Roots of the Public Sector Budget Crisis

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This is a presentation by Labor Notes Director, Mark Brenner, at the New York Troublemakers School, May 18, 2013.

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Roots of the Public Sector Budget Crisis

  1. 1. Roots of the Public Sector BudgetCrisis?Mark Brenner, Labor Noteswww.labornotes.orgmark@labornotes.orgMay 18, 2013
  2. 2. 4.0%5.0%6.0%7.0%8.0%9.0%10.0%11.0%12.0%13.0%1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012Understanding the Economic Crisis inFour Pictures - Picture 1Corporate Profits as a Percentage of GDP
  3. 3. Understanding the Economic Crisis inFour Pictures - Picture 2Real Wages for Nonsupervisory Workers$0$5$10$15$20$251947 1954 1961 1968 1975 1982 1989 1996 2003 2010
  4. 4. Understanding the Economic Crisis inFour Pictures - Picture 3Union Density10.012.014.016.018.020.022.024.026.028.01973 1978 1983 1988 1993 1998 2003 2008
  5. 5. Understanding the Economic Crisis inFour Pictures - Picture 4Financial Profits as Share of All Corporate Profits0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008
  6. 6. Wall Street Continues to Rake it In05101520253035401985 1990 1995 2000 2005 2010Wall Street Bonus Pool (Billions)
  7. 7. Rising Inequality – CEO Pay toAverage Workers’ Wages0501001502002503003504001965 1973 1978 1989 1995 2000 2007 2008 2009 2010 2011
  8. 8. Raking it InShare of U.S. Income Going to Top 10 Percent and Top 1%051015202530354045501928 1938 1948 1958 1968 1978 1988 1998 2008 2010
  9. 9. New York is Worst of the Worst
  10. 10. 1% ofPOP. 35.4% Wealth41.3% Wealth23.3% Wealth9% ofPOP.ofpopulationYear: 2010
  11. 11. Shifting Burden off Corporations andonto Individual TaxpayersCorporate Taxes as a Percentage of Total Taxes0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%1945 1955 1965 1975 1985 1995 2005 2010
  12. 12. Shifting Taxes from the 1% to 99%State and Local Taxes as % of Household Income, 2010$10,700 $25,600 $42,900 $69,000 $118,100 $253,700 $1.3 millionAvg.IncomeLowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1%024681012US Average New York State
  13. 13. Shifting Taxes from the 1% to 99%, ContdAverage Tax Rates for .01% (blue) and .1% (red)1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009010203040506070
  14. 14. Economic Toll on New YorkYear2009Budget Shortfall4.9 billion% of StateBudget17.2%2010 17.9 billion 38.8%2011 8.5 billion 15.9%2012 10 billion 18.2%2013 2 billion 3.4%Total 43.3 billion 18.7%
  15. 15. How Have Shortfalls Been Closed?Spending CutsEmergencyFederal AidTaxes and FeesReservesOther45%24%16%9%7%
  16. 16. 1% Agenda for Public Sector Medicaid “Redesign” and Other Cuts “Reforming” Pensions and Retiree Health Privatizing Services and Assets Raising Revenue with “Fee for Service” Tax Breaks and Corporate Giveaways toSpur “Job Creation”
  17. 17. SourcesCorporate Profits as % of GDP: Calculated from the Bureau of Economic Analysis, National Incomeand Product Accounts, Tables 1.1.5 Gross Domestic Product, and 6.16A-D Corporate Profits byIndustryReal Wages for Non-Supervisory Workers: Calculated from Bureau of Labor Statistics, SeriesCEU0500000008 (Average Hourly Earnings for Production and Non-Supervisory Employees) andCWUR0000SA0,CWUS0000SA0 (Consumer Price Index for Urban Wage Earners and ClericalWorkers)Union Density: Calculated from Current Population Survey by Barry T. Hirsch and David A.Macpherson, http://www.unionstats.comFinancial Profits as Share of All Corporate Profits: Calculated from the Bureau of EconomicAnalysis, National Income and Product Accounts, Tables 6.16A-D Corporate Profits by IndustryWall Street Bonus Pool: Report from NY State Comptroller, February 26, 2013Ratio of CEO Pay to Average Workers Wages: from Economic Policy Institute, State of WorkingAmerica, Table 4.43 (view on web)Share of US Income Going to Top 10% and 1%: Emmanuel Saez and Thomas Piketty, "IncomeInequality in the United States, 1913-1998", Quarterly Journal of Economics, 118(1), 2003.(Updated to 2011 from authors website)New York Income Distribution: Graphic from The Nation, May 6, 2013, Source: Fiscal PolicyInstitute, based on Pilketty and Saezs top 1% income share for the US and FPI analysis of NYSDepartment of Tax and Finance and Division of the Budget data for NYS and NYC top 1%income share, 2010-2012 projected. View onlineWealth Distribution: Edward N. Wolff, “The Asset Price Meltdown and the Wealth of the MiddleClass” New York University, August 26, 2012 (view online)
  18. 18. Sources, Cont’dCorporate Taxes as % of Total Taxes: Calculated from data compiled by Brookings Institution, TaxPolicy Center, “Historical Amount of Revenue by Source (online here)State and Local Taxes as % of Household Income: Institute for Taxation and Economic Policy,“Who Pays? A Distributional Analysis of Tax Systems in All 50 States. January 2013 (availableonline)Average Tax Rates for .01% and .1%: Thomas L. Hungerford “Taxes and the Economy: AnEconomic Analysis of the Top Tax Rates Since 1945,” Congressional Research Service,September 14, 2012, data provided by author.Cumulative Budget Shortfall in New York: Phil Oliff, Chris Mai, and Vincent Palacios, “StatesContinue to Feel Recession’s Impact” Center for Budget and Policy Priorities, June 27, 2012(available online)How Have Shortfalls Been Closed?: Elizabeth McNichol, “Out of Balance: Cuts in Services HaveBeen States’ Primary Response to Budget Gaps, Harming the Nation’s Economy” April 18, 2012(available here)

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