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Why ‘There’s Just No Money’ Claims are So Unconvincing

PLATKIN ON PLANNING-“So, here we are, on a rainy day, in the richest country in the world, in the richest state in the country, in a state as blue as it can be, and in a city rife with millionaires, where teachers have to go on strike to get the basics for our students.

… Public education is not your plaything, billionaires. It belongs to the people of Los Angeles.” -- Alex Caputo Pearl, President of United Teachers of Los Angeles (UTLA). 

The facts support Mr. Caputo-Pearl’s talking points: 

  • According to the Los Angeles Business Journal, Los Angeles is the home of 56 billionaires, a prominent backer of charter schools. 
  • California is also the richest state in the United States, as measured by total economic activity. California’s Gross Domestic Product is nearly $3 trillion, about $1 trillion more than Texas, the state in second place. 
  • California is also one of the bluest states in the United States. Its two U.S. Senators are Democrats, Democrats hold all statewide offices, and 39 of 53 Californians in the House of Representatives are Democrats. Democrats also hold super-majorities in the California State Senate and State Legislature. 
  • Nevertheless, California ranks 41st in per pupil spending, and 46th when the cost of living is considered. This is in contrast to its per prisoner spending, where California ranks number one. More specifically, California spends $10,291 per K-12 pupil per year, compared to the $75,560 per year it spends on each prisoner. This is about $24,000 more than the $51,486 average tuition and fees for an Ivy League college. 

The purpose of UTLA President Caputo-Pearl’s strike kick-off speech was to rebut the repeated “there’s just no money” excuse for rejecting the strike demands of LA teachers, such as smaller class size. This is the same excuse dished out to teachers in other cities and states, as well as to calls for restoring funding to countless other gutted educational, transportation, affordable housing, and social service programs. They have been ruthlessly subjected to bi-partisan cutbacks since the Nixon administration in the early 1970s. Furthermore, the “just no money” claim is the same excuse invoked to push back against two new proposals: Medicare-for-all and free higher education.

But is this really the case? Is there really no money for these and related government programs. 

This question was squarely answered in an email I received when Alex Caputo Pearly explained why LA teachers voted to strike. 

This is the answer to LA Times reporter Howard Blume’s central question about the LAUSD strike, “Where’s the money?”  It’s gone to war. 

The War Resisters League (WRL) estimate of military spending from 2001-2019—that includes interest on the debt related to past wars, Veterans Affairs, and Homeland Security—is $24.3 trillion dollars. That’s $74,300 per capita based on the U.S. population of 327 million (2018). Los Angeles’s share of that military spending, based on a population of some 4 million people, is just over $297 billion dollars. 

As a nation, we are flush with financial resources, but they are being sucked down the endless U.S. war tube. Please stop using the excuse that there’s not enough money to provide decent working conditions, smaller class sizes, and adequate salaries for teachers and staff in our schools. 

These figures only examine past expenditures, but if we include future expenditures that are already on the books, the total amount of military-related expenditures will be much higher.  For example: 

  • The F-35 Lockheed-Martin 5th generation Joint Strike Fighter plane will eventually cost $2 trillion, yet it is a colossal failure according to Scientific American. In their words, it is too big to fail, so money continues to be poured into this Pentagon rat hole. 
  • Despite detailed exposes of the catastrophic effects of nuclear weapons and considering that the end of the Cold War in 1991 should have ended the development and deployment of existing and new nuclear weapons, they are still gobbling up enormous amounts of resources.  A $1.2 trillion nuclear weapons program, unveiled by the Obama Administration and continued by the Trump Administration, would design new nuclear weapons and upgrade delivery systems.  Presumably, the search for new enemies to justify this deployment of scarce resources will be factored into the predictable contractor cost overruns. 

While past, present, and future military-related spending is a large part of the explanation, it is not the full answer. To address the Great Recession that began in 2008, the Federal Government instituted a variety of bail out programs for lenders who had been wiped when revenue from high-risk mortgages ground to a halt. Their house of cards collapsed, and the Federal Government rescued them, furnishing evidence that the money was really there. 

  • According to a study recently completed by economics graduate students at the University of Missouri, the total amounts of bailouts, which includes loans that were eventually repaid, was actually $29 trillion, many times the total Federal budget.  Other estimates of these bailouts are more conservative, although the totals are still astounding. 
  • PBS and Bloomberg News estimate the cost of these same lender bailouts was “only” $12.8 trillion.   
  • Forbes Magazine has a slightly higher figure for these lender bailouts, $16.8 trillion.  
  • While Matt Taibbi in Rolling Stone does not offer an alternative total figure, he breaks down the many corrupt deals that comprised the bailouts.  He further argues that they are a permanent Ponzi scheme, not a one-shot infusion of enormous amounts of Federal Government cash into the banking system. 

Another part of the funding puzzle is tax loopholes in California, especially Proposition 13, adopted by voters in 1978. It was intended to give relief to homeowners by restricting property tax assessments to small annual increases. But each time a house or condo is sold, new assessments kick in. This is sharp contrast to commercial property. These buildings seldom have a complete sale, and instead only fractional ownership portions change hands. This avoids any change in title and any new assessments. If splitting the tax rolls eliminated this loophole, exempting commercial property from Proposition 13 would generate an additional $6-10 billion per year in tax revenue, 60 percent of which would return to local governments. 

Explaining these government priorities: How can we explain these skewed budget priorities at both the Federal and State of California levels? We know that it has nothing to do with party affiliations since these budgets have had similar priorities over the decades, regardless of which political party controls the White House or Congress. In California the situation is no different, with both parties supporting Proposition 13, a reason why proponents of splitting the rolls hope to have an initiative on the 2020 ballot.  

Part of the answer also goes back to the Vietnam War, when President Lyndon Johnson justified his massive military escalation after his lopsided 1964 defeat of Barry Goldwater. Johnson argued that the United States is so rich it can afford both guns and butter. He was wrong, and the butter was sacrificed to pay for the guns then and afterward. 

Another part of the explanation is the powerful military-industrial complex. The late scholar Chalmers Johnson carefully studied the role of these special interests. He concluded that one-third of the military budget is pure pork, while two-thirds is devoted to weapons systems and 800 U.S. military bases in other countries to sustain a de facto U.S. global empire. 

We also need to consider the outsized influence of the real estate industry on both political parties, especially the Democrats. In both Sacramento and at local city halls, such as LA’s, they successfully influence elections, budgets, ordinances, and code enforcement to feather their nest. 

Is there a way out of this maze? Yes. Teachers unions, like the UTLA, have found the path and are ready to lead.

 

(Dick Platkin is a former Los Angeles city planner who reports on local planning controversies for City Watch.  Please send questions, comments, corrections, and article suggestions to rhplatkin@gmail.com.) Prepped for CityWatch by Linda Abrams.