How political corruption destroyed a city
The city of Birmingham, AL has a rich history of corruption. Matt Taibbi of the Rolling Stone published this piece about how the latest scandal has virtually destroyed Birmingham and Jefferson County. Unfortunately he chose to spin this as an indictment of Wall Street, rather than greedy politicians. (story here from Richard Fernandez at Pajamas Media)
Matt Taibbi’s Rolling Stone article describing how Jefferson County, Alabama, borrowed itself into bankruptcy can be read as a tragi-comedy or farce. Worse, it can be read as prophecy. Jefferson County, under pressure from community activists and environmental groups, decided it would reduce its sewage flows into the Cahaba River to nothing. That lofty engineering goal required it construct the mother of sewage systems, which turned out required the mother of all funding. But what with cost padding and local corruption jacking up the totals astronomically, even rate rises proved unequal to paying for it. So the county borrowed a staggering sum from Wall Street to cover it, on terms which reduced immediate payments at the cost of bloating them later, like one of those deals where you can buy a leatherette sofa with no payments until 2012 — at which time it will cost more than the Mona Lisa. And since people who buy leatherette sofas on installment usually can’t afford a Leonardo da Vinci, Jefferson County found itself defaulting on its payments.
The people of Jefferson County are totally hosed and some of the politicians will go to jail. While the Rolling Stone piece laments the fact that no one from Wall Street will be punished, Fernandez channels John Stossel (more here) to explain:
In a racket it’s normal for someone to get caught holding the bag, usually the slowest of the gang. Because if the 20 guys convicted in federal court had their druthers, wouldn’t they prefer that JP Morgan took the rap and they remained untouched? However that may be, it takes two to tango. Unfortunately while the music plays someone will get up to dance. Some government officials, knowing their limits, have in lucid moments implored the taxpayers not to lead them into temptation. John Stossel, in an article entitled “Stop Me Before I Steal Again” captured the allure of the irresistible.
Earlier this week we got a rare moment of honesty from a politician, when Congressman Tom Perriello (D-VA) said:
“The only way to get congress to balance the budget is to give them no choice… whether it’s balanced budget acts or pay-as-you-go legislation, the only thing — if you don’t tie our hands, we will keep stealing.”
Couldn’t have said it better myself. In the same clip he gives an accurate description of the problems with Medicare:
“Part of what has happened with Social Security and Medicare is that when they were set up, life expectancy was such that people would be on it for 2 or 3 years, not 15 or 20 years…”
That’s true. And as a result, the unfunded liability of Medicare alone is $36 Trillion. It’s the country’s biggest ponzi scheme, and I will devote a show to the subject soon.
Despite Rep. Perriello’s honesty, he doesn’t seem too eager to keep Congress from stealing more. He voted for the Stimulus, Cap-and Trade, and Obamacare — though he says he’s undecided about that one now that it’s coming up for a vote again.
Indeed. Remember this when you vote in November. It’s time to stop them before they steal more.