How Public Sector Bankruptcies Evolve and Why They Serve The Public

This past Thursday, the city of Detroit, Michigan, filed for bankruptcy.  There will be much crying about how “sad” this is or that an “American icon” is dead.

There is nothing about governmental bankruptcy that is bad. To the contrary bankruptcy is beneficial to the local citizens who will rebuild from the ashes, paying less for future services.  Investors in municipal bonds will have to pay closer attention to the quality of the bonds resulting in government that will have to be more efficient and accountable if it is to attract interest in bond sales.

There is only one reason why government exists and that is to provide services the public wants. At least that was theory. The reality is that elected and over-paid public officials learned, I believe within the last 30 years, that to keep power, catering to the unions was more effective for re-election than fiscal prudence.  The unions always out-number the average hard-working citizen in campaign contributions - Everett Washington firefighters’ union has its own print shop and prints yard signs for big government candidates who support firefighter demands.  

Bankruptcy alerts future bondholders to more closely scrutinize the fiscal health of government.  In the past, government has always been given a pass because it was assumed that government would increase taxes and cut expenses to meet bond obligations.  That notion was always a bit risky but in an era when we let anyone walk with a bankruptcy without shame subscription to that notion is simply foolish. What even a basically savvy public should know now is that government will NOT cut expenses but will instead raise taxes until there is no more capacity to do so, e.g. bankruptcy.

I worked for the state of Washington for 28 years; I have been both a volunteer and paid fire fighter (not for the state); I have been active in local politics and learned the ONLY way people keep a rein on government is to deprive it of money.  It is virtually impossible to elect officials who will keep spending in check because once inside government they choose to remain a part of government and the only way to do that is to support public sector unions.  Where the size of government allows poorly publicized social programs, usually state and federal (county level in more populous states) any elected official who attempts to cut programs will be accused of killing babies and suggesting old people eat dog food. There are many alternatives to these demises but government and its unfortunate (for the taxpayer) alliances in the press will make sure the alternatives do not see the light of day.  To suggest churches or private organizations provide basics to a needy public WITH CONDITIONS are labeled as cruel.  In other words, no one should have to clean public housing or pick up litter on the city streets in order to be given food at the food bank.  Literally, individuals need demonstrate no responsibility for their own care.  These are the tenets of big government; small towns and rural counties do run tighter ships and carefully control expenses and taxes because on a local level it is much easier to oust irresponsible elected officials.  Can anyone  currently living deny it is easier to vote a town councilman out of office than His Maliciousness Chuck Schumer, senator from New York?

Having lived in big and smaller cities I witness very different  attitudes toward the public. Even Spokane, Washington, a wonderful city of 200,000 people absolutely refuses to compromise relations with firefighters or police by seeking alternative providers of services.  San Bernardino, CA, has either filed for bankruptcy or is teetering.  A firefighter in that county, working one day out of four, is paid $200,000  year.  No, firefighters are NOT heroes and not worth that money.  I will make that case forever.

Four police officers in Nassau County, New York, a county adjacent to me, were paid $300,000 JUST IN OVERTIME  in one year. In Suffolk County, NY, where I live, we have the following for law “enforcement” agencies (quotes because very little is actually enforced):

State police;

County Sheriff;

County Police;

City police.

How many law “enforcement” agencies do I need to protect me?  I would accept state police and county sheriff; beyond that I am prepared to defend myself.

When I worked as a paid firefighter for two years, the union rag would brag about slowdowns in firefighter work when the union was not happy...not what good they did for the community.   As a volunteer firefighter in a department with a paid union component, the union members openly, with department indifference, offended the volunteers - against a code of behavior - until the volunteers left, e.g. all paid union department.  We are unable to hold police officers, even off duty, to a higher standard.  One Spokane Valley deputy sheriff literally FLASHED a coffee shop barista and not be fired. (Spokane, Washington). To the credit of the sheriff he did fire the deputy but an idiotic civil service commission reinstated him.  The notion that public sector people are underpaid and thus deserve public respect is not as reasonable as it once was.

By contrast a case that should have been the subject of a master’s thesis, I lived in a small Oregon coastal community.  Local government was under fire.  The city manager, who I will assume NEVER found work elsewhere, understood the purpose of city government.  When it came time to renew funding for government (slight increase in costs) he ran three bond issues.  One was to fund the volunteer fire department (of which I was a member) the second was to fund the police department and the third was to fund administration.  Fire and police passed handily (I was proud to be a firefighter; we passed with 80% of the vote; the police less handily but still a majority) the administration bond issue failed and the manager released the number of employees he had to in order to meet budget. And he did NOT gripe about it and threaten the public with compromised city services. He practiced the notion that the public has the right to define the level of services it wishes from government. The likelihood that Detroit or Suffolk County would do this is virtually nil.  The elected officials truly believe “if the taxpayers do not give us what we want, they deserve no services at all.”

Here is how to deal with this:

1)  Under bankruptcy proceedings, immediately terminate all public sector contracts.  California has threatened to sue bankrupt cities if they do not make pension plan payments.  Use public relations to make sure the citizens know if there are no services left at all, they must blame the state of California for further sucking from dry coffers.  It is not as simple as that but the state ought to learn to negotiate, not dictate.

2)  Pursue an aggressive public relations campaign to assure the public that life is not about to come to an end.  Necessary because all unions will proclaim poor quality of life and even personal danger will result from an abandonment of public employment provision of services.

3)  Pursue contracted services supplemented by volunteer ranks.  I was a volunteer firefighter for years in many districts.  As both a paid and volunteer firefighter I assure you there is no difference in quality.  One of the rare compliments I can pay Long Island is that for 3 million people, nearly all firefighting and medical services are performed by volunteers.

4) Enlist the public in provision of as many of non-emergency services as possible.  Unabashedly recruit such people and praise them publically.  Don’t be cowed by union intimidation.

Again in Suffolk County, New York, the council calls itself the “Legislature” a grossly inflated expression of self-importance.  Its list of departments may very well be one/third of that of the entire state of Washington, itself bloated with politically correct and quite unnecessary government agencies...supported either by minorities “the commission on Indian Affairs” or big business, “the potato commission.”

I revel in Detroit’s bankruptcy; we are fortunate the Federal House is conservative because you can bet Obama will demand bailouts to protect the public sector unions (to protect union jobs is exactly why he bailed out the auto-makers) and shield the elected officials of the city of Detroit the embarrassment they should enjoy...and just wait until the entire state of California or Illinois goes under.  I salivate at that prospect...no I don’t want babies to die in the street.  As I originally asserted the ONLY way to reform government is to deprive it of money and , or even old people to eat dog food.  In bankruptcy, government will reform.  I love Idaho, Utah, Wyoming. Why should any resident in these conservative, fiscally superlative states pay one cent to bail out Moonbean (Jerry Brown, governor, who likes that name) in California or the Suffolk County “Legislature” or the big labor imperialists in Detroit.  There is no reason.

Nice work, Detroit.  I mean that seriously; I applaud your perfection of government malfeasance and failure and look forward to how your public officials make sure the citizens have basic service...sans union fire fighters, a city farrier and a corrupt city government.

*&*&*&*&*&*&