Fickle floozy that it is, the Democratic Party has taken lately to carrying on with the swains of Wall Street. It used to be that the GOP was notoriously Wall Street’s squeeze. But now Wall Street is playing the field.
Like tree rings that reveal climate change, the political donations of Goldman Sachs mark the shift in the way Wall Street started making whoopee with the party that claims to despise it.
Gradually, from 1990 onward, the international banking colossus’ political contributions began to swing away from R and in the direction of D. According to the nonpartisan Center for Responsive Politics, the Goldman Sach’s political donation scale, 1990-2017, gradually tipped in favor of Democrats — by a score of $29.9 million to $28.8 million.
Speaking of Goldman Sachs, as you may recall there was, not long ago, a bearded gallant name of Jon Corzine whose flashy cash wad and promises of More Free Stuff lured away the heart of New Jersey’s Democratic Party and eventually the state’s entire electorate.
As the voters’ moms might have told them, they shouldn’t have been surprised at the unhappy outcome of that fling, given the fact that Goldman Sachs had paid Corzine tens of millions just to get rid of him. But no point cryin’ over spilt milk.
Now we have yet another Goldman Sach’s inamorato, Phil Murphy, latest heartthrob of the dyed-in-the-wool, one-party blue State of New Jersey.
Murph, too, hit the scene with a flashy cash wad and visions of transforming the Garden State into the Big Rock Candy Mountain, even more so than it now is.
Republicans were the first to pioneer the grandiose promise as a con for winning over a gullible electorate. In 1928 — just before the Great Depression — they pledged “a chicken in every pot.”
Democrats soon refined the pitch. Today the Murph is promising canard a la Normande — plus a bottle of Chateauneuf Du Pape in every household. And at absolutely no cost to you!
Meanwhile, the Wall Street/Democrat dalliance is no longer a topic confined to whispers and titters. It’s now out in the open. Such villainous capitalists as Citigroup, J.P.Morgan Chase, the American Banking Association, Bank of America, Morgan Stanley and Switzerland-based UBS Aktiengesellshaft slipped $92 million to Democrats starting in 1990.
But I don’t think it’s strictly cash and flash that came to have the Democratic Party going all googly-eyed over Wall Street. I think a mutual fascination with financial sorcery played a big role.
In slow-growth times, when the usual sources such as taxpayers and banks are tapped out, the temptation of fiscal wizardry presented itself.
A whole new language began to be spoken by an emerging class of financial shamans and mundunugus. Public and private-sectors both began to speak the language.
Financial versions of Prof. Irwin Corey — the comedian who spouted erudite gibberish — stood at the Wall Street chalk board, pointers in hand, babbling incantatory lingo. Mayors, governors and presidents picked up on it and started speaking in financial tongues, along with CEOs and boards of directors.
While our eyeballs glazed over and our brains went into shutdown mode, the wizards evoked a magical world of “Accelerated Adjournment of Capital Asset Income,” “Monetization of Anticipated Revenues” and “Convertible Arbitrage Strategies.”
As the financial esoterica proliferated, the priesthood of the New Temple of Manna spoke knowingly of “Collateralized Debt Obligations,” of “Non-Stationary Debt Mitigation,” of “the Granularity of Securitized Asset Pools” and so on and so forth.
Republicans — who had long passed themselves off as hardnosed Main Street accountants in green eyeshades, yanking the lever on the adding machine and insisting that the numbers add up — were in on the con right from the get-go.
Recall, for example, the case of Republican Gov. Christine Todd Whitman. A light bulb popped on in the blurb over her head signifying a brilliant idea: “the Securitization of Pension Debt”! This ingenious gambit entailed a $3.1-billion bond issue to kick the can of pension costs down the road.
Bright-idea light bulbs soon were popping on in overhead blurbs right and left, all over America and Europe. Financial illusionist Blackstones were soon summoning theoretical revenue instead of rabbits out of black top hats. The acts went from place to place and managed to get outta town just ahead of the sheriff, not unlike those rascals the Duke of Bilgewater and his sidekick the King, the hornswoggler duo of Huckleberry Finn.
On the federal stage, the trick that had the rubes ooo-ing and ahhh-ing was “Quantitative Easing.” Here’s how that works, as explained by those who say they’re in the know: When the cupboard’s bare, the Federal Reserve agrees to buy up — at above market value — bank bonds that a prudent person wouldn’t go within 50 miles of.
And, you may ask, how’s the Fed come up with the mullah to pull this off? Answer: by creating money “de nova.” That is, anew. Which is the same as saying, skipping the Latin, that the Fed does it by magic. Waves its wand and …. Abracadabra! Money galore! The Fed, in other words, prints it.
We uninitiated peons, meanwhile, go on with our abacus-level, kitchen-table calculations, telling ourselves that if our monthly bills amount to X, our monthly income had better damn well be at least X. Such innocents we are. As if we just arrived in town in the bed of the pickup truck amid the baskets of turnips.
