Debt: The Shame of Cities and States

Article excerpt

A century ago, America's states and cities faced a crisis in government. A number of commonwealths--California, New York, New Jersey, Wisconsin, and Illinois conspicuous among them--as well as cities across the land labored under the heavy weight of costly and corrupt misrule. This state of affairs was generally blamed on an unholy triple alliance of large corporations ("the trusts") and other business interests, party bosses and machines, and compliant legislators and officials. Lincoln Steffens, the most prominent muckraking journalist of the day, scathingly described the results in influential magazine articles, gathered together in his 1906 books The Shame of the Cities and The Struggle for Self-Government.

Since then the clock of time has completed a circuit of 100 years and more, and the nation's states and municipalities again face a crisis in government. A number of commonwealths--yes, California, New York, New Jersey, Wisconsin, and Illinois still conspicuous among them--as well as a number of counties and cities, labor under a heavy weight of debt, deficits, and future obligations. This state of affairs is generally blamed on an Iron Triangle of public employee unions, compliant governors and legislators, and a complaisant electorate.

The current crisis is the product not of contracts, graft, and patronage--the mother's milk of early-20th-century state and local politics--but of sweetheart salary, pension, and health insurance deals secured by public employee unions: the mother's milk of early 21st-century politics. The parlous state of American state and local government circa 1900 may properly be seen as a consequence of the in many other respects admirable rise of a democratic party politics over the course of the preceding century. The fiscal-deficit crisis of the past several years may properly be seen as a consequence of the in many other respects admirable rise of the welfare state.

Progressivism, the movement that rose in reaction to state and local malfeasance a century or so ago, was defined by the dictates of party politics; the clash of social, ideological, and economic interest groups; and the federalism of American government. It both reflected and reinforced the growing legitimacy of the administrative and social welfare state, and a rising discontent with boss-machine-party politics.

There are signs that a reaction is taking shape comparable in its scale and impact to progressivism but this time aimed at the excesses rather than the insufficiencies of American government. A hundred years ago a generation of governors undertook (with varying degrees of intensity) to combat the unsavory corporate-political machine combines of their time. Among the more conspicuous were Republicans Robert La Follette in Wisconsin, Hiram Johnson in California, Theodore Roosevelt and Charles Evans Hughes in New York, and Democratic Woodrow Wilson in New Jersey. Their counterparts today focus, with varying degrees of intensity, on the fiscal consequences of overgenerous pension and health care arrangements for public employees. Among them: Republicans Scott Walker in Wisconsin, Chris Christie in New Jersey, and Mitch Daniels in Indiana, and Democrats Jerry Brown in California and Andrew Cuomo in New York.

Insofar as they see themselves engaged in an effort to change policies that stem from an abuse of government power and threaten the well-being of the polity, they are very much the descendants of their counterparts a century and more ago. They are contesting the spend-and-tax conventional wisdom of past decades, much as their progressive equivalents took on the reigning assumptions of Gilded Age machine politics.

The crisis

The core problem is the massive, rapidly growing fiscal burden of current debt and future obligations spawned by public employee pensions and health care. It has become a touchstone public issue. In June 2011, the Hoover Institution's David Brady and Michael McConnell convened a State and Municipal Fiscal Default Workshop, designed to subject the crisis to concentrated, expert examination. …