Archive for May, 2010

Padded Pensions Add to New York Fiscal Woes

Thursday, May 27th, 2010
By MARY WILLIAMS WALSH and AMY SCHOENFELD
Published: May 20, 2010
In Yonkers, more than 100 retired police officers and firefighters are collecting pensions greater than their pay when they were working. One of the youngest, Hugo Tassone, retired at 44 with a base pay of about $74,000 a year. His pension is now $101,333 a year.
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Edward A. Stolzenberg collects $222,143 a year, one of the biggest New York State pensions.
Chris Maynard for The New York Times
WORKING OVERTIME Yonkers has arranged for its police officers to put in overtime as flagmen on Consolidated Edison construction sites. Though a company is paying the bill, Yonkers is reporting the work as city overtime to the New York State pension fund, thereby increasing future payouts.
It’s what the system promised, said Mr. Tassone, now 47, adding that he did nothing wrong by adding lots of overtime to his base pay shortly before retiring. “I don’t understand how the working guy that held up their end of the bargain became the problem,” he said.
Robert Stolarik for The New York Times
—————————————–
Despite a pension investigation by the New York attorney general, an audit concluding that some police officers in the city broke overtime rules to increase their payouts and the mayor’s statements that future pensions should be based on regular pay, not overtime, these practices persist in Yonkers.
The city has even arranged for its police to put in overtime as flagmen on Consolidated Edison construction sites. Though a company is paying the bill, the city is actually reporting the work as city overtime to the New York State pension fund, padding future payouts — an arrangement at odds with the spirit of public employment, if not the law.
The Yonkers experience shows how errors, misunderstandings and wishful thinking are piling hidden new costs onto New York’s public pension system every year, worsening the state’s current fiscal crisis. And the problem is not just in New York. Public pension costs are ballooning everywhere, throwing budgets out of whack and raising the question of whether venerable state pension systems are viable.
In fact, the cost of public pensions has been systemically underestimated nationwide for more than two decades, say some analysts. By these estimates, state and local officials have promised $5 trillion worth of benefits while thinking they were committing taxpayers to roughly half that amount.
The use of public money for outsize retirement pay really stings when budgets don’t balance, teachers are being laid off, furloughs are being planned and everything from poison-control centers to Alzheimer’s day care is being cut, as is happening in New York.
According to pension data collected by The New York Times from the city and state, about 3,700 retired public workers in New York are now getting pensions of more than $100,000 a year, exempt from state and local taxes. The data belie official reports that the average state pension is a modest $18,000, or $38,000 for retired police officers and firefighters. (The average is low, in part, because it includes people who worked in government only part time, or just a few years, as well as surviving spouses getting partial benefits.)
Roughly one of every 250 retired public workers in New York is collecting a six-figure pension, and that group is expected to grow rapidly in coming years, based on the number of highly paid people in the pipeline.
Payouts for Decades
Some will receive the big pensions for decades. Thirteen New York City police officers recently retired at age 40 with pensions above $100,000 a year; nine did so in their 30s. The plan’s public information officer said that the very young retirees had qualified for special disability pensions, which are 50 percent larger than ordinary police pensions. He said several dozen of the highest-paid New York City police retirees had disabilities related to 9/11 and the rest of the disabilities resulted from injuries in the line of duty.
In virtually every case, the officials who granted the rich pensions thought they were offering something affordable, because the cost estimates were too low.
Before Yonkers adopted a richer pension formula for police in 2000, for instance, it was told the maximum cost would be $1.3 million a year. But instead, the yearly cost is now $3.75 million and rising.
David Simpson, a spokesman for the mayor of Yonkers, said pension cost projections were “often lowballs,” so the city could get stuck. “Once you give something, you can’t take it away,” he said.
Police pensions and overtime have been a sore point in Yonkers for many years and were the subject of an exposé in The Journal News in Westchester in 2009. A special audit of police overtime in Yonkers in 2007 found that the police department had failed to enforce its own rules, creating pervasive opportunities for abuse.
Despite all the attention, police are now being paid as flagmen by Con Edison on their days off, Mr. Simpson confirmed, adding that the city was tacking the extra hours onto their pay, which is then reported to the state pension fund.
“The system encourages police to take as much overtime as they can in the last year before retirement. That’s the way the system is structured,” he said. “There’s nothing illegal or unethical about this.”
In fact, a Con Edison spokesman, Robert McGee, said a number of other towns also require the company to use their police officers as flagmen, raising its labor costs.
A spokesman for the New York State comptroller’s office said that the city was in error and pointed to a 1986 decision by the Supreme Court of New York that found that hours worked by police for outside businesses could not be included in their state-paid pensions.
“It has long been established that such overtime from private special duty cannot be included,” said the spokesman, Mark Johnson.
The question of how to pay for generous benefits is proving a challenge to New York and many other states whose revenue has fallen and whose debts have become harder to manage, while public officials try to limit the kind of deep service cuts that often mean political death. Some hard-pressed governments are belatedly coming to the grim conclusion that they have promised workers more than their sagging economies can deliver.
Outside the United States, Greece and Spain have recently reduced government pensions to deal with burdensome debt that has impeded their ability to finance themselves. The new British coalition government has said it will review public pension costs there as well.
Municipalities in this country cannot easily follow suit even as financial problems mount, though, because reducing benefits for their existing employees is considered impossible under the current laws of most states.
The New York State constitution bars public employers from slowing the rate at which workers build up their pensions over the course of their careers. That degree of protection contrasts sharply with the private sector, where companies can generally change the rate at which workers build their benefits at any time. Furthermore, as companies have reduced pensions substantially over the last two decades, states and cities have embellished theirs with sweeteners like inflation adjustments and lower retirement ages that appealed to unions and their members, who vote.
Police and other safety workers are in many cases allowed to retire with full pensions after 20 years. Other workers can often do so after 30 years, even as young as 55, although future hires in New York will have to work to age 62 to get their full benefits, under a law passed in January.
Census data from 2008 show that the typical state or municipal pension is substantially richer than the typical company pension — $15,941 versus $7,904 — for retirees aged 65 and older. By tradition, public employees have said they accepted lower salaries in exchange for better benefits, but the Census data show this has not been true for a number of years. In 2008 the median pay for a worker in the private sector was $39,877, compared with $45,124 for a state or local employee. The data show broad national aggregates that do not try to compare similar occupations.
And, while companies must adhere to uniform federal guidelines about setting aside money to pay pensions, states do not. Some, like New Jersey, have failed to fund their pensions for years and have fallen so far behind they may never catch up again. New York City and New York State have been more diligent about contributing the required amounts each year — but the required amounts now turn out to have been too low, in part because they counted on solid investment returns that have not materialized.
In Yonkers, contributions to the state pension fund keep rising. This year, to save money, the city is proposing to eliminate about 90 police jobs, out of 640. The savings, though, will not even cover the extra cost of the overtime-enriched pensions. Meanwhile, the police say the layoffs will make the situation worse, because shrinking the police force means those who remain must work even more overtime, driving up pension costs even more.
An online, searchable database compiled by The Times contains the names and pensions of about 3,700 public retirees in New York who receive more than $100,000 a year. Information was provided by New York State’s two big pension plans, one for teachers and the other for other state and local workers outside New York City.
Four of New York City’s five big pension funds also provided data. But the city police pension fund listed the six-figure amounts being collected by 536 retired police officers without giving their names. The pension plan for the city’s firefighters has yet to provide the information, as required by public information law.
Even without names, the pension list from the New York City police plan shows a trend toward very youthful retirement, at a time when the city’s contributions to the police pension fund have risen sharply.
New York City has budgeted a contribution of about $2 billion for this year — about 64 percent of the police payroll, one of the highest pension contribution rates in the United States. That amount does not yet include money to make up for the investment losses of 2008, so the rate is almost sure to rise.
A Variety of Occupations
Not all the people getting six-figure pensions are former police and firefighters from cities with liberal overtime and disability policies. Hundreds more worked at hospitals, power utilities, port authorities and other “public benefit corporations” — hybrid entities that compete with the private sector and pay their officials accordingly, but allow them, at the same time, to participate in the state pension fund.
Edward A. Stolzenberg makes a good example. He started out more than three decades ago in the Westchester County government; today, in retirement, he collects $222,143 a year, one of the biggest pensions paid by the New York State pension fund.
In between, he became county health commissioner, running the Westchester Medical Center when it was a big, struggling county hospital. The county made it a public benefit corporation in 1997, with a mandate to grow and compete with the big hospitals in New York City.
In the process Mr. Stolzenberg’s salary shot up. By the time he retired, he was the highest-paid official in Westchester County, he said, with a salary of more than $400,000 a year. That was still less than the rate at a for-profit hospital, he said.
“In a time when the state budget is pretty bad and money is pouring out, people look at pensions and say, ‘This is terrible! Why are people getting this kind of money?’ ” he acknowledged. “It may not be viable. But that’s the way the state structured it.”
He added that his successor at the medical center was making more than $900,000 and accruing a pension.
Companies that find they have overpromised have a way out. They can declare bankruptcy, and if a judge approves, they can send their pension plans to the federal agency that insures corporate pensions. That agency limits its coverage to what is considered a basic pension, currently $54,000 for a 65-year-old retiree, much less for younger people. If Yonkers could send its police plan to the federal guarantor, for instance, Mr. Tassone, at 47, would have his benefit cut from $101,333 to just $15,660.
But state plans don’t have such an insurance program, much less any definition of a basic, guaranteed benefit.
Federal tax law does put a cap on pension payouts, currently $195,000 a year. Congress set this cap, which has risen with inflation, more than 30 years ago to keep employers from turning their pension funds into abusive tax shelters.
But New York State found a way around it. In 1997, lawmakers created a safe-harbor mechanism allowing retirees to collect bigger pensions legally — a second pool of money called the Excess Benefit Fund. Towns all over the state pay the associated costs, even though only a few of them have retirees who qualify. At least 28 recipients in New York get pensions above $195,000 a year. One of the highest is George M. Philip, who gets $261,037 after retiring as chief executive and chief investment officer of the New York State teachers’ pension fund. Since retiring, he has gone back to work as president of the State University of New York at Albany, drawing an additional $280,000 last year.
New York’s attorney general, Andrew M. Cuomo, has said public pensions are getting out of hand, and has begun an investigation of places, like Yonkers, where there are unusual concentrations of six-figure retirees.
But he may well find that most recipients have done nothing illegal. The benefits have been enacted by legislators, signed into law by governors, hailed by comptrollers and adopted by local officials — all of whom were told by actuaries and other financial advisers that the pensions would cost just a fraction of what they are now turning out to cost.
“In very few cases do they know what they’re agreeing to,” said Edmund J. McMahon, director of the Empire Center for New York State Policy, which tracks pension costs. “They almost always obscure the costs, from themselves and from the public.”
Offended by Comments
Mr. Cuomo did not name Mr. Tassone but spoke of a Yonkers officer who had retired at 44 on $101,033 a year. Mr. Tassone said all his neighbors knew it was him, and he bristles at the implication that he got more than he was supposed to. He said he could correctly document all the overtime he worked, and that the practice was approved by the mayor and city council.
The special audit in Yonkers named Mr. Tassone in its sample of retirees with unusual overtime records, but did not accuse him of doing anything wrong. Disciplinary proceedings were brought against only one officer, who is now retired.
Mr. Tassone said the only reason he joined the police force was the promise of a full pension after just 20 years, and it would have been wrong for the state or city to go back on the promise after using it to recruit him.
He said he put up with hardships for 20 years as a police officer, “and now I’m at the end of it and I’ve become a target,” he said. “I broke my hand three times. I broke my left ankle. I blew out my knee. In my last two years alone, I made between 350 and 400 arrests, and a lot of those people weren’t volunteering.”
Because he could retire young, he added, it was important to start out with the largest pension possible. In the coming years, inflation will eat away at his benefit. Public pensions in New York City and State have had a cost-of-living adjustment feature since 2000, but it applies only to the first $18,000.
“I concede, I have a very good pension, but what’s that pension going to be worth when I’m 70 years old?” Mr. Tassone said.
Although limited to the first $18,000, the cost-of-living adjustment was the most expensive pension enhancement enacted in recent memory in New York, according to the Independent Budget Office. The cost has, once again, proved higher than expected.
Yonkers still offers full pensions to police after 20 years, but just in theory. For the moment, the city is too broke to send any new cadets to the police academy, and retirees are not being replaced.
A version of this article appeared in print on May 21, 2010, on page A1 of the New York edition.
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The Revenue Limits of Tax and Spend

