Local Leviathans and Subsidiarity

There has been plenty of tension in state capitals, city halls, and county seats throughout the nation as elected officials struggle to contain fiscal problems. In Wisconsin, for instance, fourteen Democratic state senators have fled the state to prevent the legislature from enacting Governor Scott Walker’s budget proposals, which would compel public employees to pay a small percentage of their health and pension benefits and to limit their collective bargaining powers to wage increases. Governor Walker is attempting to carry out his campaign promises to restore the state’s financial integrity by eliminating a $2-billion deficit. Fifty-two percent of Wisconsin voters supported him at the ballot box last November. But other actors have recently attacked him. President Obama and union leaders see him as a union buster. New York Times columnist Paul Krugman has made the wild-eyed accusation that Mr. Walker and his supporters are using the crisis “to make Wisconsin – and eventually, America – less of a functioning democracy and more of a third-world-style oligarchy.”

Unfortunately, many politicians and the special interest groups that fund their campaigns believe government is their private preserve and have refused to accept the reality that government spending cannot outpace revenue growth for years on end without there eventually being a day of reckoning. The Democratic Party formula of spend and tax and the Republican Party formula of spend and borrow have proven to be unsustainable. As a result, many states, local governments, agencies and special districts are being forced to curtail essential services to meet skyrocketing debt, pension, and healthcare obligations and overburdened taxpayers are joining in protests against the local leviathan’s abuse of spending and administrative power.

In traditional American and Catholic perspectives, it was not supposed to work this way. Federalism in the American context and subsidiarity in the Catholic view say that it’s best when decisions that can be made locally are in fact decided there, where people are closer to the facts on the ground. But this assumes that there’s real democratic oversight and control. In the name of localism, however, there has been a proliferation of municipal districts that possess tax, spending, and borrowing authority. In the United States there are over 80,000 local governments that contain a half million elected officials and over 20 million appointed officials. These largely unsupervised, under-the-radar municipal entities oversee every conceivable function, including aquatic plant-growth control, disposal of duck waste, and even building of fallout shelters. Pace Mr. Krugman, if you’re looking for something resembling a third-world oligarchy and corrupt cronyism in America, this is it.

None of this remotely conforms to subsidiarity, properly understood, which should preserve local freedoms and flexibility. Instead, we’ve gotten the exact opposite. Clint Bolick of the Institute for Justice has correctly pointed out that as the power of these local governments has expanded, “so has the tendency to use that power to restrict economic opportunities and bestow favoritism. In areas ranging from government-imposed taxicab monopolies to minimum milk price regulations to cable television franchising, local governments have imposed protectionist restrictions to benefit some . . . to the detriment of others. Those anticompetitive acts are insulated from corrective market forces because they are enforced by government.”

     Leo XIII: (Holy) Father of subsidiarity

In my home state of New York, there are over 6,000 such governmental districts. My own Nassau County tax statement includes taxes for eighteen special districts. These shadow governments are shielded by political bosses because they serve as patronage mills for the party faithful. Many have highly paid executive directors, legal counsel, and an abundance of staff members. Hence, perpetuating their existence is in the best interest of pols, not taxpayers.

Uncontrolled costs, especially salaries and benefits, and the inability to realize efficiencies of scale are now killing taxpayers. Public employees have better wages, retirement benefits, medical and sick benefits than private sector workers. A recent study by the Manhattan Institute, a fiscal policy think tank, estimates that the unfunded retiree healthcare liabilities of the state of New York and its local governments are an astounding $205 billion. Most municipalities pay 100 percent of retiree health premiums and when a sixty-five-year-old enrolls in Medicare, the former government employer generally reimburses those premiums.

Thanks to these local leviathans, New Yorkers have the highest state and local tax burden, highest taxes per capita, and worst business tax climate in the nation. Oppressive taxes and regulations have forced people and industries to flee New York. Over 1 million people have left since 2000 for greener economic and tax pastures. Vast areas in Western and Central New York have emptied out. Scores of farms and manufacturing plants have been abandoned. Once thriving population centers have become ghost towns. A majority of upstate jobs are now government and health-care related. It’s quite a trick when local actors are so corrupt that they drive away their tax base and constituents.

In this time of economic ills and budget crisis, it’s time to home in on the hidden power and costs of sham municipal entities. We are quite aware of the way that national governments can usurp power, spend vast sums, and still do little good. We need to turn the same critical eye on subsidiary levels of government. Taxpayers who feel alienated from local structures that appear distant and unresponsive should unite and employ the principles of subsidiarity themselves by demanding accountability and transparency in all public offices – plus power at the ballot box to minimize bureaucracy, maximize efficiency, and put an end to special deals for individuals and groups favored by politicians. Contrary to media reports, such a movement would be a corrective step toward restoring the proper practice of subsidiarity and taming neighborhood leviathans who are eating up local wealth and freedoms.

George J. Marlin, Chairman of the Board of Aid to the Church in Need USA, is the author of The American Catholic Voter and Sons of St. Patrick, written with Brad Miner. His most recent book is Mario Cuomo: The Myth and the Man.