AUTHORITY, REAL AND SURREAL

Razzle Dazzle

Authority, Real and Surreal 

By RICHARD STEIER

Figuratively as well as literally, Mayor Bloomberg's noontime budget presentation Jan. 31 and President Bush's "State of the Union" address that evening were like day and night.

You could argue the Mayor's claim that rising pension costs are an urgent problem, but his overall presentation was grounded in what some Bush Administration people like to deride as the "reality-based" world. The President, on the other hand, in addressing both foreign and domestic concerns, stepped carefully around the truths that undercut what he was serving up to Congress and a national television audience.

To paraphrase Scott Fitzgerald, Mr. Bloomberg spoke with the authority of having concluded a successful first term and been rewarded with re-election, Mr. Bush with the authority conferred by an utter failure of a first term that was somehow rewarded with a second that looks even more disastrous.

Problem-Solving vs. Avoidance

And where the Mayor's budget plan seems tailored to ward off future problems, Mr. Bush's speech was designed to push current problems far enough into the future that there would be no clamor for corrective steps that might upset his dwindling base of support.

FREE-LUNCH PRESIDENT VS. PAY-AS-YOU-GO MAYOR: While President Bush has run up record deficits to give taxpayers 'more of their own money to spend,' Mayor Bloomberg contends that effective delivery of services that enhance the quality of life even during tough fiscal times is more important than tax cuts. In short, one man sounded presidential, the other like someone who had ducked accountability his entire life and figured it couldn't possibly be healthy to suddenly try shouldering it as he turned 60.

For each, there was a telling moment offering an insight into their view of government and its obligation to its citizens.

Mr. Bush made the argument that unless the tax cuts he has overwhelmingly skewed to benefit the rich are made permanent, the net effect will be that "American families will face a massive tax increase they do not expect and will not welcome."

Moments later, he alluded to budget cuts that will further hurt poor people by, among other things, raising Medicaid deductibles and co-payments, but identified them as targeted at programs "that are performing poorly or not fulfilling essential priorities." Mr. Bush said that enacting the cuts would allow the nation to "stay on track to cut the deficit in half by 2009."

Left unsaid were two salient matters: that Mr. Bush long ago squandered a sizable surplus he inherited from the Clinton Administration, in no small measure by arranging the huge tax cuts even as he prepared for his misguided war with Iraq; and that even if his calculations about deficit reduction prove as wrong as most of his long-range forecasts, he will be gone from office by the time that becomes clear.

Nine hours earlier, the issue of tax cuts was presented to Mr. Bloomberg in the form of a reporter's question about why, with the city enjoying a $330 million budget surplus, he was not "giving back" some of it in the form of tax relief.

"We have the safest big city in the nation," Mr. Bloomberg responded, adding that the public school system is also improving. "That's what the taxpayers are paying for. Their property values are going up; people want to live here."

Get What You Pay For

In contrast to Mr. Bush, the Mayor's arguments were steeped less in ideology than they were a businessman's pragmatism: you don't mind paying for something if you're getting value in return.

The Federal Government under the current administration has not exactly delivered its money's worth to the citizenry. For all of Mr. Bush's talk of a robust economy that is continuing to grow, even Republican loyalists speak with alarm about the sense among average Americans that their economic future is becoming increasingly uncertain. Mr. Bloomberg's pledge during his "State of the City" address the previous week to reduce poverty in the city's most blighted neighborhoods was notable in part because the President almost never acknowledges the poor, in word or in deed.

One of the nation's most vibrant cities was devastated by a hurricane whose impact Mr. Bush was warned of several days before it hit the Gulf Coast, and for two years before that reports about the need to fortify the levees in New Orleans went unheeded by his administration.

That lack of preparation bore an ominous similarity to Mr. Bush's pre-9/11 response to reports about stepped-up activity on the part of Osama bin Laden and Al Qaeda, and in this case the felony was compounded by the Federal Emergency Management Administration's out-to-lunch response to the crisis once Hurricane Katrina hit.

Mr. Bush's political genius is rooted in the cynical calculation by himself and his advisers that enough people will be gulled by patriotic bluster or misdirection that you almost never have to own up to your failures.

Mystery Nation

One of his more intriguing comments during the "State of the Union" speech came when he spoke of the need to combat tyranny throughout the world. "On Sept. 11, 2001," the President said, "we found that problems originating in a failed and oppressive state 7,000 miles away could bring murder and destruction to our country."

Interpreted logically, this statement would be considered a reference to Saudi Arabia, which was the country of origin of 15 of the 19 Sept. 11 hijackers, or perhaps Afghanistan, which was the base of operations for bin Laden. It seemed likely, however, that most viewers hearing that statement assumed Mr. Bush was alluding to Iraq; despite evidence conclusively to the contrary, roughly 40 percent of the American public still believes Iraq and/or Saddam Hussein had some connection to the 9/11 attacks.

Since that time, Congress, particularly after both houses came under Republican control, has given Mr. Bush a free hand - many would say too free - in the war on terrorism, leading to abuses ranging from the decision to invade Iraq to the systemic torture of Iraqi prisoners. Despite that, he apparently did not feel strongly enough about the merits of his arguments to seek congressional authorization of domestic surveillance that included the tapping of Americans' phones in cases where he believed it could lead to terrorist activity being uncovered.

Avoided Oversight

In the speech the other night, however, Mr. Bush contended that he was merely exercising the same constitutionally granted authority as some of his predecessors, without offering any specific parallels. That claim is dubious, but it helps obscure one likely reason he never sought congressional approval: it could have led to controls and safeguards against abuses in the program.