Saturday, May 22nd, 2010
Whether rates are high or low, evidence shows our tax system won’t collect more than 20% of GDP.
By DAVID RANSON
May 17, 2020
The Greeks have always been trendsetters for the West. Washington has repudiated two centuries of U.S. fiscal prudence as prescribed by the Founding Fathers in favor of the modern Greek model of debt, dependency, devaluation and default. Prospects for restraining runaway U.S. debt are even poorer than they appear.
U.S. fiscal policy has been going in the wrong direction for a very long time. But this year the U.S. government declined to lay out any plan to balance its budget ever again. Based on President Obama’s fiscal 2011 budget, the Congressional Budget Office (CBO) estimates a deficit that starts at 10.3% of GDP in 2010. It is projected to narrow as the economy recovers but will still be 5.6% in 2020. As a result the net national debt (debt held by the public) will more than double to 90% by 2020 from 40% in 2008. The current Greek deficit is now thought to be 13.6% of a far smaller GDP. Unlike ours, the Greek insolvency is not too large for an international rescue.
As sobering as the U.S. debt estimates are, they are incomplete and optimistic. They do not include deficit spending resulting from the new health-insurance legislation. The revenue numbers rely on increased tax rates beginning next year resulting from the scheduled expiration of the Bush tax cuts. And, as usual, they ignore the unfunded liabilities of social insurance programs, even though these benefits are officially recognized as “mandatory spending” when the time comes to pay them out.
The feds assume a relationship between the economy and tax revenue that is divorced from reality. Six decades of history have established one far-reaching fact that needs to be built into fiscal calculations: Increases in federal tax rates, particularly if targeted at the higher brackets, produce no additional revenue. For politicians this is truly an inconvenient truth.
The nearby chart shows how tax revenue has grown over the past eight decades along with the size of the economy. It illustrates the empirical relationship first introduced on this page 20 years ago by the Hoover Institution’s W. Kurt Hauser—a close proportionality between revenue and GDP since World War II, despite big changes in marginal tax rates in both directions. “Hauser’s Law,” as I call this formula, reveals a kind of capacity ceiling for federal tax receipts at about 19% of GDP.
What’s the origin of this limit beyond which it is impossible to extract any more revenue from tax payers? The tax base is not something that the government can kick around at will. It represents a living economic system that makes its own collective choices. In a tax code of 70,000 pages there are innumerable ways for high-income earners to seek out and use ambiguities and loopholes. The more they are incentivized to make an effort to game the system, the less the federal government will get to collect. That would explain why, as Mr. Hauser has shown, conventional methods of forecasting tax receipts from increases in future tax rates are prone to over-predict revenue.
For budget planning it’s wiser and safer to assume that tax receipts will remain at a historically realistic ratio to GDP no matter how tax rates are manipulated. That leads me to conclude that current projections of federal revenue are, once again, unrealistically high.
Like other empirical “laws,” Hauser’s Law predicts within a range of approximation. Changes in marginal tax rates do not make a perceptible difference to the ratio of revenue to GDP, but recessions do. When GDP falls relative to its potential, tax revenue falls even more. History shows that, in an economy with no “output gap” between GDP and potential GDP, a ratio of federal revenue to GDP of no more than 18.3% would be realistic.
In this form, Hauser’s Law provides a simple basis for testing the validity of any government’s revenue projections. Today, since the economy already suffers from a large output gap that is expected to take many years to close, 18.3% must be a realistic upper limit on the ratio of budget revenues to GDP for years to come. Any major tax increase will reduce GDP and therefore revenues too.
But CBO projections based on the current budget show this ratio reaching 18.3% as early as 2013 and rising to 19.6% in 2020. Such numbers implicitly assume that the U.S. labor market will get back to sustainable “full employment” by 2013 and that GDP will exceed its potential thereafter. Not likely. When the projections are tempered by the constraints of Hauser’s Law, it’s clear that deficit spending will grow faster than the official estimates show.
Mr. Ranson is the head of research at H. C. Wainwright & Co. Economics.
Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

The Revenue Limits of Tax and SpendWhether rates are high or low, evidence shows our tax system won’t collect more than 20% of GDP.By DAVID RANSONWall Street Journal – link to originalMay 17, 2020
The Greeks have always been trendsetters for the West. Washington has repudiated two centuries of U.S. fiscal prudence as prescribed by the Founding Fathers in favor of the modern Greek model of debt, dependency, devaluation and default. Prospects for restraining runaway U.S. debt are even poorer than they appear.
U.S. fiscal policy has been going in the wrong direction for a very long time. But this year the U.S. government declined to lay out any plan to balance its budget ever again. Based on President Obama’s fiscal 2011 budget, the Congressional Budget Office (CBO) estimates a deficit that starts at 10.3% of GDP in 2010. It is projected to narrow as the economy recovers but will still be 5.6% in 2020. As a result the net national debt (debt held by the public) will more than double to 90% by 2020 from 40% in 2008. The current Greek deficit is now thought to be 13.6% of a far smaller GDP. Unlike ours, the Greek insolvency is not too large for an international rescue.
As sobering as the U.S. debt estimates are, they are incomplete and optimistic. They do not include deficit spending resulting from the new health-insurance legislation. The revenue numbers rely on increased tax rates beginning next year resulting from the scheduled expiration of the Bush tax cuts. And, as usual, they ignore the unfunded liabilities of social insurance programs, even though these benefits are officially recognized as “mandatory spending” when the time comes to pay them out.
The feds assume a relationship between the economy and tax revenue that is divorced from reality. Six decades of history have established one far-reaching fact that needs to be built into fiscal calculations: Increases in federal tax rates, particularly if targeted at the higher brackets, produce no additional revenue. For politicians this is truly an inconvenient truth.

The nearby chart shows how tax revenue has grown over the past eight decades along with the size of the economy. It illustrates the empirical relationship first introduced on this page 20 years ago by the Hoover Institution’s W. Kurt Hauser—a close proportionality between revenue and GDP since World War II, despite big changes in marginal tax rates in both directions. “Hauser’s Law,” as I call this formula, reveals a kind of capacity ceiling for federal tax receipts at about 19% of GDP.
What’s the origin of this limit beyond which it is impossible to extract any more revenue from tax payers? The tax base is not something that the government can kick around at will. It represents a living economic system that makes its own collective choices. In a tax code of 70,000 pages there are innumerable ways for high-income earners to seek out and use ambiguities and loopholes. The more they are incentivized to make an effort to game the system, the less the federal government will get to collect. That would explain why, as Mr. Hauser has shown, conventional methods of forecasting tax receipts from increases in future tax rates are prone to over-predict revenue.
For budget planning it’s wiser and safer to assume that tax receipts will remain at a historically realistic ratio to GDP no matter how tax rates are manipulated. That leads me to conclude that current projections of federal revenue are, once again, unrealistically high.
Like other empirical “laws,” Hauser’s Law predicts within a range of approximation. Changes in marginal tax rates do not make a perceptible difference to the ratio of revenue to GDP, but recessions do. When GDP falls relative to its potential, tax revenue falls even more. History shows that, in an economy with no “output gap” between GDP and potential GDP, a ratio of federal revenue to GDP of no more than 18.3% would be realistic.
In this form, Hauser’s Law provides a simple basis for testing the validity of any government’s revenue projections. Today, since the economy already suffers from a large output gap that is expected to take many years to close, 18.3% must be a realistic upper limit on the ratio of budget revenues to GDP for years to come. Any major tax increase will reduce GDP and therefore revenues too.
But CBO projections based on the current budget show this ratio reaching 18.3% as early as 2013 and rising to 19.6% in 2020. Such numbers implicitly assume that the U.S. labor market will get back to sustainable “full employment” by 2013 and that GDP will exceed its potential thereafter. Not likely. When the projections are tempered by the constraints of Hauser’s Law, it’s clear that deficit spending will grow faster than the official estimates show.
Mr. Ranson is the head of research at H. C. Wainwright & Co. Economics.
Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

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Lessons for the U.S. in Greece’s National Meltdown