Which brings us back to Phil Murphy, millionaire former Wall Street haruspex, now chief fiscal magician of the
Garden State. Having been a top wangateur at Goldman Sachs, the Zeus atop the Mount Olympus of investment-banking deities, he surely has insights into fiscal mysteries impenetrable to the rest of us. His public-sector union fans are certainly counting on it.
If he possesses such insights, good thing he does. For the numbers are, as they say, daunting indeed. New Jersey’s public employee workforce has become a forbiddingly expensive governmental army to maintain. Think of this administrative and regulatory horde as, numerically, the military equivalent of, say, 150 or so Army battalions.
Due to the proliferating administrative and legal complexities of regulatory minutiae, this state workforce requires more and more lawyers and data-processing technicians and accountants and such. And you can’t get away with paying them like you would, say, McDonalds’ counter help. Nor can you hire cheap illegals as substitutes as in the private sector.
No, the state workforce comes with a certain level of built-in, unavoidable cost. And all the more so since 75 percent are unionized and 83 percent have the additional protection of civil service coverage.
So payroll costs inevitably have gone up, up, up and up. The number of union members at $100,000 or higher rose five and half times (!) from 2007-2016. And the cost of salaries and medical insurance are the least of it. These numbers are inflating pension costs like an industrial-grade air compressor applied to a child’s balloon.
New Jersey’s public-sector pension rolls now include 780,000 actual and prospective retirees, and calculations are that the state is short by billions and billions of dollars of being able to cover retirement checks promised them over the long run.
Calculations vary, but there’s wide agreement the “unfunded liability” is humongous. A study by the American Legislative Exchange Council put the New Jersey pension system’s unfinanced obligations at $248.7 billion — $27,806 for every man, woman and child in the state. The widely respected Volker Alliance rated New Jersey’s public pension system as among the 10 most imperiled (No. 6) in America. It gave the state a grade of D-minus for mismanagement of its public-sector retirement obligations.
Meanwhile, New Jersey’s new guv works up a cheering section constituency with chants of “More Free Stuff! More Free Stuff!”
Skeptics are inclined to wonder, “Where’s the money come from for more free stuff?”
Hey, no problemo.
There’s a school of thought prevalent especially among the Mad Magazine Alfred E. Neuman “What, Me Worry” faction of Democrats that says you can always get the money by making the evil, undeserving, filthy rich pay their “fair share.”
Here we bump up against one of the Democratic Party’s darkest family secrets. The party that advocates for extensive, interventionist government, and fervently believes the more of it the better, in fact counts heavily on the evil, underserving, filthy rich to be its government- funding sugar daddies.
You can look it up. Despite unceasing rhetoric suggesting that the wealthy are stiffing the Tax Man and sticking the Little Guy with the bill for government, the obscenely rich in fact are forking over a share vastly out proportion to their numbers.
I point this out not to solicit tearful sniffling on behalf of the rich but merely to note a plain mathematical fact. For example, New Jersey’s most affluent — people with incomes in excess of $500,000 — constitute only about 1.5 percent of tax filers but pay 41 percent of total state income taxes collected. Similar statistics apply to federal income tax collections.
Progressives will vigorously interject at this point that the numbers reflect the reality that a tiny percentage of the rich controls a hugely disproportionate share of the wealth. And true enough, they do. Nevertheless, it’s still true, as said, that the sugar daddies make big, activist, interventionist, government possible.
Even as Democrats tirelessly bemoan income inequality, even as they splutter and rail against the rich as greedy, no good, stingy, cold-hearted, self-interested plutocrats, the affluent are, nevertheless, in effect the Democratic Party’s silent partners. Without all of that tax money pouring in from the rich, government is going to be a way more downsized enterprise than it is today, no getting around it.
As Murph now takes the stage in his cape and top hat, his magic wand at the ready, the question seems to be: How much more can he squeeze outta his fellow One Percenters without sabotaging the state’s economy or driving increasing numbers of these sugar daddies to decamp across the river to Bucks County, Pa., or to Delaware or to Florida?
The Alfred E. Neuman “What, Me Worry?” faction of the Democratic Party takes the position that there’s plenty of gold left in them thar hills — Shorts Hills, Far Hills, etc. And indeed there may be, according the N.J. Treasury Department’s “Statistics of Income” report.
It shows $574 billion total gross income for tax year 2014, most recent figures available. Of that sum the state tax collectors took a piddling — “piddling” as far as the “What, Me Worry?” faction is concered — $12.36 billion.
So there’s indeed plenty more gold in them thar hills. Question is: Can Murph come up with a trick to transfer the golden eggs from the goose that lays them to the Division of Taxation headquarters at 50 Barrack Street, Trenton?
You’re on, Murph. a drum roll, please.