A BIG, FAT "GREEK" BUDGET
May 11, 2010
As New York City Mayor Michael Bloomberg unveiled his updated $66.2 billion city budget last week, Greek protesters were terrorizing their compatriots and global markets. In other words, the West's economic crises are far from over, says Nicole Gelinas, a senior fellow with the Manhattan Institute.
Greece is in trouble because markets have made it admit that its finances are impossible, says Gelinas:
- Athens will spend 13.9 percent more than it can expect to take in this year -- and that's no one-time thing.
- For years, Greece has spent more on its public workers and retirees than it could afford - because membership in the "safe" euro allowed it to borrow cheaply.
New York City isn't Greece, but its numbers are disturbing, says Gelinas:
- In fiscal year 2009 (which started in July 2008), New York City spent 6.1 percent more than it took in via tax collections and other recurring local revenues -- a $2.5 billion gap.
- In 2010, the city spent 5.2 percent more -- $2.2 billion.
- For the new year, 2011 -- which starts this July -- the city will spend 7.6 percent more than it takes in, or $3.3 billion.
- By 2014, the city will cross an important line, with an 11.3 percent gap; like Greece did, New York City is approaching scary double digits.
Everyone, says Gelinas, knows the problem is being caused by public-sector retiree costs. It's not simply that taxpayers have to make up for declines in the stock market portfolios that fund public workers' guaranteed pensions, it is worse: Even as taxpayers must pour more cash in, more is pouring out, too:
- Pension and health payments to retirees are now $13.1 billion a year, up from $7.5 billion in 2002.
- The cash drain is accelerating as more uniformed workers retire on lucrative disability pensions and others live longer.
- Cutting library hours, closing senior centers and shutting pools down early will save just $36 million -- one day's worth of payments to state public-sector retirees.
Source: Nicole Gelinas, "A big, fat 'Greek' budget," New York Post, May 10, 2010.
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