Monday, May 17th, 2010
In Athens or in Washington, it’s the size of government that matters.
By MONA CHAREN
NRO – link to original
“The President of Greece warned last night that his country stood on the brink of the abyss after three people were killed when an anti-government mob set fire to the Athens bank where they worked.” — TheTimes Online
That “anti-government mob,” it must be understood, consisted of civil servants, tens of thousands of whom took to the streets to protest austerity measures. Greece is in the midst of a general strike. Airports are closed. Trains are not running. Classrooms are empty. Trash is piling up. The Wall Street Journal reports that “angry youths rampaged through the center of Athens, torching several businesses and vehicles and smashing shop windows. Protesters and police clashed in front of parliament and fought running street battles around the city.” The Greek crisis, like a fraying rope on a footbridge, is also sending shudders throughout the Eurozone.
This is more than a financial crisis. This is a national meltdown. And while facile comparisons to the U.S. must be avoided, there are nonetheless lessons for us — particularly in light of the direction the Democratic party wants to travel.
First, the differences. Greece is a small nation of 11.3 million people. Its GDP is estimated to be in the range of $333 billion (though with recent revelations of government dishonesty about deficit numbers, all figures must be viewed skeptically). Greece partakes zestily in the Mediterranean tradition of tax avoidance, and corruption is endemic. Many ordinary transactions are greased with fakelaki (“little envelopes”) or rousfeti (“political favors”). Daniel Kaufmann, a senior fellow at the Brookings Institution, compared 40 industrialized countries and concluded, “If Greece had better control of corruption — not to Swedish standards, but even at Spain’s level — it would have had a smaller budget deficit by 4 percent of gross domestic product.”
So Greece has cultural problems that contributed to its economic implosion. But there are similarities to the U.S. as well — and because we have elected Democrats, they are growing. By the end of 2011, Greece’s debt will be 150 percent of its GDP. According to a March report by the Congressional Budget Office, President Obama’s 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next ten years — $1.2 trillion more than the administration projected — which will increase our debt-to-GDP ratio to 90 percent by 2020.
One in three Greeks works for the government. Government employees enjoy higher wages, more munificent benefits, and earlier retirements than private-sector employees. Civil servants can retire after 35 years of service at 80 percent of their highest salary and enjoy lavish health plans, vacations, and other perks. Because they are so numerous, and because Greece is highly centralized, public-sector unions hardly have to negotiate. They simply vote in their preferred bosses. Some civil servants receive bonuses for using computers, others for arriving at work on time. Forestry workers get a bonus for outdoor work. All civil servants receive 14 yearly checks for twelve months’ work. And it’s almost impossible to fire them — even for the grossest incompetence.
Public-sector unions are growing in the U.S. More than 50 percent of all union members are now public employees, and their unions have negotiated sweet deals with local, state, and federal governments. As economic historian John Steele Gordon points out, “Federal workers now earn, in wages and benefits, about twice what their private-sector equivalents get paid. State workers often have Cadillac health plans and retirement benefits far above the private sector average: 80 percent of public-sector workers have pension benefits, only 50 percent in the private sector. Many can retire at age 50.” While private employers were shedding jobs during the recession, state and local governments hired 110,000 new workers.
President Obama’s new spending will result in a 14.5 percent increase in the number of federal employees in just two years. And he has looked after union interests with particular zeal — at General Motors and Chrysler, by funneling one-third of stimulus spending to state and local governments, and by repealing the rule that required unions to disclose their spending, to name three examples.
And in a corrupt feedback loop that may not be so very different from the Greek practice after all, public-employee unions give generously to Democratic candidates, both in cash contributions and by manning phone banks, getting out the vote, and so on.
It’s no coincidence that the states with the most powerful public-sector unions — New Jersey, California, and New York — are facing the most severe budget crises.
Greece is in flames, but if you look around, you can smell the smoke here as well.
— Mona Charen is a nationally syndicated columnist. © 2010
In Athens or in Washington, it’s the size of government that matters.”The President of Greece warned last night that his country stood on the brink of the abyss after three people were killed when an anti-government mob set fire to the Athens bank where they worked.” — TheTimes Online
That “anti-government mob,” it must be understood, consisted of civil servants, tens of thousands of whom took to the streets to protest austerity measures. Greece is in the midst of a general strike. Airports are closed. Trains are not running. Classrooms are empty. Trash is piling up. The Wall Street Journal reports that “angry youths rampaged through the center of Athens, torching several businesses and vehicles and smashing shop windows. Protesters and police clashed in front of parliament and fought running street battles around the city.” The Greek crisis, like a fraying rope on a footbridge, is also sending shudders throughout the Eurozone.
This is more than a financial crisis. This is a national meltdown. And while facile comparisons to the U.S. must be avoided, there are nonetheless lessons for us — particularly in light of the direction the Democratic party wants to travel.
First, the differences. Greece is a small nation of 11.3 million people. Its GDP is estimated to be in the range of $333 billion (though with recent revelations of government dishonesty about deficit numbers, all figures must be viewed skeptically). Greece partakes zestily in the Mediterranean tradition of tax avoidance, and corruption is endemic. Many ordinary transactions are greased with fakelaki (“little envelopes”) or rousfeti (“political favors”). Daniel Kaufmann, a senior fellow at the Brookings Institution, compared 40 industrialized countries and concluded, “If Greece had better control of corruption — not to Swedish standards, but even at Spain’s level — it would have had a smaller budget deficit by 4 percent of gross domestic product.”
So Greece has cultural problems that contributed to its economic implosion. But there are similarities to the U.S. as well — and because we have elected Democrats, they are growing. By the end of 2011, Greece’s debt will be 150 percent of its GDP. According to a March report by the Congressional Budget Office, President Obama’s 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next ten years — $1.2 trillion more than the administration projected — which will increase our debt-to-GDP ratio to 90 percent by 2020.
One in three Greeks works for the government. Government employees enjoy higher wages, more munificent benefits, and earlier retirements than private-sector employees. Civil servants can retire after 35 years of service at 80 percent of their highest salary and enjoy lavish health plans, vacations, and other perks. Because they are so numerous, and because Greece is highly centralized, public-sector unions hardly have to negotiate. They simply vote in their preferred bosses. Some civil servants receive bonuses for using computers, others for arriving at work on time. Forestry workers get a bonus for outdoor work. All civil servants receive 14 yearly checks for twelve months’ work. And it’s almost impossible to fire them — even for the grossest incompetence.
Public-sector unions are growing in the U.S. More than 50 percent of all union members are now public employees, and their unions have negotiated sweet deals with local, state, and federal governments. As economic historian John Steele Gordon points out, “Federal workers now earn, in wages and benefits, about twice what their private-sector equivalents get paid. State workers often have Cadillac health plans and retirement benefits far above the private sector average: 80 percent of public-sector workers have pension benefits, only 50 percent in the private sector. Many can retire at age 50.” While private employers were shedding jobs during the recession, state and local governments hired 110,000 new workers.
President Obama’s new spending will result in a 14.5 percent increase in the number of federal employees in just two years. And he has looked after union interests with particular zeal — at General Motors and Chrysler, by funneling one-third of stimulus spending to state and local governments, and by repealing the rule that required unions to disclose their spending, to name three examples.
And in a corrupt feedback loop that may not be so very different from the Greek practice after all, public-employee unions give generously to Democratic candidates, both in cash contributions and by manning phone banks, getting out the vote, and so on.
It’s no coincidence that the states with the most powerful public-sector unions — New Jersey, California, and New York — are facing the most severe budget crises.
Greece is in flames, but if you look around, you can smell the smoke here as well.
— Mona Charen is a nationally syndicated columnist. © 2010

In Athens or in Washington, it’s the size of government that matters.By MONA CHARENNRO – link to original

