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The Great Regression

Birmingham, Alabama has a $30 million hole in its education budget. The AP quotes system CFO Arthur Watts, who

says that means the city will need to close and consolidate more schools, sell surplus property and have mass layoffs.

Superintendent Craig Witherspoon says he’s working on a plan to address the budget crisis. He says layoffs will definitely be necessary.

Get that? Alabama taxes millionaires at half the effective rate of its poorest residents and has the lowest property taxes in America but the solution for Birmingham’s budget problem is to sell off public assets and lay off hundreds of teachers. See how that works?

Birmingham is the seat of Jefferson County, famously bankrupted in 2009 by a failed Wall Street plan to refinance their sewer bonds. Alabama’s biggest city has paid out $120 million in fees on that deal, an amount four times the gap in its education budget. There will be no help from the state — Alabama had a $500 million hole in its education budget last year, one filled with federal stimulus funds that won’t be matched in 2011.

With austerity the only option, disaster capitalists will sweep in to sell us on even more schemes, such as privatizing school janitors. Republican governors are already pushing for new anti-union laws with the usual dose of resentment. NYT:

Some new governors, most notably Scott Walker of Wisconsin, are even threatening to take away government workers’ right to form unions and bargain contracts.

“We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots,” Mr. Walker, a Republican, said in a speech. “The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers.” (Emphasis mine)

Of course, the apostles of austerity tout private business as the model for government. But even in the private sector, disaster capitalism is destroying America.  This was brought home to me New Year’s Day as a close friend caught me up: the company he works for has been sold, employees have discovered their new health insurance and long-held stock options are worthless, and there were no raises last year.

The only people having a good time are the CEO and his executive staff, who — as a result of cost-cutting measures — took home rich bonuses and made side deals in the sale of the company. His story is sadly typical, as upward mobility is now the exclusive domain of upper management.

It’s not as if we want things this way. In a new CBS poll, a clear majority of Americans prefer to raise taxes on the wealthiest two percent of Americans rather then cut entitlements, but this is not what the 111th Congress did or what the 112th promises to do. The richest tiny slice of Americans set up the collapse of 2008, had banner years in 2009 and 2010, have failed to create jobs with the tax cuts they already had, and will continue to extract good fortune at the expense of ninety-eight percent of America for at least two more years.

Meanwhile, the middle class has shrunk. Suburbs have been hit hard. Cities are failing. Yet the gospel of the producer is as rigid and powerful a dogma as geocentric astronomy was in Galileo’s time. Austerity promises prosperity, but actually delivers the opposite. To Krugman’s Irish example, we may add Alabama and Texas:

A budget shortfall as high as $25 billion is projected as lawmakers head into the 2011 legislative session, according to estimates from economists and the comptroller’s office. Texas writes budgets biennially, or in two-year terms, so the shortfall affects the 2012-2013 state budget.

Leadership in the Texas Legislature, which is dominated by fiscal conservatives, is not expected to support attempts to raise taxes to fill the multibillion-dollar hole. But social service advocates say the state’s safety net system can’t afford any further budget cuts.

This eager assault on the foundations of modern middle-class America is of a piece with tea party tantrums on the 14th Amendment, or Rand Paul’s views on the Civil Rights Act. The urge to austerity is epitomized in a movement that demands we return to the gold standard. Modern conservatism has exceeded its title: not content to stand still,  today’s conservatives demand a great going backwards. They would spend the 21st Century undoing the 20th Century.

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