Sunday, April 08, 2012

The Coming Reckoning

The civil society may be defined as follows:

...the totality of voluntary civic and social organizations and institutions that form the basis of a functioning society as opposed to the force-backed structures of a state (regardless of that state's political system) and commercial institutions of the market.

The civil society is something we Americans take for granted.

But what happens when promises to huge segments of society simple can't be fulfilled?

The next decade in Illinois will yield some answers; it represents the problems of the country in microcosm.

Illinois has combined $137 billion in pension and healthcare liabilities on top of $9 billion in current unpaid bills. Yet, Illinois legislators will not even ask 6-figure pensioners to pick up a portion of their health premiums...

...The Illinois Policy Institute ... is releasing 133 pages of frightening data. Beyond that $83 billion in unfunded pensions, state government alone faces an unfunded liability of more than $54 billion in retiree health liabilities over the next 30 years.

During the 2011 deliberations, two groups helped block retiree health reform: lawmakers of both parties who have state institutions (and thus state retirees) in their districts, and well-paid lobbyists whose prior careers in government entitle them to, yes, fat public pensions. If that happens this year, we want to read names.

Who is to blame for this mess?

• Public unions
• Politicians in bed with public unions
• Voters who vote for politicians who are in bed with public unions

Yet this problem wasn't supposed to happen.

Already levying one of the nation's highest tax burdens, Illinois' Democrat governor decided to raise taxes to help "close the gap". In January of 2011, Governor Quinn predictably broke a campaign promise and raised income taxes by a stunning 66 percent.

Problem solved, right?

Of course not. Because Democrats and public sector unions -- the unholy alliance designed to extract ever-increasing amounts of money from taxpayers -- choose to ignore history, facts, logic and common sense.

In a study for the Brookings Institution, Richard Goode (1983, pp. 96—97) expressed some of the all-too-predictable problems with raising taxes on the productive members of society (PDF).

High taxes may make people less willing to work, to assume managerial responsibility, to make innovations, to save and to invest.

The more progressive a tax the more likely it is that. . . incentives will he damaged. . . . Government use of tax revenues to subsidize or provide free goods and services that people would otherwise buy for themselves, such as food, housing and medical services, will accentuate the adverse effects on incentives. . .

Resistance may take the form of increased evasion . . [or] diversion of activities from commercial or organized markets to other channels that are less exposed to taxation, . . . Migration and capital flight to [regions]
with lower taxes are strong forms of resistance.

In other words, the act of raising taxes invariably fails to successfully raise revenue.

There is a reckoning coming. Retirees will not get the pensions and health care benefits they were promised. Vendors will not get paid in full.

The extra-Constitutional promises of temporary politicians have set this society on a course for an inevitable conflict.

It is our job -- it is our duty -- to re-moor this society to the Constitution. The alternative is too painful to consider. The alternative is to abandon this, the most magnificent society ever seen on Earth, to the rubrics of corrupt and power-hungry politicians.

And this I refuse to do. November is coming.

1 comment:

SgtPete said...

I still can't understand why the people of IL, CA, and NY refuse to acknowledge this crisis. Soon the awaking will come, but at what price. Police, fire and emergency workers will not get paid, or get paid significantly less. In turn some will die when these workers don't show. Why should they risk their lives for no compensation. It will be interesting, but like that stop sign being placed after a fatality, the legislature will be replaced only after a significant number of people die. With no fire, police or EMTs, should we expect riots or worse?