Cities behaving badly

As if we hadn’t already known it, some of the reaction to the choice of Paul Ryan as Republican vice-presidential nominee confirms that much of the political class simply dreads anyone getting serious about actions to avert national bankruptcy.

The fear of corrective action tells us, among other things, that the danger is greater than we know. Almost every day brings new evidence that the monumental irresponsibility is not limited to a remote and disconnected federal government.

States have assumed public employee pension obligations they can’t sustain, expanded Medicaid benefits beyond their lawful obligations (one-fourth the population of New York is on Medicaid,) cooked the books to hide the extent of their indebtedness and now—The Wall Street Journal reported earlier this month—California, Illinois, New Jersey and New York have even securitized future tax revenues; that is, they’ve sold anticipated future tax collections to investors in exchange for cash today.

With fewer available methods for dodging the consequences of their actions, cities are filing bankruptcy.

Close to home, the Village of Menomonee Falls has put taxpayers on the hook in a disastrous hotel venture, and continues pouring good money after bad.

Unfazed by the Menomonee Falls experience, Oak Creek couldn’t resist getting into the same dangerous game.

These things happen when government seeks to enhance government, as opposed to understanding and meeting its real responsibilities. Sometimes we say government should operate like a business, but that’s a mistake. A sound business doing something that doesn’t work will stop doing it. Government thinks whatever it does must go on forever.

We’ve spent half a century demolishing the founders’ narrow limits on what government is permitted to do. The reasons for those forgotten limits are now painfully obvious.

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