By Bob Hennelly
January 26, 2011
In Washington and around the country, chief executives including the president, the governors, and local mayors are all giving their annual takes on reality.
On Tuesday, from President Obama, we are going to hear about a nation that is still hurting but has turned a corner toward recovery.
But how is it really going on America’s Main Streets?
The website for the US Conference of Mayors says it represents 1,139 cities distributed in 363 metro areas where 85 percent of America lives.
According to an independent analysis the mayors commissioned, a third of those metro regions expect to have unemployment that persists above 10 percent through the end of this year. 42 percent of the metro zones won’t get back down to their pre-recession levels of relatively lower unemployment until 2014. For some really hard cases like Detroit, such a rebound was pegged for 2025. President Obama will be retired and have a library by then.
But the real sobering reading on the mayors’ web site is the Conference’s Task Force on Vacant and Abandoned Property. The survey has been checking in with 77 Mayors in 30 states since 2006. The latest update indicates that the 77 cities surveyed have 146,057 vacant and abandoned residential properties. Some of the
larger cities responding are sitting on a stock of over 10,000 such downer properties.
Add to that mix the more than 15,000 vacant commercial properties. That’s the tally from fewer than 100 of the 1,100 cities that make up the Conference of Mayors. Can you imagine the national total?
As the Conference of Mayors knows all too well, abandoned properties depress property values for everyone in the neighborhood. When property values erode, so do tax receipts and household wealth and security. The mayors report this crisis is getting deeper.
Unfortunately the Obama administration’s plan to help homeowners hold on to their homes and slow the slide of America has not kept pace with the challenge.
As I reported in a recent column, the Congressional Oversight Panel reports the US Treasury Home Affordable Modification Program has been a massive bust. The report finds it will ultimately only help 700,000 to 800,000 households avoid foreclosure, “far fewer than the 3 to 4 million foreclosures that Treasury initially aimed to stop…..vastly fewer than the 8 to 13 million expected by 2012.”
Unfortunately, the word from most of the nation’s governors holding down State Street is pretty grim as well. The Center on Budget and Policy Priorities reports 44 states are facing an aggregate $125 billion dollar budget hole for 2012.
According to the Pew Center on the States, the fine print that describes the states unfunded pension and retiree health care cost liabilities is even more disturbing. Pew’s latest numbers show that states have at least a trillion dollar shortfall when it comes to their pension obligations. “Many states shortchanged their pension plans in both good times and bad,” wrote Pew’s Susan Urban.
The states malfaesance in how they handled their employee pensions was aggravated by the hit their portfolios took on Wall Street. So when apologists for the current status quo talk about how neatly the Treasury’s and Federal Reserve rescue of the financial system worked, keep in mind just what a toll Wall Street machinations played in blowing this multi-billion dollar hole in the public pension balance sheet.
Even now, Washington does not get the totality of the states’ problems. On their unfunded health care commitments and other non-pension benefits for their public employees, the states will need hundreds of billions set aside that they don’t have. Only two states, Alaska and Arizona, have more than half of what they will need to cover those commitments.
Who we have not heard from in any meaningful way is the nation’s public unions, for whom so much is at stake. Right now they are caught in the very same crunch that we face nationally in trying to keep the societal compact that is social security. Promises were made, they argue.
But they need to learn from how things backfired for the New Jersey Education Association when the NJEA blew off Governor Christie’s call for a teacher pay freeze so local districts could hang on to new teachers. The NJEA’s response helped catapult Christie into national orbit.
Right now, public unions are being unfairly scapegoated as the cause of our Main Street to State Street fiscal meltdown. And this comes at a time that they are already struggling to stay relevant as we become a nation of independent contractors because businesses don’t have to employ people.
Meanwhile, global hot money continues 24-7 to chase the best rate of return threatening to dump national currencies or sell public debt short if it doesn’t get what it wants: more. It has no control but its own insatiable appetite.
So, right now, two years into the Obama Presidency there still is it no nuts and bolts plan of how we get unstuck. Hopefully President Obama offers something tangible that will be meaningful for America’s Main Street and State Streets..