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The Teapot, Boiling

Angst over jobs, local taxes, race, and terror could turn us red in 2010

The Erie County Fiscal Stability Authority, or ECFSA, otherwise known as the Control Board, will soon be revealed as either a complete political fraud or as the stern, sane fiscal watchdog that will keep at least some local politicians honest. If the ECFSA goes “hard” again, chances are that Chris Collins’s candidacy for governor is dead. If the ECFSA stays “soft,” then one may wonder why taxpayers should fund a state-created entity that issues scary memos but does nothing.

The last scary memo came on October 13. In its seven pages, the ECFSA warned of a $172.3 million budget gap. It pointed to the end of the federal government’s bailout money. It criticized the bizarre and baseless assertions by the county executive that he can, all by himself, divert sales tax receipts from towns to his own exchequer. Finally, the ECFSA warned of undisclosed huge property tax increases ahead, starting in 2011.

And then? Nothing. The ECFSA decided to take a break for the Halloween, Thanksgiving, Hanukkah, Eid, and Advent holidays, and maybe for Christmas and Kwanzaa too.

“Only the receipt of approximately $76 million in [federal] stimulus funds has allowed the county to produce balanced budgets for 2009 and 2010,” the ECFSA wrote in October. And only a supine, confused, listless, and clueless Erie County Legislature and Erie County Democratic Party has allowed all the federal money to be swallowed up in budgets that still cut funding for libraries, cultural groups, parks, health clinics, and the nutrition program for young mothers. This same legislative body, whose 12-member Democratic majority was unable to muster 10 votes to override the county executive’s veto of a long-overdue countywide land-use planning board, is about to elevate to its chairmanship a legislator who has trouble filing accurate campaign finance disclosure reports. This is the same body that meandered wordlessly as the executive ripped up the intermunicipal agreement that has allowed the Olmsted Conservancy to manage Buffalo’s major parks after Buffalo ran out of money in 2004.

If the ECFSA remains dominated and directed by the Buffalo Niagara Partnership, chances are good-to-excellent that the looming fiscal problems of 2011 will remain out there, looming, with only a hand-wringer here and there wondering what will be cut next. The cultural community refused to rally around a 2007 plan for creating a dedicated fund for cultural organizations. As predicted, that funding mechanism has been politicized, and now its budget has been reduced by more than 20 percent notwithstanding the demonstrated economic impact of steady public support for the arts. Libraries have been cut by 10 percent, and the so-called Library Protection Act has thus been revealed as toothless.

Traditional politics, then, is failing us. One doubts that a county executive who turns away federal grants for social-service programs will choose to raise property tax rates in a political environment where there is no opposition—an environment that features Democrats who can’t or won’t forge a coalition of cultural leaders, social workers, library fans, and parks partisans to fight back. If even the people whose interests are being trashed won’t rise up, it’s hard to imagine the ECFSA roaring back to life.

Thus we’ve just been given a preview of the next several years of political, fiscal, and community life in the Rust Belt—in which angry, anti-government rhetoric will get much, much angrier as the population and tax bases shrink, in which political paralysis will prevent bold support even for popular public amenities, and in which federal bailout money (if it ever comes again) simply disappears unacknowledged. Unaddressed, the problems will grow worse, the alienation will continue, and the pot will boil hotter and hotter.

This is how Barack Obama loses the blue states in 2010.

What bad will look like

After the midterm election in 2010, President Barack Obama could face a very hostile Congress, even a new Republican majority in the House. Reliably progressive Congressional districts in Long Island, Westchester County, and even in Erie County could swing Republican. “White voters are deserting [Obama] in droves,” a senior Democratic strategist told me last week. “Next year could be a disaster. A disaster.”

And that’s just Congressional politics in the midterm election. It has often been the case that a popular new president gets kicked hard in the election the year after he is first inaugurated. What’s new and different this time around is how local fiscal issues, and state budget problems, may have created a systemic crisis.

