roots of the public sector budget crisis
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Roots of the Public Sector Budget Crisis?
Mark Brenner, Labor Notes www.labornotes.org
mark@labornotes.org
May 18, 2013
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 2012
Understanding the Economic Crisis in Four Pictures - Picture 1Corporate Profits as a Percentage of GDP
Understanding the Economic Crisis in Four Pictures - Picture 2 Real Wages for Nonsupervisory Workers
$0
$5
$10
$15
$20
$25
1947 1954 1961 1968 1975 1982 1989 1996 2003 2010
Understanding the Economic Crisis in Four Pictures - Picture 3
Union Density
10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0
26.0
28.0
1973 1978 1983 1988 1993 1998 2003 2008
Understanding the Economic Crisis in Four Pictures - Picture 4 Financial Profits as Share of All Corporate Profits
0.0%
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
Wall Street Continues to Rake it In
0
5
10
15
20
25
30
35
40
1985 1990 1995 2000 2005 2010
Wall Street Bonus Pool (Billions)
Rising Inequality – CEO Pay to Average Workers’ Wages
0
50
100
150
200
250
300
350
400
1965 1973 1978 1989 1995 2000 2007 2008 2009 2010 2011
Raking it InShare of U.S. Income Going to Top 10 Percent and Top 1%
0
5
10
15
20
25
30
35
40
45
50
1928 1938 1948 1958 1968 1978 1988 1998 2008 2010
New York is Worst of the Worst
1% of POP. 35.4% Wealth
41.3% Wealth
23.3% Wealth
9% of POP.
of
population
Year: 2010
Shifting Burden off Corporations and onto Individual TaxpayersCorporate Taxes as a Percentage of Total Taxes
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
1945 1955 1965 1975 1985 1995 2005 2010
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.Income
Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1%0
2
4
6
8
10
12 US Average New York State
Shifting Taxes from the 1% to 99%, Cont'd
Average Tax Rates for .01% (blue) and .1% (red)
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20090
10
20
30
40
50
60
70
Economic Toll on New York
Year
2009
Budget Shortfall
4.9 billion
% of State Budget
17.2%
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%
How Have Shortfalls Been Closed?
Spending Cuts
EmergencyFederal Aid
Taxes and Fees
Reserves
Other
45%
24%
16%
9%
7%
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 to
Spur “Job Creation”
SourcesCorporate Profits as % of GDP: Calculated from the Bureau of Economic Analysis, National Income
and Product Accounts, Tables 1.1.5 Gross Domestic Product, and 6.16A-D Corporate Profits by Industry
Real Wages for Non-Supervisory Workers: Calculated from Bureau of Labor Statistics, Series CEU0500000008 (Average Hourly Earnings for Production and Non-Supervisory Employees) and CWUR0000SA0,CWUS0000SA0 (Consumer Price Index for Urban Wage Earners and Clerical Workers)
Union Density: Calculated from Current Population Survey by Barry T. Hirsch and David A. Macpherson, http://www.unionstats.com
Financial Profits as Share of All Corporate Profits: Calculated from the Bureau of Economic Analysis, National Income and Product Accounts, Tables 6.16A-D Corporate Profits by Industry
Wall Street Bonus Pool: Report from NY State Comptroller, February 26, 2013
Ratio of CEO Pay to Average Workers Wages: from Economic Policy Institute, State of Working America, Table 4.43 (view on web)
Share of US Income Going to Top 10% and 1%: Emmanuel Saez and Thomas Piketty, "Income Inequality 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 Policy Institute, based on Pilketty and Saez's top 1% income share for the US and FPI analysis of NYS Department of Tax and Finance and Division of the Budget data for NYS and NYC top 1% income share, 2010-2012 projected. View online
Wealth Distribution: Edward N. Wolff, “The Asset Price Meltdown and the Wealth of the Middle Class” New York University, August 26, 2012 (view online)
Sources, Cont’dCorporate Taxes as % of Total Taxes: Calculated from data compiled by Brookings Institution, Tax
Policy 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 (available online)
Average Tax Rates for .01% and .1%: Thomas L. Hungerford “Taxes and the Economy: An Economic 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, “States Continue 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 Have Been States’ Primary Response to Budget Gaps, Harming the Nation’s Economy” April 18, 2012 (available here)
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