As he resists having to appear before Congress to explain what has happened in that initiative, Mr. Bush framed the debate in a way designed to convince viewers that he had taken this step for their own sakes: "If there are people inside our country who are talking with Al Qaeda, we want to know about it, because we will not sit back and wait to be hit again."

One of his more remarkable juxtapositions came when he spoke of a "revolution of conscience" that had convinced a growing number of young Americans "that a life of responsibility is a life of fulfillment."

Immoral Relativism

He then stated, "Yet many Americans, especially parents, still have deep concerns about the direction of our culture and the health of our most basic institutions. They are concerned about unethical conduct by public officials and discouraged by activist courts that try to redefine marriage."

His voting base was undoubtedly pleased that Mr. Bush could find a moral equivalency between the lobbyist-fueled corruption scandal involving top congressional Republicans and court rulings on gay marriage. It's hard to imagine, though, that most Americans see the two as either related or posing the same danger to our way of life.

Mayor Bloomberg, on the other hand, did not seem to be playing to any particular constituency, except perhaps for those who believe in the kind of fiscal conservatism that national Republicans long ago abandoned.

Like Mr. Bush, he occasionally relied on euphemisms to disguise his intent. The Mayor's call to "modernize the city's pension system for future employees" equated updating with downgrading.

One truism of government is that budgets are political documents: some spending increases and cuts reflect public sentiment, but others are a matter of mayoral priorities that are not necessarily shared by the voters.

It was clear throughout the transit negotiations that Mr. Bloomberg, while not directly affected, took a keen interest in the Metropolitan Transportation Authority's efforts to reduce its pension and health-care costs. Achieving some savings in those areas from the municipal unions was at the top of his budget agenda: he argued that "if we don't act now to meet and control these future costs, they will soon overwhelm the city's ability to pay for" essential services from police and fire protection to education.

That was what happened during the fiscal crisis of the mid-1970s, he told reporters in the City Hall Blue Room.

A Rainy Day Fund

Part of his plan was to take a healthy slice of the current fiscal year's budget surplus and a similar slice of the surplus anticipated for next year - $1 billion annually - and put it in a Retiree Health Benefits Trust Fund. New Governmental Accounting Standards Board rules require the city to detail its retiree health-benefit obligations, just as it always has for pension payments.

It was hard to escape the fact that a big chunk of the money involved came from a $1.5 billion windfall the city received when the five pension systems reported earnings that were strong enough to delay increases in the city's pension contributions.

Several municipal pension experts contend that the city's costs in that area should not be nearly as great a concern as for health benefits. They point out that the short-term problem created by large withdrawals from the five municipal retirement systems by the Giuliani administration, followed soon after by three dismal years of performance by the systems' stock investments, has subsided.

Pension Costs Flatten

The Mayor's own budget projections support that analysis. City spending on pensions tripled between 2003 and the current fiscal year - from $1.5 billion to $4.7 billion - but the rise is beginning to level off. In the fiscal year that begins July 1, according to Office of Management and Budget estimates, pension spending will rise just $500 million, and three years later will be just $250 million above that.

This explained the disparity in the reaction of United Federation of Teachers President Randi Weingarten, speaking in her role as head of the Municipal Labor Committee, to the Mayor's health and pension proposals.

She called the health trust fund "prudent," but took a considerably dimmer view of his push for a new retirement tier, arguing that "costs are not spiraling out of control." In a statement, she noted that during the decade that concluded in 2000, the city's contributions to the five pension systems actually decreased, implying that absent another large mayoral withdrawal coupled with a stock market crash, the systems could flourish without having to curtail benefits for future employees.

Mr. Bloomberg insisted, however, that you couldn't separate the two issues. "Every employee loves those benefits," he said, a love that no doubt has grown as municipal employees see large private companies scaling down or walking away from their pension and health-care obligations. "And somebody's gotta pay for them."

'Riding Companies' Wave'

In a Feb. 3 phone interview, Ms. Weingarten added, "Given that the pension costs as a percentage of all compensation, as well as a percentage of the budget, have gone down rather than up, I think it's a very different issue [than health benefit costs]. I think the Mayor is just riding the same wave of all the companies that are ditching their pension plans."

But even as the retirement systems' investment performances are returning to normal, the Mayor noted, the long-term cost of providing a pension is rising "as people are living longer."

Employees if asked about compensation would respond by saying that their salary is "X," Mr. Bloomberg said. But that calculation does not include the value of pension and health benefits, he noted; if factored in, "On average they get paid 155 percent of X, and a uniformed employees gets 200 percent of X."

Mr. Bloomberg views pension and health benefits from the standpoint of someone who has spent most of his working life in the private sector, where those kind of fringes aren't nearly as generous. City employees and their union leaders, conversely, argue that their pension and health plans are part of an overall package. "We have long given up high pay in return for the surety that our health care would be taken care of," said Bill Henning, a vice president of Communications Workers of America Local 1180.

The fact that union officials of the past had the foresight to grasp the value of those benefits before costs took off, and a combination of union power and a state law prohibiting reductions in pension benefits for those already in the system, account for city workers' advantage over their private counterparts.

Grousing a Tribute

During the transit strike, some New Yorkers expressed anger that the employees on the picket line had walked off their jobs while enjoying far better benefits than private-sector workers. In a backhand way, their pique was a tribute to the impact that an effective union can have on behalf of those it represents.

And so the issue becomes how hard Mr. Bloomberg will press for concessions on health and pension benefits once Ms. Weingarten and her colleagues make clear how limited they believe the discussions should be.

During the budget press conference, the Mayor claimed the unions understood that the benefits problem would not disappear and so it was better to address it during a period of relative prosperity. "You can't go in bad times," he said, "and borrow your way out of trouble the way a corporation could."

Or, he might have added, the way a President has.

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