Tax Cuts Are To Blame for Cities’ Bankruptcy Risks


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Just days before Christmas, there are warnings that dozens of large cities and states in the industrialized world may be going broke next year. But it’s not just a ripple from the Great Recession. It comes from three decades of neoliberal tax cuts that have defunded public services and institutions.

Three days ago, the Guardian ran a short but damning piece about the civic vulnerabilities in North America and Europe: $2tn debt crisis threatens to bring down 100 US cities | Business | The Guardian.

Below are a number of descriptions of the conditions our public bodies are in. I would argue that the neoliberal motivations of the rich since the socio-economic purges beginning with Reagan/Thatcher/Mulroney have caused or largely contributed to each of these. We’re not talking complex logarithmic supply-demand curves here; we’re talking the basic arithmetic of collecting enough income to match expenses, something households do every day…or don’t, since so many of us are addicted to consumer debt to keep our unsustainable economy afloat.

But as you read what 2011 will look like for many sub-national governments, beware the neoliberal solution from the Citigroup zombie below: austerity and more spending cuts, not increasing taxes for necessary services; this will all pad the privatization agenda:

  1. New Jersey governor Chris Christie summarised the problem succinctly: “We spent too much on everything. We spent money we didn’t have. We borrowed money just crazily. The credit card’s maxed out, and it’s over. We now have to get to the business of climbing out of the hole. We’ve been digging it for a decade or more. We’ve got to climb now, and a climb is harder.”
  2. American cities and states have debts in total of as much as $2tn. In Europe, local and regional government borrowing is expected to reach a historical peak of nearly €1.3tn (£1.1tn) this year.
  3. Detroit is cutting police, lighting, road repairs and cleaning services affecting as much as 20% of the population.
  4. Illinois has spent twice as much money as it has collected and is about six months behind on creditor payments.
  5. California has raised state university tuition fees by 32%.
  6. Arizona has sold its state capitol and supreme court buildings to investors, and leases them back.
  7. Public sector indebtedness needs to be cut, it needs a lot of austerity, and it hit the central governments first, and now is hitting local bodies,” said Philip Brown, managing director at Citigroup in London.
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Stephen Elliott-Buckley

Post-partisan eco-socialist. at Politics, Re-Spun
Stephen Elliott-Buckley is a husband, father, professor, speaker, consultant, former suburban Vancouver high school English and Social Studies teacher who changed careers because the BC Liberal Party has been working hard to ruin public education. He has various English and Political Science degrees and has been writing political, social and economic editorials since November 2002. Stephen is in Twitter, Miro and iTunes, and the email thing, and at his website, dgiVista.org.

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One thought on “Tax Cuts Are To Blame for Cities’ Bankruptcy Risks”

  1. Government downloading its quasi-contractual obligations to the people — how is this not surprising?

    It’s too bad so few ever learn that though there are some well-meaning people in government, the institution is corrupt; for all governments lie and operate in the dark.

    What we have going on now is an international crime-ring being carried out under the flag of government, with its tentacles creeping into affairs from the local government on up to the highest institutional levels, and with the deleterious effects escallating accordingly.

    Democracy only works if we practice it. And voting in, thus giving consent to, corporate-backed political Parties only ENSURES there will be no representation of anything other than the owners’ interests — and that is corporate profit.

    So the question, knowing this impossible-to-ignore truth, is how can we possibly have our collectively understood model of government reformed, as it is likely a prerequisite needed before a further democratization of governance?

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