“The President of Greece warned last night that his country stood on the brink of the abyss after three people were killed when an anti-government mob set fire to the Athens bank where they worked.” — TheTimes OnlineThat “anti-government mob,” it must be understood, consisted of civil servants, tens of thousands of whom took to the streets to protest austerity measures. Greece is in the midst of a general strike. Airports are closed. Trains are not running. Classrooms are empty. Trash is piling up. The Wall Street Journal reports that “angry youths rampaged through the center of Athens, torching several businesses and vehicles and smashing shop windows. Protesters and police clashed in front of parliament and fought running street battles around the city.” The Greek crisis, like a fraying rope on a footbridge, is also sending shudders throughout the Eurozone.This is more than a financial crisis. This is a national meltdown. And while facile comparisons to the U.S. must be avoided, there are nonetheless lessons for us — particularly in light of the direction the Democratic party wants to travel.First, the differences. Greece is a small nation of 11.3 million people. Its GDP is estimated to be in the range of $333 billion (though with recent revelations of government dishonesty about deficit numbers, all figures must be viewed skeptically). Greece partakes zestily in the Mediterranean tradition of tax avoidance, and corruption is endemic. Many ordinary transactions are greased with fakelaki (“little envelopes”) or rousfeti (“political favors”). Daniel Kaufmann, a senior fellow at the Brookings Institution, compared 40 industrialized countries and concluded, “If Greece had better control of corruption — not to Swedish standards, but even at Spain’s level — it would have had a smaller budget deficit by 4 percent of gross domestic product.”So Greece has cultural problems that contributed to its economic implosion. But there are similarities to the U.S. as well — and because we have elected Democrats, they are growing. By the end of 2011, Greece’s debt will be 150 percent of its GDP. According to a March report by the Congressional Budget Office, President Obama’s 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next ten years — $1.2 trillion more than the administration projected — which will increase our debt-to-GDP ratio to 90 percent by 2020.One in three Greeks works for the government. Government employees enjoy higher wages, more munificent benefits, and earlier retirements than private-sector employees. Civil servants can retire after 35 years of service at 80 percent of their highest salary and enjoy lavish health plans, vacations, and other perks. Because they are so numerous, and because Greece is highly centralized, public-sector unions hardly have to negotiate. They simply vote in their preferred bosses. Some civil servants receive bonuses for using computers, others for arriving at work on time. Forestry workers get a bonus for outdoor work. All civil servants receive 14 yearly checks for twelve months’ work. And it’s almost impossible to fire them — even for the grossest incompetence.Public-sector unions are growing in the U.S. More than 50 percent of all union members are now public employees, and their unions have negotiated sweet deals with local, state, and federal governments. As economic historian John Steele Gordon points out, “Federal workers now earn, in wages and benefits, about twice what their private-sector equivalents get paid. State workers often have Cadillac health plans and retirement benefits far above the private sector average: 80 percent of public-sector workers have pension benefits, only 50 percent in the private sector. Many can retire at age 50.” While private employers were shedding jobs during the recession, state and local governments hired 110,000 new workers.President Obama’s new spending will result in a 14.5 percent increase in the number of federal employees in just two years. And he has looked after union interests with particular zeal — at General Motors and Chrysler, by funneling one-third of stimulus spending to state and local governments, and by repealing the rule that required unions to disclose their spending, to name three examples.And in a corrupt feedback loop that may not be so very different from the Greek practice after all, public-employee unions give generously to Democratic candidates, both in cash contributions and by manning phone banks, getting out the vote, and so on.It’s no coincidence that the states with the most powerful public-sector unions — New Jersey, California, and New York — are facing the most severe budget crises.Greece is in flames, but if you look around, you can smell the smoke here as well.— Mona Charen is a nationally syndicated columnist. © 2010In Athens or in Washington, it’s the size of government that matters.”The President of Greece warned last night that his country stood on the brink of the abyss after three people were killed when an anti-government mob set fire to the Athens bank where they worked.” — TheTimes OnlineThat “anti-government mob,” it must be understood, consisted of civil servants, tens of thousands of whom took to the streets to protest austerity measures. Greece is in the midst of a general strike. Airports are closed. Trains are not running. Classrooms are empty. Trash is piling up. The Wall Street Journal reports that “angry youths rampaged through the center of Athens, torching several businesses and vehicles and smashing shop windows. Protesters and police clashed in front of parliament and fought running street battles around the city.” The Greek crisis, like a fraying rope on a footbridge, is also sending shudders throughout the Eurozone.This is more than a financial crisis. This is a national meltdown. And while facile comparisons to the U.S. must be avoided, there are nonetheless lessons for us — particularly in light of the direction the Democratic party wants to travel.First, the differences. Greece is a small nation of 11.3 million people. Its GDP is estimated to be in the range of $333 billion (though with recent revelations of government dishonesty about deficit numbers, all figures must be viewed skeptically). Greece partakes zestily in the Mediterranean tradition of tax avoidance, and corruption is endemic. Many ordinary transactions are greased with fakelaki (“little envelopes”) or rousfeti (“political favors”). Daniel Kaufmann, a senior fellow at the Brookings Institution, compared 40 industrialized countries and concluded, “If Greece had better control of corruption — not to Swedish standards, but even at Spain’s level — it would have had a smaller budget deficit by 4 percent of gross domestic product.”So Greece has cultural problems that contributed to its economic implosion. But there are similarities to the U.S. as well — and because we have elected Democrats, they are growing. By the end of 2011, Greece’s debt will be 150 percent of its GDP. According to a March report by the Congressional Budget Office, President Obama’s 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next ten years — $1.2 trillion more than the administration projected — which will increase our debt-to-GDP ratio to 90 percent by 2020.One in three Greeks works for the government. Government employees enjoy higher wages, more munificent benefits, and earlier retirements than private-sector employees. Civil servants can retire after 35 years of service at 80 percent of their highest salary and enjoy lavish health plans, vacations, and other perks. Because they are so numerous, and because Greece is highly centralized, public-sector unions hardly have to negotiate. They simply vote in their preferred bosses. Some civil servants receive bonuses for using computers, others for arriving at work on time. Forestry workers get a bonus for outdoor work. All civil servants receive 14 yearly checks for twelve months’ work. And it’s almost impossible to fire them — even for the grossest incompetence.Public-sector unions are growing in the U.S. More than 50 percent of all union members are now public employees, and their unions have negotiated sweet deals with local, state, and federal governments. As economic historian John Steele Gordon points out, “Federal workers now earn, in wages and benefits, about twice what their private-sector equivalents get paid. State workers often have Cadillac health plans and retirement benefits far above the private sector average: 80 percent of public-sector workers have pension benefits, only 50 percent in the private sector. Many can retire at age 50.” While private employers were shedding jobs during the recession, state and local governments hired 110,000 new workers.President Obama’s new spending will result in a 14.5 percent increase in the number of federal employees in just two years. And he has looked after union interests with particular zeal — at General Motors and Chrysler, by funneling one-third of stimulus spending to state and local governments, and by repealing the rule that required unions to disclose their spending, to name three examples.And in a corrupt feedback loop that may not be so very different from the Greek practice after all, public-employee unions give generously to Democratic candidates, both in cash contributions and by manning phone banks, getting out the vote, and so on.It’s no coincidence that the states with the most powerful public-sector unions — New Jersey, California, and New York — are facing the most severe budget crises.Greece is in flames, but if you look around, you can smell the smoke here as well.— Mona Charen is a nationally syndicated columnist. © 2010

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The Black Family: 40 Years of Lies

Saturday, May 15th, 2010

Kay S. Hymowitz

Rejecting the Moynihan report caused untold, needless misery.

Summer 2005

City Journal – link to original

Read through the megazillion words on class, income mobility, and poverty in the recent New YorkTimes series “Class Matters” and you still won’t grasp two of the most basic truths on the subject: 1. entrenched, multigenerational poverty is largely black; and 2. it is intricately intertwined with the collapse of the nuclear family in the inner city.

By now, these facts shouldn’t be hard to grasp. Almost 70 percent of black children are born to single mothers. Those mothers are far more likely than married mothers to be poor, even after a post-welfare-reform decline in child poverty. They are also more likely to pass that poverty on to their children. Sophisticates often try to dodge the implications of this bleak reality by shrugging that single motherhood is an inescapable fact of modern life, affecting everyone from the bobo Murphy Browns to the ghetto “baby mamas.” Not so; it is a largely low-income—and disproportionately black—phenomenon. The vast majority of higher-income women wait to have their children until they are married. The truth is that we are now a two-family nation, separate and unequal—one thriving and intact, and the other struggling, broken, and far too often African-American.

So why does the Times, like so many who rail against inequality, fall silent on the relation between poverty and single-parent families? To answer that question—and to continue the confrontation with facts that Americans still prefer not to mention in polite company—you have to go back exactly 40 years. That was when a resounding cry of outrage echoed throughout Washington and the civil rights movement in reaction to Daniel Patrick Moynihan’s Department of Labor report warning that the ghetto family was in disarray. Entitled “The Negro Family: The Case for National Action,” the prophetic report prompted civil rights leaders, academics, politicians, and pundits to make a momentous—and, as time has shown, tragically wrong—decision about how to frame the national discussion about poverty.

To go back to the political and social moment before the battle broke out over the Moynihan report is to return to a time before the country’s discussion of black poverty had hardened into fixed orthodoxies—before phrases like “blaming the victim,” “self-esteem,” “out-of-wedlock childbearing” (the term at the time was “illegitimacy”), and even “teen pregnancy” had become current. While solving the black poverty problem seemed an immense political challenge, as a conceptual matter it didn’t seem like rocket science. Most analysts assumed that once the nation removed discriminatory legal barriers and expanded employment opportunities, blacks would advance, just as poor immigrants had.

Conditions for testing that proposition looked good. Between the 1954 Brown decision and the Civil Rights Act of 1964, legal racism had been dismantled. And the economy was humming along; in the first five years of the sixties, the economy generated 7 million jobs.

Yet those most familiar with what was called “the Negro problem” were getting nervous. About half of all blacks had moved into the middle class by the mid-sixties, but now progress seemed to be stalling. The rise in black income relative to that of whites, steady throughout the fifties, was sputtering to a halt. More blacks were out of work in 1964 than in 1954. Most alarming, after rioting in Harlem and Paterson, New Jersey, in 1964, the problems of the northern ghettos suddenly seemed more intractable than those of the George Wallace South.

Moynihan, then assistant secretary of labor and one of a new class of government social scientists, was among the worriers, as he puzzled over his charts. One in particular caught his eye. Instead of rates of black male unemployment and welfare enrollment running parallel as they always had, in 1962 they started to diverge in a way that would come to be called “Moynihan’s scissors.” In the past, policymakers had assumed that if the male heads of household had jobs, women and children would be provided for. This no longer seemed true. Even while more black men—though still “catastrophically” low numbers—were getting jobs, more black women were joining the welfare rolls. Moynihan and his aides decided that a serious analysis was in order.

Convinced that “the Negro revolution . . . , a movement for equality as well as for liberty,” was now at risk, Moynihan wanted to make several arguments in his report. The first was empirical and would quickly become indisputable: single-parent families were on the rise in the ghetto. But other points were more speculative and sparked a partisan dispute that has lasted to this day. Moynihan argued that the rise in single-mother families was not due to a lack of jobs but rather to a destructive vein in ghetto culture that could be traced back to slavery and Jim Crow discrimination. Though black sociologist E. Franklin Frazier had already introduced the idea in the 1930s, Moynihan’s argument defied conventional social-science wisdom. As he wrote later, “The work began in the most orthodox setting, the U.S. Department of Labor, to establish at some level of statistical conciseness what ‘everyone knew’: that economic conditions determine social conditions. Whereupon, it turned out that what everyone knew was evidently not so.”

But Moynihan went much further than merely overthrowing familiar explanations about the cause of poverty. He also described, through pages of disquieting charts and graphs, the emergence of a “tangle of pathology,” including delinquency, joblessness, school failure, crime, and fatherlessness that characterized ghetto—or what would come to be called underclass—behavior. Moynihan may have borrowed the term “pathology” from Kenneth Clark’s The Dark Ghetto, also published that year. But as both a descendant and a scholar of what he called “the wild Irish slums”—he had written a chapter on the poor Irish in the classic Beyond the Melting Pot—the assistant secretary of labor was no stranger to ghetto self-destruction. He knew the dangers it posed to “the basic socializing unit” of the family. And he suspected that the risks were magnified in the case of blacks, since their “matriarchal” family had the effect of abandoning men, leaving them adrift and “alienated.”

More than most social scientists, Moynihan, steeped in history and anthropology, understood what families do. They “shape their children’s character and ability,” he wrote. “By and large, adult conduct in society is learned as a child.” What children learned in the “disorganized home[s]” of the ghetto, as he described through his forest of graphs, was that adults do not finish school, get jobs, or, in the case of men, take care of their children or obey the law. Marriage, on the other hand, provides a “stable home” for children to learn common virtues. Implicit in Moynihan’s analysis was that marriage orients men and women toward the future, asking them not just to commit to each other but to plan, to earn, to save, and to devote themselves to advancing their children’s prospects. Single mothers in the ghetto, on the other hand, tended to drift into pregnancy, often more than once and by more than one man, and to float through the chaos around them. Such mothers are unlikely to “shape their children’s character and ability” in ways that lead to upward mobility. Separate and unequal families, in other words, meant that blacks would have their liberty, but that they would be strangers to equality. Hence Moynihan’s conclusion: “a national effort towards the problems of Negro Americans must be directed towards the question of family structure.”

