite the fact that close to half of all public school funding comes from the state. In addition, the state junior colleges, colleges, and universities are projected to be required to cut close to a thousand positions, as well as eliminate a large percentage of part-time faculty. Needless to say, it doesn’t appear that the legislature has actually looked at the situation at most institutions, or at the findings of the state board of regents who noted that in times of economic down-turn, enrollments in college and post-graduate work go up. Nor does anyone seem to be noting that most state institutions already have full classrooms and faculty working overtime and beyond, so that, in many cases, there are neither enough teachers, classroom spaces, and time slots to accommodate existing students, let alone those who will be flooding the institutions next year because of a high birth rate and a lack of jobs for those without more education. At the same time, the universities are offering early retirement incentives, but the problem with these is that it encourages the loss of those professors with the most experience to offer, and, frankly, from what I’ve seen, most [but not all] work harder and longer than their younger “replacements” do. The same problems are occurring with police and fire departments throughout the state, which are freezing hires, and with prisons, which have already laid off employees. Likewise, the state is eliminating most spending on infrastructure improvements, which isn’t exactly reassuring, given the sad state of all too many highways, bridges, and mass transit systems.
From what I can tell and from recent news reports, similar problems are occurring across the nation. Given this trend, what I want to ask is: Why can we easily spend hundreds of billions of dollars to bail out reckless banks and brokerage firms, to rescue mismanaged auto manufacturers, but ignore education, public safety, and local infrastructure? Even under “trickle-down” economics, very little of the revenues generated by the various bailout proposals will flow to support these basic areas of our society.