22 Painful Signs That Austerity Has Arrived In America

The Business Insider reports that 22 Painful Signs That Austerity Has Arrived In America.

(emphasis mine)

22 Painful Signs That Austerity Has Arrived In America
Michael Snyder, The Economic Collapse
Jan. 18, 2011, 4:23 PM

Over the past couple of years, most Americans have shown little concern as austerity measures were imposed on financially troubled nations across Europe.  Even as austerity riots erupted in nations such as Greece and Spain, most Americans were still convinced that nothing like that could ever happen here.

Well, guess what? 
Austerity has arrived in America.

At this point,
it is not a formal, mandated austerity like we have seen in Europe, but the results are just the same.  Taxes are going up, services are being slashed dramatically, thousands of state and city employees are being laid off, and politicians seem to be endlessly talking about ways to make even deeper budget cuts.  Unfortunately, even with the incredibly severe budget cuts that we have seen already, many state and local governments across the United States are still facing a sea of red ink as far as the eye can see.

Most Americans tend to think of "government debt" as only a problem of the federal government.  But that is simply not accurate.  The truth is that
there are thousands of "government debt problems" from coast to coast.  Today, state and local government debt has reached at an all-time high of 22 percent of U.S. GDP.  It is a crisis of catastrophic proportions that is not going away any time soon.

A recent article in the New York Times did a good job of summarizing the financial pain that many state governments are feeling right now.  Unfortunately, as bad as the budget shortfalls are for this year, they are projected to be even worse in 2012....

While state revenues — shrunken as a result of the recession — are finally starting to improve somewhat, federal stimulus money that had propped up state budgets is vanishing and costs are rising, all of which has left state leaders bracing for what is next. For now, states have budget gaps of $26 billion, by some estimates, and foresee shortfalls of at least $82 billion as they look to next year's budgets.

So what is the solution? Well,
for state and local politicians from coast to coast, the answer to these financial problems is to impose austerity measures.  Of course they never, ever use the term "austerity measures," but that is exactly what they are.

1)  The financial manager of Detroit Public Schools wants to close half of all city schools, leading to class sizes of up to 62 students.

2)  Detroit Mayor Dave Bing wants to cut 20 percent of the city off from police and trash services.

3)  California Gov. Jerry Brown is requiring 48,000 state workers to turn in their government cell phones by June 1st.

4)  N.Y. Gov. Andrew Cuomo is proposing to completely eliminate 20 percent of state agencies.

5)  NYC Mayor Michael Bloomberg has closed 20 fire departments at night and is proposing layoffs in every single city agency.

6)  Illinois lawmakers recently pushed through a 66% increase in the state's personal income tax rate.

7)  The town of Prichard, Ala., recently stopped sending pension checks to retirees in violation of state law.

8)  N.J. Gov. Chris Christie purposely skipped a scheduled $3.1 billion payment to the state's pension system.

9)  New Jersey still faces a $10 billion budget deficit this year even after cutting $1 billion from the education budget and laying off thousands of teachers.

10)  Major cuts to Newark's police force have led to a substantial spike in the city's crime rate.

11)  Camden, N.J., the second-most dangerous city in America, recently laid off half of its police force due to a huge budget shortfall.

12)  Philly, Baltimore and Sacramento have started "rolling brownouts," shutting down city fire stations on a rotating basis.

13)  In Georgia, Clayton County eliminated its public bus system to save $8 million.


15)  In Connecticut, the governor wants state legislators to pass the biggest tax increase the state has seen in two decades.

16)  State parks and historic sites are deteriorating due to widespread budget shortfalls.

17)  Arizona has decided to stop paying for many types of organ transplants for people enrolled in the state's Medicaid program.

18)  Arizona is so desperate for money they have sold off the state capitol building, the supreme court and the legislative chambers.

19)  All over the nation, asphalt roads are being ground up and replaced with gravel because it is cheaper to maintain.

20)  Illinois is such a financial disaster zone, it is difficult for even the state Comptroller to describe.

21)  Chicago's budget is in such dire straits, officials are toying with the idea of setting up a city-owned casino to raise cash.

22)  Mich. Gov. Rick Snyder is desperately looking for ways to cut the budget and says that "hundreds of jurisdictions" in the state could go bankrupt in the next few years.

But everything you just read is only the beginning.

Budget shortfalls for our state and local governments are projected to be much worse in the years ahead.

So what is the answer?  Well, our state and local governments are going to have to spend less money.  That means that we are likely to see even more savage budget cutting.

In addition, our state and local politicians are going to feel intense pressure to find ways to "raise revenue".  In fact, we are already starting to see this happen.

According to the National Association of State Budget Officers, over the past couple of years a total of 36 out of the 50 U.S. states have raised taxes or fees of some sort.

So hold on to your wallets, because the politicians are going to be coming after them.

We are entering a time of extreme financial stress in America.  The federal government is broke.  Most of our state and local governments are broke.  Record numbers of Americans are going bankrupt.  Record numbers of Americans are being kicked out of their homes.  Record numbers of Americans are now living in poverty.

The debt-fueled prosperity of the last several decades came at a cost.  We literally mortgaged the future.  Now nothing will ever be the same again.

My reaction:  Great article.  I have nothing to add.

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3 Responses to 22 Painful Signs That Austerity Has Arrived In America

  1. Bob says:

    I agree, Eric, excellent article. Besides a false messiah, what can be done to break the cycle we are in? As a side note I work for New York State government. We have 9 staff in our bureau and need about 7 more to process our mandate properly. I wear 3 hats as it is and I can not imagine losing more staff.

  2. Jan Paul says:

    Eric, thanks for sharing your views on world events. Your blog has been one of the few that stayed in my favorites over the years.

  3. sharonsj says:

    We'd have some extra money the moment we stop the insane wars in Iraq and Afghanistan (not sure of the exact amount but something like $2 billion a month). Then we could close half of the nearly 1,000 military bases we run around the world, bring home the troops, and use them to guard our borders.

    We ought to stop giving millions in foreign aid to places like Saudi Arabia and China (like they need our money!) and start taxing oil companies like Exxon-Mobil, who not only made billions and never paid one cent of tax but who got a tax refund!

    The insane list goes on. And we Americans are complete fools for going along with this crap.

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