In these times when the federal government is distributing massive amounts of cash, it’s shocking how little attention has been paid to any trace of accountability or performance testing.
During the bailout phase, financial institutions were literally handed hundreds of millions of dollars without any clear instructions about what they were supposed to do with the money. It’s not clear if this was by design and it’s not clear what was accomplished. It is clear that the money is gone.
The stimulus phase is only a slightly more controlled. While throwing bushels of money into a giant fan might get the economy moving again, it seems that specific objectives are completely missing.
Ours is a consumer-based economy, which relies on large numbers of people having enough extra money to spend easily, and the confidence to spend it.
At this point, the primary objective of any stimulus plan should be to keep people working. Once layoffs occur, the effects ripple through the entire economy, making any comeback much more difficult.
So, it is truly surprising that the federal stimulus doesn’t contain provisions limiting layoffs by government subdivisions and rewarding businesses that limit layoffs.
While we may have reached the point of no return, there still may be something that state and local government could try that might save us from economic disaster.
At this point, most state and local agencies should still be able to prevent almost all layoffs by making substantial cuts in the pay of their highest paid employees.
Our economy is out of whack, as it was in 1929, in that the gap between the richest and poorest is huge. Such gaps are demoralizing and socially destructive.
Some of this inequity has spilled over into public employment. A few years ago, the Arizona Legislature gave a percentage increase to all university employees. I was later stunned to find that the president’s increase was more than the entire yearly salary of thousands of university employees.
Public employees are being traumatized by threats of layoffs. But the University of Arizona, for example, has more than 1,200 employees who receive more than $100,000 per year. Few, if any, of them are facing layoffs. Such employees should bear their fair share of the pain and ask not what their state can do for them, but what they can do for society.
If all Arizona public employees’ salaries are reduced according to a strongly progressive formula, we should be able to operate with no government layoffs at all. That would be stimulus we could believe in for our state.
It would be necessary to do some adjusting at the high end, but a basic formula that would appear to work at this stage would be to reduce pay by 2 percent for every $10,000 of pay.
So, employees who earn $30,000 would be cut 6 percent and those who earn $100,000 would be cut 20 percent, certainly leaving enough to live on. And not nearly as economically damaging as having lower level employees lose their jobs completely.
In addition to preventing layoffs, which would be good for everyone, such a plan could drive some creative thinking.
We’d have to explain why somebody should get a million bucks to teach kids to throw a ball around. If Arizona announced that no coach could be paid more than, say, the average assistant professor, the move would sweep across the country like a fresh wind. The emperor has no clothes, and tuition-battered families would rejoice.
We could do the same thing with the university presidents who think that they’re CEOs with $500,000 pay, housing allowances, and golden parachutes. Whack ‘em back to reality.
As a retired high school teacher, I defy anyone to explain clearly why any high school administrator deserves to be paid much more than the average teacher. Make that adjustment and we would be able to keep and hire the teachers we need to get class size down.
So, will it be a plan, or will we flail away?
John Kromko served in the Arizona Legislature for 14 years.