Thanks to the federal stimulus money, the last fiscal year wasn’t all that tough on state and local governments. But 2010 could be very very tough, and 2011 could be a screaming nightmare. Here’s the list of woes: First, in New York State anyway, whatever new stimulus money arrives won’t help pay the Medicaid bills that the first round of stimulus money paid, so county property taxes will have to rise. Second, the bill for local public employee pensions is coming due in 2011, because the state pension fund’s bubble popped when the Wall Street bubble popped. Third, economic activity has not been so great (unemployment is up, sales are down), so sales tax receipts are down. Fourth, because of continued suburban sprawl, there is a huge oversupply of houses all over Upstate New York, which means that the sale prices of real property won’t continue to grow, and could start shrinking—and what that means is, simply, that the property tax won’t yield as much revenue as governments need in order to fund all the services property taxpayers demand.

The problem will be most acute in suburban towns. State aid to school districts will be cut, which will leave suburban school budgets in the hands of voters who have, increasingly, rejected school-tax increases. Town property taxes will go up even as the long-term trends for first-ring suburbs, which is where the oldest of the old taxpayers live, get poorer. There is good reason to believe that, by 2020, the 1,200-square-foot 1950s Cape Cods of Tonawanda, Cheektowaga, West Seneca, and Hamburg will house either desperately poor people or nobody at all. As Buffalo and other old cities have found, abandoned houses don’t yield much tax revenue. And it is a very good bet that the chamber of commerce rhetoric about taxes, plus the downsizer rhetoric about taxes, and the Tea Party rhetoric about taxes, will never ever address the root cause of the problem: namely, the vast and increasing oversupply of houses in a part of the country whose population is not growing.

Thus the finance and real-estate elites who cause the problem will have succeeded in making themselves richer, but homeowners will be told, as they already are, that their tax woes are somebody else’s doing.

What worse could look like

The distinguished Columbia University historian Robert O. Paxton published The Anatomy of Fascism before Sarah Palin was elected governor of Alaska at the height of the George W. Bush political ascendancy. Her anti-elitism was and remains her brand. To a greater extent than was ever the case when W. was president, our media make more and more room for crude expressions of anti-elitism that sound and feel like the visceral anger that found political expression in the 1930s in Europe. Barack Obama is the specific target of a much more intense scorn, even rage, than any of the negativity hurled by condescending intellectuals against W.

At town hall meetings and Tea Party demonstrations, our new president is blamed for the subprime mortgage crisis, the collapse of Lehman Brothers, the stock market collapse of 2008, and all the other stuff that occurred before he took office in January 2009, but blamed in language that has little to do with the specific Treasury and Federal Reserve programs of which he is at most a part-author, a follow-on author. Instead, the language is about group grievance: “What is happening to our America?” has been sobbed and shouted out by folks whose general feelings of victimhood are widespread—as widespread as the national housing crisis.

Liberals have correctly pointed out the inherent racism of homemade pictures of Obama as a witch doctor. But liberals are dreaming if they believe that Tea Party sentiment is confined to the uneducated lower-middle-class whose bungalows are in foreclosure.

Reading Paxton’s book about the 1920s and 1930s in civilized Europe ought to give everybody shivers. He enumerates the “mobilizing passions” that led lots of previously sane people to seek a heroic game-changer who would come in and sweep away the usual politics. These include “a sense of overwhelming crisis beyond the reach of any traditional solutions,” “the belief that one’s group is a victim, a sentiment that justifies any action, without legal or moral limits, against its enemies, both internal and external,” “dread of the group’s decline under the corrosive effects of individualistic liberalism, class conflict and alien influences.” Finally, Paxton writes of “the need for authority by natural leaders (always male), culminating in a national chief who alone is capable of incarnating the group’s destiny.”

The only part of that picture that doesn’t fit is the gender bit. The attraction of, and revulsion to, Sarah Palin is all about un-intellectual, non-rational stuff. It’s about fear. The fear is grounded in anxiety about money, and I see that anxiety growing, not shrinking.

Bruce Fisher a former deputy executive for Erie County and currently visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

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