Astonishingly, even for that surpri sing time, the Johnson administration agreed. Prompted by Moynihan’s still-unpublished study, Johnson delivered a speech at the Howard University commencement that called for “the next and more profound stage of the battle for civil rights.” The president began his speech with the era’s conventional civil rights language, condemning inequality and calling for more funding of medical care, training, and education for Negroes. But he also broke into new territory, analyzing the family problem with what strikes the contemporary ear as shocking candor. He announced: “Negro poverty is not white poverty.” He described “the breakdown of the Negro family structure,” which he said was “the consequence of ancient brutality, past injustice and present prejudice.” “When the family collapses, it is the children that are usually damaged,” Johnson continued. “When it happens on a massive scale, the community itself is crippled.”

Johnson was to call this his “greatest civil rights speech,” but he was just about the only one to see it that way. By that summer, the Moynihan report that was its inspiration was under attack from all sides. Civil servants in the “permanent government” at Health, Education, and Welfare (HEW) and at the Children’s Bureau muttered about the report’s “subtle racism.” Academics picked apart its statistics. Black leaders like Congress of Racial Equality (CORE) director Floyd McKissick scolded that, rather than the family, “[i]t’s the damn system that needs changing.”

In part, the hostility was an accident of timing. Just days after the report was leaked to Newsweek in early August, L.A.’s Watts ghetto exploded. The televised images of the South Central Los Angeles rioters burning down their own neighborhood collided in the public mind with the contents of the report. Some concluded that the “tangle of pathology” was the administration’s explanation for urban riots, a view quite at odds with civil rights leaders’ determination to portray the violence as an outpouring of black despair over white injustice. Moreover, given the fresh wounds of segregation, the persistent brutality against blacks, and the ugly tenaciousness of racism, the fear of white backsliding and the sense of injured pride that one can hear in so many of Moynihan’s critics are entirely understandable.

Less forgivable was the refusal to grapple seriously—either at the time or in the months, years, even decades to come—with the basic cultural insight contained in the report: that ghetto families were at risk of raising generations of children unable to seize the opportunity that the civil rights movement had opened up for them. Instead, critics changed the subject, accusing Moynihan—wrongfully, as any honest reading of “The Negro Family” proves—of ignoring joblessness and discrimination. Family instability is a “peripheral issue,” warned Whitney Young, executive director of the National Urban League. “The problem is discrimination.” The protest generating the most buzz came from William Ryan, a CORE activist, in “Savage Discovery: The Moynihan Report,” published in The Nation and later reprinted in the NAACP’s official publication. Ryan, though a psychologist, did not hear Moynihan’s point that as the family goes, so go the children. He heard code for the archaic charge of black licentiousness. He described the report as a “highly sophomoric treatment of illegitimacy” and insisted that whites’ broader access to abortion, contraception, and adoption hid the fact that they were no less “promiscuous” than blacks. Most memorably, he accused Moynihan of “blaming the victim,” a phrase that would become the title of his 1971 book and the fear-inducing censor of future plain speaking about the ghetto’s decay.

That Ryan’s phrase turned out to have more cultural staying power than anything in the Moynihan report is a tragic emblem of the course of the subsequent discussion about the ghetto family. For white liberals and the black establishment, poverty became a zero-sum game: either you believed, as they did, that there was a defect in the system, or you believed that there was a defect in the individual. It was as if critiquing the family meant that you supported inferior schools, even that you were a racist. Though “The Negro Family” had been a masterpiece of complex analysis that implied that individuals were intricately entwined in a variety of systems—familial, cultural, and economic—it gave birth to a hardened, either/or politics from which the country has barely recovered.

By autumn, when a White House conference on civil rights took place, the Moynihan report, initially planned as its centerpiece, had been disappeared. Johnson himself, having just introduced large numbers of ground troops into Vietnam, went mum on the subject, steering clear of the word “family” in the next State of the Union message. This was a moment when the nation had the resources, the leadership (the president had been overwhelmingly elected, and he had the largest majorities in the House and Senate since the New Deal), and the will “to make a total . . . commitment to the cause of Negro equality,” Moynihan lamented in a 1967 postmortem of his report in Commentary. Instead, he declared, the nation had disastrously decided to punt on Johnson’s “next and more profound stage in the battle for civil rights.” “The issue of the Negro family was dead.”

Well, not exactly. Over the next 15 years, the black family question actually became a growth industry inside academe, the foundations, and the government. But it wasn’t the same family that had worried Moynihan and that in the real world continued to self-destruct at unprecedented rates. Scholars invented a fantasy family—strong and healthy, a poor man’s Brady Bunch—whose function was not to reflect truth but to soothe injured black self-esteem and to bolster the emerging feminist critique of male privilege, bourgeois individualism, and the nuclear family. The literature of this period was so evasive, so implausible, so far removed from what was really unfolding in the ghetto, that if you didn’t know better, you might conclude that people actually wanted to keep the black family separate and unequal.

Consider one of the first books out of the gate, Black Families in White America, by Andrew Billingsley, published in 1968 and still referred to as “seminal.” “Unlike Moynihan and others, we do not view the Negro as a causal nexus in a ‘tangle of pathologies’ which feeds on itself,” he declared. “[The Negro family] is, in our view, an absorbing, adaptive, and amazingly resilient mechanism for the socialization of its children and the civilization of its society.” Pay no attention to the 25 percent of poor ghetto families, Billingsley urged. Think instead about the 75 percent of black middle-class families—though Moynihan had made a special point of exempting them from his report.

Other black pride–inspired scholars looked at female-headed families and declared them authentically African and therefore a good thing. In a related vein, Carol Stack published All Our Kin, a 1974 HEW-funded study of families in a midwestern ghetto with many multigenerational female households. In an implicit criticism of American individualism, Stack depicted “The Flats,” as she dubbed her setting, as a vibrant and cooperative urban village, where mutual aid—including from sons, brothers, and uncles, who provided financial support and strong role models for children—created “a tenacious, active, lifelong network.”

In fact, some scholars continued, maybe the nuclear family was really just a toxic white hang-up, anyway. No one asked what nuclear families did, or how they prepared children for a modern economy. The important point was simply that they were not black. “One must question the validity of the white middle-class lifestyle from its very foundation because it has already proven itself to be decadent and unworthy of emulation,” wrote Joyce Ladner (who later became the first female president of Howard University) in her 1972 book Tomorrow’s Tomorrow. Robert Hill of the Urban League, who published The Strengths of Black Families that same year, claimed to have uncovered science that proved Ladner’s point: “Research studies have revealed that many one-parent families are more intact or cohesive than many two-parent families: data on child abuse, battered wives and runaway children indicate higher rates among two-parent families in suburban areas than one-parent families in inner city communities.” That science, needless to say, was as reliable as a deadbeat dad.

Feminists, similarly fixated on overturning the “oppressive ideal of the nuclear family,” also welcomed this dubious scholarship. Convinced that marriage was the main arena of male privilege, feminists projected onto the struggling single mother an image of the “strong black woman” who had always had to work and who was “superior in terms of [her] ability to function healthily in the world,” as Toni Morrison put it. The lucky black single mother could also enjoy more equal relationships with men than her miserably married white sisters.

If black pride made it hard to grapple with the increasingly separate and unequal family, feminism made it impossible. Fretting about single-parent families was now not only racist but also sexist, an effort to deny women their independence, their sexuality, or both. As for the poverty of single mothers, that was simply more proof of patriarchal oppression. In 1978, University of Wisconsin researcher Diana Pearce introduced the useful term “feminization of poverty.” But for her and her many allies, the problem was not the crumbling of the nuclear family; it was the lack of government support for single women and the failure of business to pay women their due.

With the benefit of embarrassed hindsight, academics today sometimes try to wave away these notions as the justifiably angry, but ultimately harmless, speculations of political and academic activists. “The depth and influence of the radicalism of the late 1960s and early 1970s are often exaggerated,” historian Stephanie Coontz writes in her new book, Marriage, a History: From Obedience to Intimacy, or How Love Conquered Marriage. This is pure revisionism. The radical delegitimation of the family was so pervasive that even people at the center of power joined in. It made no difference that so many of these cheerleaders for single mothers had themselves spent their lives in traditional families and probably would rather have cut off an arm than seen their own unmarried daughters pushing strollers.

Take, for instance, Supreme Court Justice William Brennan, who wrote a concurring assent in the 1977 Moore v. City of East Cleveland decision. The case concerned a woman and her grandson evicted from a housing project following a city ordinance that defined “family” as parents—or parent—and their own children. Brennan did not simply agree that the court should rule in favor of the grandmother—a perfectly reasonable position. He also assured the court that “the extended family has many strengths not shared by the nuclear family.” Relying on Robert Hill’s “science,” he declared that delinquency, addiction, crime, “neurotic disabilities,” and mental illness were more prevalent in societies where “autonomous nuclear families prevail,” a conclusion that would have bewildered the writers of the Constitution that Brennan was supposedly interpreting.

In its bumbling way and with far-reaching political consequences, the executive branch also offered warm greetings to the single-parent family. Alert to growing apprehension about the state of the American family during his 1976 presidential campaign, Jimmy Carter had promised a conference on the subject. Clearly less concerned with conditions in the ghetto than with satisfying feminist advocates, the administration named a black single (divorced) mother to lead the event, occasioning an outcry from conservatives. By 1980, when it finally convened after numerous postponements, the White House Conference on the Family had morphed into the White House Conference on Families, to signal that all family forms were equal.

Instead of the political victory for moderate Democrats that Carter had expected, the conference galvanized religious conservatives.

Later, conservative heavyweight Paul Weyrich observed that the Carter conference marked the moment when religious activists moved in force into Republican politics. Doubtless they were also more energized by their own issues of feminism and gay rights than by what was happening in the ghetto. But their new rallying cry of “family values” nonetheless became a political dividing line, with unhappy fallout for liberals for years to come.

