What’s Good for General Motors is Good for Philadelphia: Renegotiate Pensions and Unions and Debt, Oh My!


Michael Nutter, the Mayor of Philadelphia, says the city faces a billion dollar shortfall over the next five years, all but guaranteed to rise, due to declining revenues from the global economic meltdown. As a result the mayor has announced budget cuts in the hundreds of millions including the closing of libraries and fire stations in addition to closing recreational pools and laying off a couple hundred city workers.  He’s taking an axe to seasonal jobs and contract jobs as well as ordering pay cuts for non union workers above a certain income level.  Mayor Nutter has done well to deal with these hard decisions and the necessary cuts and for that he should be applauded but he’s only dealt with half the problem at this point.

It seems that Mayor Nutter and the big three automakers have much in common that have been contributing to a financial boondoggle that only now is coming into specific relief if not screaming for attention.  The heads of the Big Three Automakers know this problem only too well because it’s been driving them out of business for years and without relief it will destroy the American Auto Industry. The fact is that this silent killer has been killing Philadelphia and many big northeastern cities just as it killed the steel industry.  What is this killer of municipal governments and car industries alike?  Out of control union contracts, pension contracts, debt and image.  Over half the city’s budget is considered non discretionary spending!  What kinds of things are non discretionary? Pension Plans, Debt payments, Exorbitant Union Contracts and Politically Correct Social Service Spending. 

It’s well known that Union Contracts and Pension payments have been killing the car industry for a long time.  It’s well understood that they’re going to have to nullify escalating union wages that have bled the automakers white. It’s a certainty that a bankruptcy court will likely do that because there simply are no other choices.  The Big Three foolishly promised extravagant retirement pensions and benefits and now they simply can’t continue business unless they achieve significant relief from those promises.  Pension plans and retirement benefits have been bedeviling lots of industries and governmental units across the nation and in this Philadelphia is not alone.   Government does a terrible job of running pension plans and both municipal government and business want to transfer the risk to the employee or the federal government.   Perhaps the lesson for employers, public or private, is to transfer the risk and reward of pensions and retirement benefits to private system and to get out of pensions entirely.  We have a situation in this nation where the burden of retirement benefits and pensions are killing us.  A bankruptcy judge will deal with setting the auto industry back into financial solvency but who will do the same for government entities like Philadelphia who have the same problem?

Mayor Nutter: Please make sure that the Unions and Pensioners share in the cuts necessary to maintain solvency and sanity in the city’s budget.  Go to court if you have to but break these contracts and make no deals that fail to reflect the financial realities of today. These contracts were a great idea in their day but have become an unserviceable sacred cow: so please go to court in an effort to share the burden equally. It’s the right thing to do.

Retirees and Pensioners:  While the benefits you enjoy were promised in good faith they are unsustainable and will remain so for the foreseeable future.  In good times pensioners should share in the good times just as in bad times you should share in the pain.  It’s not acceptable to have retirees and pensioners taking this much of a city budget when fire stations are closing and when some say we’re in the worst economic event since the Great Depression.  I know it’s not fair but I think it’s just plain true.  You need to deal with this. It’s the right thing to do.

And now we come to all the social service programs, the social engineering programs and the welfare state programs that have swollen to such an alarming percentage of the city budget.  After school programs and additional education help in poor communities are a desirable thing but times have changed and so must our priorities.  A minority or poor child does not have a right to city funded recreational, educational programs that the city can’t, in good faith, afford. Period. 

Poor and Minority Kids that  want these programs should understand that it’s not the governments job to provide such programming and that any that are provided are DISCRESIONARY.  Let me put it another way:  the only programming the poor and minority communities of Philadelphia are entitled to is anything that the congress has mandated the city to do by law. Anything that is not a funded or unfunded mandate by the federal government should be reduced in an equal measure to the less than half of the budget that presently bears the entire burden of the Mayor’s budget cutting ax. 

The idea that there are “special” populations who are except from service cuts because their programs are based on a individuals race, gender, affection preference; even when the city is being body slammed by the beginnings of a potential depression, is absurd.  City’s have the right, and indeed the obligation, not to cut essential services like police or fire over welfare programming or even a Mummers Parade.  You don’t fund Parades or Ethnic Pride Centers when you’re facing an economic tsunami.  It’s not racist to cut or eliminate programs like this if events warrant and it’s preferable to cut such programs over reducing fire and police protection which are the city’s first and primary reasons for existence. 

While I applaud the Mayors grit in going after fire stations and non union employees and libraries it seems to me that the job of Mayor Nutter is only half done.  It’s time to demonstrate the kind of leadership it takes to take on the Unions, the Pensioners and the Poverty and Racial Advocates too.  What good is half a job?  What inspiration can come from a call for sacrifice sent to half the people?  When bad times come everyone should expect to sacrifice in like manor because the government that plays favorites (politics) has no moral authority to govern.  Such a government becomes just another corrupt player in the game and an obstacle to be overcome or outwitted by its own residents. Thank God, with the assent of Barak Obama to supreme power on earth we’re finally into post racial politics!  Now: if someone could get the memo to Mayor Nutter, than we could all experience the truth that what’s good for General Motors is Good for Philadelphia.


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