Nicole Gelinas writes about New York City’s budget woes, making the point that there is plenty of room for policymakers to cut spending given the rapid spending growth that occurred in recent years:



In this budget cycle, Bloomberg has focused on what Albany is purportedly making him do. He said Thursday that the Capitol is “starving New York City” by cutting nearly $500 million in education aid, forcing 4,419 teacher layoffs and 1,995 fewer teacher hires. The state’s $1.3 billion in cuts elsewhere will force another 4,583 job cuts.


But Albany has ramped its education spending to $8.3 billion in the last half-decade, from $5.8 billion in 2004. Since Bloomberg took office, city spending on education (not including pensions) has risen 68 percent, more than twice much as police, fire and sanitation outlays. A loss of $500 million should be manageable.


Yet she also highlights the need to take on the big issues, like pension costs, to really balance the budget, since overwhelmingly shortfalls in these programs fuel the deficits.



The bickering allows everyone to ignore the real problem — public-sector retiree costs. It’s not simply that taxpayers have to make up for declines in the stock-market portfolios that fund our workers’ guaranteed pensions, it’s worse: Even as we must pour more cash in, more is pouring out, too.


Pension and health payments to retirees are now $13.1 billion a year, up from $7.5 billion in 2002. The cash drain is accelerating as more uniformed workers retire on lucrative disability pensions and others live longer.


Cutting library hours, closing senior centers and shutting pools down early will save just $36 million — one day’s worth of payments to public-sector retirees. As the Citizens Budget Commission noted last week, if public-sector workers were to agree to pay small amounts toward their health plans and accept less generous pensions for new workers, the city could avoid teacher-job cuts.


While she writes about New York City, many of the same points could be made about the federal government’s finances. Entitlement programs like Medicare and Social Security have unfunded liabilities in excess of $100 trillion. In ten years, entitlement programs and interest will eat up 90 percent of the federal budget. That leaves little for other priorities like defense, and also tells us that even abolishing the Department of Education and ending farm subsidies wouldn’t be enough to fix our budget problem.


Greece has shown us that politicians can only kick the can down the road for so long. Of course, as Robert Samuelson reminded us in this article yesterday, this Administration isn’t just kicking the can but making things far worse by creating new entitlement programs, like the new healthcare law, which everyone knows will only add to our deficits.


Politicians need to step up and face these big issues before it’s too late.