The Great Debate

Sticky and very high

The following is a guest post by Russ Roberts taken from his co-authored blog, Cafe Hayek. The opinions expressed are his own.

Both Arnold Kling and I (and probably a few million other people) have wondered why it was necessary for Federal money to be given to the states and cities to prevent job losses. For states that have been irresponsible or unlucky and find themselves short of revenue, why not reduce salaries some, say 10% and save that money?

One answer is that state and city employees are under union contracts that are not easily adjusted on short notice.

Oakland is grappling with this problem. The city wants to lay off 80 officers from a force of 776 and it is negotiating with the union.

With Oakland desperate to cut its public safety costs to balance its budget, the police union has agreed to two key city proposals – that officers contribute part of their salaries toward their pensions and that the retirement age be pushed back for future hires.

Obama’s disappearing stimulus

bills– Christopher Swann is a Reuters columnist. The views expressed are his own –

It’s not just California that threatens to sabotage the Obama stimulus. State and local governments across the nation are gradually unravelling federal efforts to revive growth.

The states have been inveterate stimulus eaters in the past. For most of the 1930s the expansionary policies of the federal government were just sufficient to offset the shrinking of state and local governments. Click here for PDF.