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12/19/2010

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Bob Lemer

Totally absent from the dialogue is the very real fact that, just like the federal government, state and local government budgets literally reek with fat. The obvious first move should be to specifically identify and remove this fat, before even beginning to talk about raising taxes or cutting services.

I make this observation based upon:(a)extensive auditing and consulting with about 100 governmental and nonprofit entities while a partner with a Big Four accounting firm; and (b) more than a quarter-century of researching the operations and finances of the federal, state, and many local governments and quasi-governmental entities.

Jack

Bob: You're surely right and having grown up in New England I'm about as anti-pork and waste as one can be. Cutting is in the air today and while you're busy cutting local fat, I'll go over and see if I can give the military a bit of a haircut including excising the F-35 program along with a host of others "designed" for anything other than pork ladling, for wars of the sort anticipated before the USSR imploded.

As most of the fat and pork is spent on wages for some one, somewhere, and most likely within our borders once we've accomplished our task and added a few more millions to the unemployment roles and thousands more homes to the record foreclosures expected in 2011, then what? So "we" are lean and mean but, alas unemployed with demand for goods and services even lower than today.

W/O the extra funds/demand created by the stock market boom of the 90's and the housing boom spawned of fraudulent banking practices of the 2000's I'm sure the unemployment problem would have shown up 20 years ago albeit more gradually.

It seems the big question is; have we reached a time when our highly productive economy does not need the workforce of yesteryear? And the related question of unneeded labor scrambling for what few tidbits are available increasing the downward pressure on long stagnant wages?

Then as, or if, energy and other costs increase (cost of imports?) there will be yet fewer discretionary dollars available to create demand for our goods and services and the downward spiral continues.

Seems we're in a time of similar concentrations of wealth and incomes in the hands of very few that created make-work programs like the WPA but are obsessed with cutting and throwing yet more folks out of work.

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. Real (inflation-adjusted) GDP is roughly the same today that it was three years ago; it “should” be 9 percent higher—which would make GDP almost $1.5 trillion greater today than it is. The economy cannot rejoin the trend line with unemployment as high as it is.
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As bad as their present fiscal situation is, the long-term picture for state and local government finance is even more dismal. The vast looming problem is the huge level of unfunded liabilities for pensions and health care to retired government employees.

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So, the public’s assessment for California (one of the highest overall taxing states) is that …well Californians are not paying enough taxes. Anybody notice the vicious cycle I was talking about? That is why America seems to have passed the point of no return

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