Meanwhile, the partisans of single motherhood got a perfect chance to test their theories, since the urban ghettos were fast turning into nuclear-family-free zones. Indeed, by 1980, 15 years after “The Negro Family,” the out-of-wedlock birthrate among blacks had more than doubled, to 56 percent. In the ghetto, that number was considerably higher, as high as 66 percent in New York City. Many experts comforted themselves by pointing out that white mothers were also beginning to forgo marriage, but the truth was that only 9 percent of white births occurred out of wedlock.

And how was the black single-parent family doing? It would be fair to say that it had not been exhibiting the strengths of kinship networks. According to numbers crunched by Moynihan and economist Paul Offner, of the black children born between 1967 and 1969, 72 percent received Aid to Families with Dependent Children before the age of 18. School dropout rates, delinquency, and crime, among the other dysfunctions that Moynihan had warned about, were rising in the cities. In short, the 15 years since the report was written had witnessed both the birth of millions of fatherless babies and the entrenchment of an underclass.

Liberal advocates had two main ways of dodging the subject of family collapse while still addressing its increasingly alarming fallout. The first, largely the creation of Marian Wright Edelman, who in 1973 founded the Children’s Defense Fund, was to talk about children not as the offspring of individual mothers and fathers responsible for rearing them, but as an oppressed class living in generic, nebulous, and never-to-be-analyzed “families.” Framing the problem of ghetto children in this way, CDF was able to mount a powerful case for a host of services, from prenatal care to day care to housing subsidies, in the name of children’s developmental needs, which did not seem to include either a stable domestic life or, for that matter, fathers. Advocates like Edelman might not have viewed the collapsing ghetto family as a welcome occurrence, but they treated it as a kind of natural event, like drought, beyond human control and judgment. As recently as a year ago, marking the 40th anniversary of the Civil Rights Act, CDF announced on its website: “In 2004 it is morally and economically indefensible that a black preschool child is three times as likely to depend solely on a mother’s earnings.” This may strike many as a pretty good argument for addressing the prevalence of black single-mother families, but in CDF-speak it is a case for federal natural-disaster relief.

The Children’s Defense Fund was only the best-known child-advocacy group to impose a gag rule on the role of fatherless families in the plight of its putative constituents. The Carnegie Corporation followed suit. In 1977, it published a highly influential report by Kenneth Keniston called All Our Children: The American Family Under Pressure. It makes an obligatory nod toward the family’s role in raising children, before calling for a cut in unemployment, a federal job guarantee, national health insurance, affirmative action, and a host of other children’s programs. In a review in Commentary, Nathan Glazer noted ruefully that All Our Children was part of a “recent spate of books and articles on the subject of the family [that] have had little if anything to say about the black family in particular and the matter seems to have been permanently shelved.” For that silence, children’s advocates deserve much of the credit—or blame.

The second way not to talk about what was happening to the ghetto family was to talk instead about teen pregnancy. In 1976 the Alan Guttmacher Institute, Planned Parenthood’s research arm, published “Eleven Million Teenagers: What Can Be Done About the Epidemic of Adolescent Pregnancy in the United States?” It was a report that launched a thousand programs. In response to its alarms, HEW chief Joseph Califano helped push through the 1978 Adolescent Health Services and Pregnancy Prevention and Care Act, which funded groups providing services to pregnant adolescents and teen moms. Nonprofits, including the Center for Population Options (now called Advocates for Youth), climbed on the bandwagon. The Ford and Robert Wood Johnson Foundations showered dollars on organizations that ran school-based health clinics, the Charles Stewart Mott Foundation set up the Too Early Childbearing Network, the Annie E. Casey Foundation sponsored “A Community Strategy for Reaching Sexually Active Adolescents,” and the Carnegie, Ford, and William T. Grant Foundations all started demonstration programs.

There was just one small problem: there was no epidemic of teen pregnancy. There was an out-of-wedlock teen-pregnancy epidemic. Teenagers had gotten pregnant at even higher rates in the past. The numbers had reached their zenith in the 1950s, and the “Eleven Million Teenagers” cited in the Guttmacher report actually represented a decline in the rate of pregnant teens. Back in the day, however, when they found out they were pregnant, girls had either gotten married or given their babies up for adoption. Not this generation. They were used to seeing children growing up without fathers, and they felt no shame about arriving at the maternity ward with no rings on their fingers, even at 15.

In the middle-class mind, however, no sane girl would want to have a baby at 15—not that experts mouthing rhetoric about the oppressive patriarchal family would admit that there was anything wrong with that. That middle-class outlook, combined with post-Moynihan mendacity about the growing disconnect between ghetto childbearing and marriage, led the policy elites to frame what was really the broad cultural problem of separate and unequal families as a simple lack-of-reproductive-services problem. Ergo, girls “at risk” must need sex education and contraceptive services.

But the truth was that underclass girls often wanted to have babies; they didn’t see it as a problem that they were young and unmarried. They did not follow the middle-class life script that read: protracted adolescence, college, first job, marriage—and only then children. They did not share the belief that children needed mature, educated mothers who would make their youngsters’ development the center of their lives. Access to birth control couldn’t change any of that.

At any rate, failing to define the problem accurately, advocates were in no position to find the solution. Teen pregnancy not only failed to go down, despite all the public attention, the tens of millions of dollars, and the birth control pills that were thrown its way. It went up—peaking in 1990 at 117 pregnancies per 1,000 teenage girls, up from 105 per 1,000 in 1978, when the Guttmacher report was published. About 80 percent of those young girls who became mothers were single, and the vast majority would be poor.

Throughout the 1980s, the inner city—and the black family—continued to unravel. Child poverty stayed close to 20 percent, hitting a high of 22.7 percent in 1993. Welfare dependency continued to rise, soaring from 2 million families in 1970 to 5 million by 1995. By 1990, 65 percent of all black children were being born to unmarried women.

In ghetto communities like Central Harlem, the number was closer to 80 percent. By this point, no one doubted that most of these children were destined to grow up poor and to pass down the legacy of single parenting to their own children.

The only good news was that the bad news was so unrelentingly bad that the usual bromides and evasions could no longer hold. Something had to shake up what amounted to an ideological paralysis, and that something came from conservatives. Three thinkers in particular—Charles Murray, Lawrence Mead, and Thomas Sowell—though they did not always write directly about the black family, effectively changed the conversation about it. First, they did not flinch from blunt language in describing the wreckage of the inner city, unafraid of the accusations of racism and victim blaming that came their way. Second, they pointed at the welfare policies of the 1960s, not racism or a lack of jobs or the legacy of slavery, as the cause of inner-city dysfunction, and in so doing they made the welfare mother the public symbol of the ghetto’s ills. (Murray in particular argued that welfare money provided a disincentive for marriage, and, while his theory may have overstated the role of economics, it’s worth noting that he was probably the first to grasp that the country was turning into a nation of separate and unequal families.) And third, they believed that the poor would have to change their behavior instead of waiting for Washington to end poverty, as liberals seemed to be saying.

By the early 1980s the media also had woken up to the ruins of the ghetto family and brought about the return of the repressed Moynihan report. Declaring Moynihan “prophetic,” Ken Auletta, in his 1982 The Underclass, proclaimed that “one cannot talk about poverty in America, or about the underclass, without talking about the weakening family structure of the poor.” Both the Baltimore Sun and the New York Times ran series on the black family in 1983, followed by a 1985 Newsweekarticle called “Moynihan: I Told You So” and a 1986 CBS documentary, The Vanishing Black Family, produced by Bill Moyers, a onetime aide to Lyndon Johnson, who had supported the Moynihan report. The most symbolic moment came when Moynihan himself gave Harvard’s prestigious Godkin lectures in 1985 in commemoration of the 20th anniversary of “The Negro Family.”

For the most part, liberals were having none of it. They piled on Murray’s 1984 Losing Ground, ignored Mead and Sowell, and excoriated the word “underclass,” which they painted as a recycled and pseudoscientific version of the “tangle of pathology.” But there were two important exceptions to the long list of deniers. The first was William Julius Wilson. In his 1987 The Truly Disadvantaged, Wilson chastised liberals for being “confused and defensive” and failing to engage “the social pathologies of the ghetto.” “The average poor black child today appears to be in the midst of a poverty spell which will last for almost two decades,” he warned. Liberals have “to propose thoughtful explanations for the rise in inner city dislocations.” Ironically, though, Wilson’s own “mismatch theory” for family breakdown—which hypothesized that the movement of low-skill jobs out of the cities had sharply reduced the number of marriageable black men—had the effect of extending liberal defensiveness about the damaged ghetto family. After all, poor single mothers were only adapting to economic conditions. How could they do otherwise?

The research of another social scientist, Sara McLanahan, was not so easily rationalized, however. A divorced mother herself, McLanahan found Auletta’s depiction of her single-parent counterparts in the inner city disturbing, especially because, like other sociologists of the time, she had been taught that the Moynihan report was the work of a racist—or, at least, a seriously deluded man. But when she surveyed the science available on the subject, she realized that the research was so sparse that no one knew for sure how the children of single mothers were faring. Over the next decade, McLanahan analyzed whatever numbers she could find, and discovered—lo and behold—that children in single-parent homes were not doing as well as children from two-parent homes on a wide variety of measures, from income to school performance to teen pregnancy.

Throughout the late eighties and early nineties, McLanahan presented her emerging findings, over protests from feminists and the Children’s Defense Fund. Finally, in 1994 she published, with Gary Sandefur, Growing Up with a Single Parent. McLanahan’s research shocked social scientists into re-examining the problem they had presumed was not a problem. It was a turning point. One by one, the top family researchers gradually came around, concluding that McLanahan—and perhaps even Moynihan—was right.

In fact, by the early 1990s, when the ghetto was at its nadir, public opinion had clearly turned. No one was more attuned to this shift than triangulator Bill Clinton, who made the family a centerpiece of his domestic policy.

In his 1994 State of the Union Address, he announced: “We cannot renew our country when, within a decade, more than half of our children will be born into families where there is no marriage.” And in 1996, despite howls of indignation, including from members of his own administration (and mystifyingly, from Moynihan himself), he signed a welfare-reform bill that he had twice vetoed—and that included among its goals increasing the number of children living with their two married parents.

