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Is it time to declare a fiscal Code Orange
-- a condition of serious financial peril -- for America's
states and cities?
A seasoned intergovernmental professional,
requesting he not be identified, suggests to me the situation
is just that serious -- and likely to reach Code Red if we
don't watch out.
Foreign terrorists alone, he adds, can't
be blamed for this danger alert. It's a direct result of what
he'd categorize as "blind and insensitive" policy
directions that our government -- especially the Bush White
House -- are now pursuing.
Personally, I'd put the immediate peril
of a U.S. attack on Iraq at the top of the list. Its cost,
according to such experts as Delaware's Joseph Biden, the
Senate's leading Democrat on foreign affairs, may be as much
as $80-$100 billion. The 1991 Gulf War cost $61 billion --
almost $80 billion in today's dollars -- and in that case
foreign allies picked up 90 percent of the cost, and we had
no plans for regime change and long-term occupation.
Assuming a $100 billion total, the National
Priorities Project has broken down the cost in taxpayer dollars,
by state and city. The figures are disturbing: California
$10.1 billion, Texas $5.7 billion, Illinois $4.3 billion,
Michigan $2.9 billion, for example. Or by city: Chicago $775
million, Detroit $179 million, St. Louis $75 million, Houston
$447 million, Seattle $228 million.
The fiscal stakes are immense, even ignoring
the moral or military-strategic stakes in an Iraq war that
we wage against the will and advice of much of the world.
Oregon taxpayers, for example, would pay $368 million toward
a $100 billion Iraq war. The same dollars would pay 7,090
elementary school teachers, buy 1,636 fire trucks or place
58,963 children in Head Start.
Small wonder, both on moral and fiscal
grounds, that some 80 American cities, from New Haven to San
Francisco, Atlanta to Portland, have passed resolutions opposing
the war.
But others, including my Code Orange intergovernmental
source, see an alarmingly insensitive White House, even without
the Iraq issue.
A prime example: slow and paltry federal
assistance for local "first responders" -- police,
firefighters, emergency medical personnel -- who will represent
out first line of personal defense in any terrorist attack.
The terror peril is linked inextricably
to foreign policy and intelligence failures -- clear federal
roles. Cities, counties and states, gripped by their worst
fiscal crisis of modern times by the recession, have been
spending billions to provide extra protection since 9/11.
But the Bush administration failed to press
hard on a promised $3.5 billion first-responder aid package.
And Congress dawdled. The federal fiscal year 2003 budget,
belatedly passed this month, earmarks only $1.2 billion for
first responders and in hard fact actually reduces overall
federal aid for local law enforcement and disaster recovery
from $11.7 billion in 2002 to $6.4 billion for 2003.
Just as alarming, the Bush budget proposed
for 2004 barely corrects that, asking only for $8.4 billion
for all law, disaster aid and first responder assistance --
even while it asks a staggering, pre-war, $379.9 billion for
the armed forces.
One would have thought an administration
headed by an ex-governor, with former state chief executives
in several Cabinet slots, would have more sensitivity. But
trace the dollars where you will, this administration's fiscal
plans spell deep trouble for mayors and governors.
Take Bush's idea to lift federal taxes
on dividend income (channeling most benefits to the 1 percent
of taxpayers who earn over $300,000, with no comparable favor
for wage earners). That could cost the states $50 billion
in the next decade, because so many state income tax forms
"piggy-back" on the federal. Governors and legislatures
would have a nasty choice: take the political flack for raising
taxes in the face midst of a recession, or cut funds for critical
services. Either way, they'd deepen the recession.
A companion Bush proposal would let people
with spare cash (up to $45,000 a year) set up absolutely tax-free
investment accounts-- part of what would be cumulative $1.8
trillion losses to the federal treasury in the next decade.
Meanwhile, Mr. Bush would cut child-care and after-school
programs, chip away at vocational training, end the Hope VI
program that's remade so many ravaged public housing projects
into exemplary communities, and make earned-income tax credits
(many poor people's best fiscal safety ring) harder to get.
Maybe it's intentional: A red-ink drowned
federal government will likely be unable to partner with states
and localities in any meaningful way -- for years and years
to come.
But if Mr. Bush intends that, why didn't
he run on such a platform? Virtually nothing in his 2000 campaign
suggested he'd advocate rigid ideological positions, foreign
and domestic, leading to this kind of result. Having trailed
in the popular vote by a half million votes, a consensus-based
government of national unity would have been more appropriate.
Is there a solution? Maybe, in 2004 --
regime change.
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