He's Oh Cay

I'm a big fan of David Cay Johnson.  He used to write for the New York Times and won a Pulitzer Prize for beat reporting in 2001, though these days he does more general freelance writing, with a few regular assignments.  He covers a range of topics, from basic investigative reporting and economics, but taxes tend to be his expertise.  What I most like about him is how he can take such a sand-dry topic like taxes and make it absolutely fascinating -- a neat trick he does by often by creating real-world analogies that make the most convoluted topics brain-dead easy to understand.

My favorite example of this was when I saw him explain on television why it makes sense when you're running a deficit to spend money, not cut, and increase your debt.  To paraphrase him, he said -- imagine that you're out of work and in debt.  Someone offers you a job, but it's far away and you no longer own a car.  Do you borrow money to buy a car, adding to your debt, so that you can accept the job, earn income and get out of debt -- or do you turn down the job because you don't want to add to what you owe, never allowing you to get out of debt?  Most people with any sense, he said, would grasp this and say, of course, you spend the money.  As he put it, it works the same with government as it does with personal finances.

Johnson has a terrific article here in National Memo, titled "Governor Christie Embraces Theft."  He talks about how Gov. Chris Christie (R-NJ) recently met with a group of citizens and told them that New Jersey would be unable to pay state worker retirement benefits, and in his blunt, bullying style, said -- “Promises were made that can’t be kept… Welcome to the real world, folks.”

While that sounds tough and macho -- and sounds really swell to the far right, who applauded this supposedly blunt, gruff cost-cutting stance -- Johnson explains that, to the contrary, it's theft.  The money, he notes, is not the taxpayers' money as many presume, but actually the workers.  Money that was "promised," as Christie himself said, in earlier contract negotiations -- benefits offered as delayed compensation during retirement, rather than payment made upfront.

Though some on the far right might begin to foam at the concept of benefits and tax money and delayed compensation, Johnson then does what he always does so well -- he puts it in real-world context that anyone can easily understand.

"If you have trouble grasping this," he writes, "just imagine opening your next paycheck to find that only some of the money is there — and when asked about this, your employer says, “promises were made that can’t be kept… Welcome to the real world, folks.”

(This is similar to the concept in Hollywood where residuals and royalties drive studio executives hot maniacally crazy.  Executives insist it's giving money to the creative people as a bonus that they didn't earn, since they were already paid.  Except that's not what residuals and royalties are at all.  When selling your services -- or, speaking personally in the case of writers, when selling your script -- that script has value.  Great value, in fact.  Far more value, in fact, than any producer or company can ever afford to pay up front when there's no money coming in on the project.  So, rather than demanding that they get paid what their script is actually worth -- which would guarantee that the project never gets made -- writers agree to take much less money up front, on the promise that when money does finally come in, they will then get paid what they should have gotten paid at the start but delayed their compensation until later.  And that comes in the form of residuals and royalties.  Studios aren't doing the writers -- or directors or actors -- a "favor" by kindly paying them residuals.  These aren't "bonuses."  The writers et al had previously done studios the favor by delaying compensation and at last -- only when the project has started to earn money -- getting what was agreed to and promised contractually.)

So it is with state workers and their benefits.  Rather than demand more money upfront, they took less salary during contract negotiations, in order that the state could provide services to its citizens, on the condition of a promise to make up that guaranteed salary in the form of retirement benefits.  As Johnson says, it's the workers' money, not the taxpayers.

If an employer can't pay his promised benefits he has choices:  he can go out of business, he can declare bankruptcy and be placed under court ordered receivership, he can try to negotiate a new payment agreement with his employees and accept new obligations, or he can even make cut-backs to save money.  But the money for benefits is still owed.  The obligation doesn't just disappear because the boss decides he doesn't want to pay and screw you, saying, "Sorry, promises were made that can't be kept...Welcome to the real world, folks."  You know the workers who are owed the money would insist on it.  As for Gov. Christie's Real World, in the real world,workers would go on strike, or quit when they see the boss is so untrustworthy that promises aren't going to be kept, or they'd sue for money owed.  In the end, if you make cut backs to save money, the reason you're saving money is to pay your expenses, which include the benefits you owe.

At the very least, if the state can't pay its employees what it owes them, it should at the very least have the human decency to not try to bully its way out of the hole it itself dug, and try to make itself the hero by stealing their money.

But then, this seems to be a recurring theme in conservative politics, the supposedly "personal responsibility" folks -- buy but don't pay.  That was the idea during GOP efforts not to raise the debt ceiling, which was nothing more than authorizing Congress to be able to pay for what they'd already spent.  Or GOP insistence on authorizing services, but not raising taxes to pay for them.  It follows the infamous words of Dick Cheney when he told Ronald Reagan, "Deficits don't matter."  Spend what you like, don't worry about paying for it.  Welcome to the real world, folks.  Keeping in mind, of course, the White House official under George Bush (believed to be Karl Rove) who told Ron Suskind that "We can create our own reality."  That's the "real world" of conservatives, of Chris Christie.  Where promises can regularly be made but not kept, because you can spend but not pay for it.

You can read all of David Cay Johnson's terrific article here.