So, have we reached the end of the Moynihan report saga? That would be vastly overstating matters. Remember: 70 percent of black children are still born to unmarried mothers. After all that ghetto dwellers have been through, why are so many people still unwilling to call this the calamity it is? Both NOW and the National Association of Social Workers continue to see marriage as a potential source of female oppression. The Children’s Defense Fund still won’t touch the subject. Hip-hop culture glamorizes ghetto life: “ ’cause nowadays it’s like a badge of honor/to be a baby mama” go the words to the current hit “Baby Mama,” which young ghetto mothers view as their anthem. Seriously complicating the issue is the push for gay marriage, which dismissed the formula “children growing up with their own married parents” as a form of discrimination. And then there is the American penchant for to-each-his-own libertarianism. In opinion polls, a substantial majority of young people say that having a child outside of marriage is okay—though, judging from their behavior, they seem to mean that it’s okay, not for them, but for other people. Middle- and upper-middle-class Americans act as if they know that marriage provides a structure that protects children’s development. If only they were willing to admit it to their fellow citizens.

All told, the nation is at a cultural inflection point that portends change. Though they always caution that “marriage is not a panacea,” social scientists almost uniformly accept the research that confirms the benefits for children growing up with their own married parents. Welfare reform and tougher child-support regulations have reinforced the message of personal responsibility for one’s children. The Bush administration unabashedly uses the word “marriage” in its welfare policies. There are even raw numbers to support the case for optimism: teen pregnancy, which finally started to decline in the mid-nineties in response to a crisper, teen-pregnancy-is-a-bad-idea cultural message, is now at its lowest rate ever.

And finally, in the ghetto itself there is a growing feeling that mother-only families don’t work. That’s why people are lining up to see an aging comedian as he voices some not-very-funny opinions about their own parenting. That’s why so many young men are vowing to be the fathers they never had. That’s why there has been an uptick, albeit small, in the number of black children living with their married parents.

If change really is in the air, it’s taken 40 years to get here—40 years of inner-city misery for the country to reach a point at which it fully signed on to the lesson of Moynihan’s report. Yes, better late than never; but you could forgive lost generations of ghetto men, women, and children if they found it cold comfort.

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How Much Government?

Tuesday, May 11th, 2010

by David Gergen

Parade – link to original article

May 9, 2010

Seventy-five years ago,  President Franklin D. Roosevelt was eager to weave a safety net under millions of impoverished Americans who were retired and had no savings. On his left, supporters called for a massive new government program. On his right, Republicans argued that it would bankrupt the country and undermine people’s habits of thrift and self-reliance.

Sound familiar?

FDR, ever the master, came up with an ingenious solution: create a program in which Americans would be asked to contribute to a social savings account that government would manage on their behalf and would be there for retirement. Instead of big government, it was to be a partnership that would encourage individual thrift and responsibility. Thus was born Social Security, overwhelmingly supported in the Senate by Democrats and Republicans (77–6 on final passage) and the most popular social initiative in the country’s history.

Where is that spirit of creativity and collaboration when we need it again? Today, many citizens are at dagger points as we argue over a question that has hung over us since the founding of our nation: How much government is good for America?

Democrats argue—with justification—that in the elections of 2006 and especially 2008, voters sent a clear signal that they wanted more government. Candidate Barack Obama asserted that free markets were broken and promised that Washington would ride to the rescue, saving the economy, overhauling health care, stopping global warming, and reforming K–12 education. Voters not only gave him 53% of their votes—the highest total for a Democrat in 44 years—but returned swollen Democratic majorities in the House and Senate.

Democrats can well say they had a mandate, and they insist that after throwing trillions of dollars at our problems, we are beginning to see success. The economic engines are indeed starting to rev up, and slowly—painfully so—people are finding work. So Democrats feel they will ultimately be celebrated.

But it is equally clear that, for now, these massive efforts are scaring the dickens out of a growing number of Americans, prompting a significant backlash. Republicans now argue—with increasing justification—that we are creating more government than we need, more than we want, and certainly more than we are willing to pay for. Consider just a few statistics.

• Public spending by federal, state, and local government was 24% of the Gross Domestic Product (GDP) in 1950, 35% before the Great Recession, and could hit 44% this year.

• The Tax Foundation estimates that 60% of all Americans now receive more in income benefits from government than they pay into government, and that with new policy directions, the number will grow closer to 70%.

• The Tax Policy Center has found that while everyone is expected to pay payroll taxes, only 47% of American households now pay federal income taxes.

• The European Union has agreed that it is dangerous for a country to allow its publicly held debt to exceed 60% of its GDP. The Congressional Budget Office says that the U.S. could hit 60% by the end of this year, and on its current course could hit 100% by 2020.

• Meanwhile, The Economist estimates that the federal government now employs a quarter of a million people to write and enforce regulations.

Personally, I find these trends troubling. If they continue, we will diminish both the vitality and prosperity of the nation. Government should be compassionate and yet lean. But I recognize that others who care just as much about the country’s future sharply disagree. Our challenge is whether we can put down our daggers and once again work together in a civil, creative spirit. We clearly have the means to solve our problems; what is less clear is whether we have the collective will.

David Gergen is a professor of public service at Harvard and a senior political analyst at CNN. He serves on the board of Teach for America and has advised four Presidents.

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Law and disorder – immigration law

Sunday, May 9th, 2010

by Jeff Jacoby

The Boston Globelink to original
May 9, 2010

IT IS REMARKABLE how many Republicans and conservatives deplore the liberty-infringing perils of big government, yet applaud Arizona’s draconian new immigration law, which empowers the police to interrogate anyone suspected of being in the country unlawfully. It is also perplexing. How can they brandish “Don’t Tread On Me” signs at a Tea Party rally on Monday, then on Tuesday cheer a law making the failure to carry “an alien-registration document” a crime? Surely Americans who extol the work ethic and admire the spirit of enterprise should be dismayed — not delighted — when Arizona forbids a willing employer from hiring a willing employee because of something as irrelevant as his immigration status?

Not all Republicans endorse the new statute. US Senate candidate Marco Rubio has spoken out against it in Florida; so has business executive Meg Whitman, now running for governor in California. Other GOP critics include Texas Governor Rick Perry, political strategist Karl Rove, and South Carolina Senator Lindsey Graham. But they are decidedly in the minority. According to the latest Gallup poll, 75 percent of Republicans who have heard of the new law support it; only 17 percent are opposed.

I have never understood the anti-immigration hysterics. Industrious self-starters who come to the United States to find work, create new wealth, and improve their lives are not a menace or a threat. They are an asset. No state seeks to drive out hard-working newcomers from New Mexico or Indiana; why should hard-working newcomers from Old Mexico or India be treated any differently? To say that they cross the border illegally only begs the question. Why should it be illegal for any person to come to the United States, assuming his intentions are peaceful and he is not likely to become a public charge or health risk?

For most of US history, there was no ceiling on the number of immigrants allowed to enter the country. There were some specific exclusions — polygamists and prostitutes were denied entry, for example, and the racist Chinese Exclusion Act barred immigrants from China — but on the whole, nearly anyone who wished to settle in the United States before the 1920s was free to do so. The immense influx of immigrants made possible by that policy was often the cause of tension and suspicion. It was also an extraordinary blessing, transforming America into the most prosperous, vibrant, and innovative nation in history.

We have an illegal immigration problem today only because federal law makes legal immigration so costly and difficult. A concrete-and-barbed-wire wall along the border will not fix that problem, and neither will punitive sanctions on employers who hire illegal aliens. Meaningful immigration reform would focus instead on simply making it easier for low-skilled or unskilled workers to enter the country lawfully.

Republicans like to think of themselves as champions of law and order — never more so, many of them, than when damning illegal aliens. To quote Republican state senator Russell Pearce, lead sponsor of the new Arizona law: “Illegal is illegal.” That is what passes for a thoughtful argument among many immigration restrictionists.

But there is nothing thoughtful or admirable about insisting that a foolish or counterproductive law be enforced at all costs. In Montgomery, Ala., in 1955, Rosa Parks broke the law that mandated racial segregation on public buses. For refusing to give up her seat to a white passenger, Parks was arrested, fingerprinted, and fined. As she was being removed from the bus, she asked the arresting officer, “Why do you push us around?”

“I don’t know,” he replied. “But the law is the law and you’re under arrest.”

A century earlier, thousands of Southern slaves were guided to freedom by “conductors” along the Underground Railroad, the clandestine network of escape routes into the Northern states and Canada. Those “conductors” — many of them supporters of the new Republican Party — loathed the Fugitive Slave Act, which mandated the return of runaway slaves and imposed criminal sanctions on anyone aiding a fugitive. No doubt there were Americans who cried then, as Russell Pearce and those who anathematize illegal aliens cry today, that “illegal is illegal” and the law must be obeyed.

Of course respect for the law is important. But when laws are foolish, perverse, and repugnant to American interests and ideals, they should be resisted and replaced. Republicans and conservatives should be leading the fight for real immigration reform. How sad that so many of them would rather fight immigrants instead.

(Jeff Jacoby is a columnist for The Boston Globe).

