© by Mark Dempsey
Sacramento County Supervisor Frost’s recent email newsletter in effect declares the County is “out of money.” The County has a reserve of only 1.5% of its budget, while the next lowest County has 9.2%. Sacramento County “only saved 10% of the money [it] gained this year.” When I objected to the austerity this implies, Ms. Frost asked whether I believed “we shouldn’t have even saved the 10%?”
Never mind that this compares apples and oranges--is Tuolumne County’s reserve an appropriate guide for what Sacramento’s should be? And never mind how reserves vary over time--in 2007, Contra Costa County’s reserves were -0.5% of their budget. What I suggest is that austerity entirely misses the point. Ms. Frost’s "reserves" are insignificant compared to what she ignores.
Despite the widely held view to the contrary, public sector spending provides something of value to society at large. Good roads not only bring produce from farm to fork, they save tires and are a net benefit, though to the County, roads remain only a cost.
Reserves can magically appear too--Sacramento City recently gave the Kings a quarter billion dollar subsidy with money that appeared nowhere as reserves. Narrowly focusing on the County’s budget reserves does not tell the whole story.
Ms. Frost might respond: “But we’d need to borrow or tax for a program of street improvements or something like “Housing First” for the homeless--which could save 50 - 80% of the $40 million the region currently spends.
Yes, sometimes it takes money to save money. But if borrowing produces social benefits exceeding the cost of the loan, why not borrow?
Meanwhile: Why are we borrowing from private banks? A public bank could give the County a line of credit so it could have a “prudent reserve,” and produce overall savings without shorting other programs or raising taxes. North Dakota has had public banking for nearly a century, borrowing at low rates, recycling repayment in-state rather than sending the money to Wall Street. It has lower taxes than California and was one of the few states unscathed by the Great Recession.
Public banking is no novelty. Herbert Hoover’s Reconstruction Finance Corporation funded the Tennessee Valley Authority, and the first Bay Bridge. Eisenhower ended the RFC, so, like the Kings stadium subsidy, Goldman Sachs underwrote the second Bay Bridge. California actually has an infrastructure bank, but in a suspicious twist, their underwriting is so restrictive that they couldn't fund the Bay Bridge rebuild.
The Bank of North Dakota’s earnings exceeded Goldman Sachs’. Investing in public banking could provide the County’s pension fund with better returns than Wall Street.
Meanwhile ordinary citizens get "We're out of money!" as a prelude to some sacrificed service, but when the plutocrats need a bailout--as the Kings' owners did, as Wall Street's Ponzi capitalists did in 2007-8--No problem! Take as much money as you want!
We’ve seen where austerity leads, too. Margaret Thatcher pled austerity and privatized U.K. public assets like their railways, where ticket prices promptly soared while levels of service declined. Before Thatcher, one in ten British children was poor; after, one in three. Once austerity arrives, funding declines persist, too. In California education funding is down 15.8% compared to pre-recession levels (in North Dakota it’s up 38.6%!).
So Ms. Frost has my best wishes for her term as supervisor. It’s a tough job, but I’ll ask that she please not accept the “we’re out of money” obsession as a viable excuse to cut County services. We’re not out of money any more than the scorekeeper at the ball game is out of points.
Sacramento County Supervisor Frost’s recent email newsletter in effect declares the County is “out of money.” The County has a reserve of only 1.5% of its budget, while the next lowest County has 9.2%. Sacramento County “only saved 10% of the money [it] gained this year.” When I objected to the austerity this implies, Ms. Frost asked whether I believed “we shouldn’t have even saved the 10%?”
Never mind that this compares apples and oranges--is Tuolumne County’s reserve an appropriate guide for what Sacramento’s should be? And never mind how reserves vary over time--in 2007, Contra Costa County’s reserves were -0.5% of their budget. What I suggest is that austerity entirely misses the point. Ms. Frost’s "reserves" are insignificant compared to what she ignores.
Despite the widely held view to the contrary, public sector spending provides something of value to society at large. Good roads not only bring produce from farm to fork, they save tires and are a net benefit, though to the County, roads remain only a cost.
Reserves can magically appear too--Sacramento City recently gave the Kings a quarter billion dollar subsidy with money that appeared nowhere as reserves. Narrowly focusing on the County’s budget reserves does not tell the whole story.
Ms. Frost might respond: “But we’d need to borrow or tax for a program of street improvements or something like “Housing First” for the homeless--which could save 50 - 80% of the $40 million the region currently spends.
Yes, sometimes it takes money to save money. But if borrowing produces social benefits exceeding the cost of the loan, why not borrow?
Meanwhile: Why are we borrowing from private banks? A public bank could give the County a line of credit so it could have a “prudent reserve,” and produce overall savings without shorting other programs or raising taxes. North Dakota has had public banking for nearly a century, borrowing at low rates, recycling repayment in-state rather than sending the money to Wall Street. It has lower taxes than California and was one of the few states unscathed by the Great Recession.
Public banking is no novelty. Herbert Hoover’s Reconstruction Finance Corporation funded the Tennessee Valley Authority, and the first Bay Bridge. Eisenhower ended the RFC, so, like the Kings stadium subsidy, Goldman Sachs underwrote the second Bay Bridge. California actually has an infrastructure bank, but in a suspicious twist, their underwriting is so restrictive that they couldn't fund the Bay Bridge rebuild.
The Bank of North Dakota’s earnings exceeded Goldman Sachs’. Investing in public banking could provide the County’s pension fund with better returns than Wall Street.
Meanwhile ordinary citizens get "We're out of money!" as a prelude to some sacrificed service, but when the plutocrats need a bailout--as the Kings' owners did, as Wall Street's Ponzi capitalists did in 2007-8--No problem! Take as much money as you want!
We’ve seen where austerity leads, too. Margaret Thatcher pled austerity and privatized U.K. public assets like their railways, where ticket prices promptly soared while levels of service declined. Before Thatcher, one in ten British children was poor; after, one in three. Once austerity arrives, funding declines persist, too. In California education funding is down 15.8% compared to pre-recession levels (in North Dakota it’s up 38.6%!).
So Ms. Frost has my best wishes for her term as supervisor. It’s a tough job, but I’ll ask that she please not accept the “we’re out of money” obsession as a viable excuse to cut County services. We’re not out of money any more than the scorekeeper at the ball game is out of points.
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