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When Problems Persist

Monday, May 3rd, 2010
In 1965, the Moynihan Report started a debate about inner-city family breakdown that continues to this day.
May 3, 2010
By VINCENT J. CANNATO
In March 1965, a young political appointee in the Labor Department named Daniel Patrick Moynihan wrote a report warning of high levels of out-of-wedlock births in the black community. “The Negro Family: The Case for National Action,” as the report was officially titled, noted that nearly a quarter of all black children were born out of wedlock, a ratio that had been rising since the end of World War II. Such a trend, Mr. Moynihan warned, could deepen black poverty rates and lead to a “tangle of pathologies.”
The Moynihan Report, as it came to be known, informed a major presidential address by Lyndon Johnson, unleashed a firestorm of criticism and began four decades of debate over the connection between family life and poverty.
Now James T. Patterson, a professor emeritus at Brown University, has written a concise and judicious account of Mr. Moynihan’s political career, the report he made famous and the policy debates that the report inspired. This is a story not just about Mr. Moynihan but also about E. Franklin Frazier, James Q. Wilson, Christopher Jencks, William Julius Wilson and other scholars and commentators who have examined the connections between marriage, race and poverty. “Freedom Is Not Enough” is written in an engaging style that makes these debates come alive again and that reminds us of their continuing importance.
Mr. Moynihan took a lot of heat over his report, some of it brought on by his own tart rhetoric but much of it by the passions of the times: Black America in the 1960s was in no mood to be lectured at by a white government official. The Moynihan Report’s focus on illegitimacy was thought to deflect attention from white racism. In fact, the term “blaming the victim” comes from an attack on Mr. Moynihan that was written by a white liberal critic.
Mr. Patterson, though, is an admirer of Mr. Moynihan’s. He seeks to defend Mr. Moynihan’s ideas both from his enemies in the 1960s and from later critics who portrayed him as a self-aggrandizing blowhard. Mr. Patterson sees Mr. Moynihan as a “committed liberal” who believed that “unemployment was the major source of instability within poor families” and that “government could and should act to improve their chances in life.” It is certainly true that Mr. Moynihan was a child of the New Deal. One of his early ideas was to re-establish twice-a-day mail service to increase civil-service jobs for black males. To many liberals, the Moynihan Report seemed a clarion call for more federal programs to help repair the black family and strengthen inner-city communities.
The phrase “freedom is not enough” comes from LBJ’s 1965 speech at Howard University, partly written by Mr. Moynihan himself. Johnson called not just for equality of opportunity for black Americans but for equality of result. Slavery and racism had done terrible damage, he said; the government would need to step in and actively improve conditions in the black community—with jobs, decent housing and safer playgrounds, among much else. The speech was a high-water mark for activist liberalism.
Yet the problem of black poverty, as we know too well, was not so easily solved. One of the charts in the Moynihan Report showed that, by the early 1960s, inner-city welfare rates and unemployment rates were moving in opposite directions: Government subsidy for black single mothers was needed even when there was work to be had for black males. In short, poverty persisted even in good economic times. Clearly cultural changes were taking place, and economics alone could not explain the problem or solve it.
Mr. Moynihan was a conventional liberal Democrat after his election to the U.S. Senate in 1976 but hardly a firebrand for activist government. If anything he had become skeptical of government programs, like other “neoconservatives” of his generation, citing social science to show how so many such programs had failed. Unfortunately, as Mr. Moynihan noted in a 2002 speech, social science had its limits. Most lamentably it could not (in Mr. Patterson’s paraphrase) “explain fully the massive changes affecting family life in the western world.”
Whatever its causes, illegitimacy has proved to be among the most vexing aspects of modern society, especially in black communities. Ever since the Moynihan Report it has been argued that more job opportunities could help strengthen family life in the inner city. But better jobs depend on a decent education, and educational success depends in part on a stable home environment and a steady household income. A high rate of illegitimacy thus perpetuates the conditions that bring it about in the first place, creating a cycle of poverty.
In recent decades there has been progress of course; the black middle class has grown substantially. But inter-generational poverty continues in many inner-city communities. As for out-of-wedlock births, the problem has worsened and widened. In 2008, the black out-of-wedlock birth rate stood at 72.3%, more than three times the rate when Mr. Moynihan compiled his report. The white out-of-wedlock birth rate in 2008 was 28.6%, higher than the 1965 rate for blacks that had so alarmed Mr. Moynihan. (The rate for Hispanics is 52.5%.)
Clearly we are witnessing cultural changes that now go beyond the black family and even beyond the U.S.; Western Europe has also seen an increase in out-of-wedlock births. Mr. Patterson still clings to the hopes expressed by Lyndon Johnson, even if he is skeptical of the solutions that have been proposed since Mr. Moynihan sounded the alarm. Two generations of research and political quarreling have put us no closer to finding an answer to the problem of family breakdown.
Mr. Cannato is the author of “American Passage: The History of Ellis Island,” just out in paperback from HarperPerennial.
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Greek Wealth Is Everywhere but Tax Forms

Sunday, May 2nd, 2010

By SUZANNE DALEY
Published: May 1, 2010

The New York Times – link to original

Photo:  Signs of wealth abound in Athens, but only a few thousand Greeks out of 11 million declared an income of more than $132,000 last year, according to the Finance Ministry.
Photo:  Athenians declared taxes at a local office. Greek’s shadow economy represents 20 to 30 percent of its G.D.P.
ATHENS — In the wealthy, northern suburbs of this city, where summer temperatures often hit the high 90s, just 324 residents checked the box on their tax returns admitting that they owned pools.
Multimedia
So tax investigators studied satellite photos of the area — a sprawling collection of expensive villas tucked behind tall gates — and came back with a decidedly different number: 16,974 pools.
That kind of wholesale lying about assets, and other eye-popping cases that are surfacing in the news media here, points to the staggering breadth of tax dodging that has long been a way of life here.
Such evasion has played a significant role in Greece’s debt crisis, and as the country struggles to get its financial house in order, it is going after tax cheats as never before.
Various studies, including one by the Federation of Greek Industries last year, have estimated that the government may be losing as much as $30 billion a year to tax evasion — a figure that would have gone a long way to solving its debt problems.
“We need to grow up,” said Ioannis Plakopoulos, who like all owners of newspaper stands will have to give receipts and start using a cash register under the new tax laws passed last month. “We need to learn not to cheat or to let others cheat.”
On the eve of an International Monetary Fund bailout deal that is sure to call for deep sacrifices here, including harsh austerity measures, layoffs and steep tax increases, many Greeks say they feel chastened by the financial crisis that has pushed the country to the edge of bankruptcy.
But even so, changing things will not be easy. Experts point out that ducking taxes is part of a broader culture of bribery and corruption that is deeply entrenched.
Mr. Plakopoulos, who supports most of the government’s new efforts, admits that he and his friends used to chuckle over the best ways to avoid taxes.
To get more attentive care in the country’s national health system, Greeks routinely pay doctors cash on the side, a practice known as “fakelaki,” Greek for little envelope. And bribing government officials to grease the wheels of bureaucracy is so standard that people know the rates. They say, for instance, that 300 euros, about $400, will get you an emission inspection sticker.
Some of the most aggressive tax evaders, experts say, are the self-employed, a huge pool of people in this country of small businesses. It includes not just taxi drivers, restaurant owners and electricians, but engineers, architects, lawyers and doctors.
The cheating is often quite bold. When tax authorities recently surveyed the returns of 150 doctors with offices in the trendy Athens neighborhood of Kolonaki, where Prada and Chanel stores can be found, more than half had claimed an income of less than $40,000. Thirty-four of them claimed less than $13,300, a figure that exempted them from paying any taxes at all.
Such incomes defy belief, said Ilias Plaskovitis, the general secretary of the Finance Ministry, who has been in charge of revamping the country’s tax laws. “You need more than that to pay your rent in that neighborhood,” he said.
He said there were only a few thousand citizens in this country of 11 million who last year declared an income of more than $132,000. Yet signs of wealth abound.
“There are many people with a house, with a cottage in the country, with two cars and maybe a small boat who claim they are earning 12,000 euros a year,” Mr. Plaskovitis said, which is about $15,900. “You cannot heat this house or buy the gas for the car with that kind of income.”
The Greek government has set a goal for itself of collecting at least $1.6 billion more than last year — a modest goal, Mr. Plaskovitis believes. But European Union officials were so skeptical, Mr. Plaskovitis said, they would not even allow the figure to be included in the budget forecast used in negotiations over the bailout package.
“They said, ‘Yes, yes, we have heard that before, but it never happens,’ ” he said.
Over the past decade, Greece actually lost ground in collecting taxes, even as the economy was booming. A 2008 European Union report on Greece tax shortfalls found that between 2000 and 2007, the country’s average growth in nominal gross domestic product was 8.25 percent. Its taxes grew at just 7 percent.
How Greece ended up with this state of affairs is a matter of debate here. Some attribute it to Greece’s long history under Turkish occupation, when Greeks got used to seeing the government as an enemy. Others point out that, classical history aside, Greece is actually a relatively young democracy.
Whatever the reason, Kostas Bakouris, the president of the Greek arm of the anticorruption organization Transparency International, said that Greeks were constantly facing the lure of petty corruption. “If they go to the mechanic, it is one price without a receipt and quite a bit more with it,” Mr. Bakouris said.
He said his own sister had recently told him that she was uncomfortable asking her doctor for a receipt. “I said that’s crazy,” he said. “But still, that feeling is out there.”
Various studies have concluded that Greece’s shadow economy represented 20 to 30 percent of its gross domestic product. Friedrich Schneider, the chairman of the economics department at Johannes Kepler University of Linz, studies Europe’s shadow economies; he said that Greece’s was at 25 percent last year and estimated that it would rise to 25.2 percent in 2010. For comparison, the United States’ was put at 7.8 percent.
The Finance Ministry believes that the new tax laws, which also increased the weight on income and value-added taxes, have laid the legal groundwork for better enforcement. In the past, the tax code gave many categories of workers special status. Entire professions were allowed to file a set income. For instance, newsstand owners could simply claim that they earned an income of 12,000 euros (about $15,900) and no questions were asked.
Now, most of these exceptions have been eliminated and the tax code has been simplified. It also offers various incentives to make people collect receipts — an important step, officials say, in shrinking the off-the-books economy.
In addition, the tax department is being reorganized so that regional offices will have far less autonomy.
Mr. Plaskovitis said that tax collectors had already begun using technology to crosscheck claims and that they had taken steps like asking luxury car dealerships for list of their clients. A lot of Greeks, he said, listed luxury cars as company cars, a practice that would be challenged in the future. “We do not believe you need a Porsche to sell Coca-Cola,” he said.
Soon, Mr. Plaskovitis said, people will see results. “In the coming weeks,” he said, “we are going to be closing down companies, restaurants and doctors’ offices because they have not paid taxes.”
But how fast progress will come is an open question. The changes have provoked protests and deep resentment in some circles. For instance, the president of the union for doctors who work in state hospitals, Stathis Tsoukalos, 60, calls the loss of a special tax status for his doctors wrongheaded and unfair. He contended that the special low tax rate was given to make up for the fact that doctors received very low pay.
Speaking of the doctors in the Kolonaki neighborhood who claimed small incomes, he said, they may have just opened their practices or bought real estate there with help from their parents.
Whether the country’s tax collectors are up to the task is also unclear. Many Greeks say tax collectors have a reputation for being among the easiest officials to bribe. Some say tax troubles are usually solved in a three way split: You pay a third of what you owe to the government, a third to the collector and a third remains in your pocket.
Froso Stavraki, who has been a tax collector for 27 years and is now a high-ranking official in the union, readily concedes that there is some corruption in the ranks. But she contends that the politicians never wanted toughness.
“The orders from above were to do everyday tax processing,” she said. “We were busy going over forms, checking on those who pay taxes, not those who didn’t.”
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