Is Philadelphia the Next Greece?

Wednesday, 20 Oct 2010 08:02 AM

By Chris Freind

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Philadelphia Mayor Michael Nutter recently urged college students to stay in the city after graduation, stating, “We have a more knowledge-based workforce here."

Too bad we don’t have a “knowledge-based government.”

Nutter praised the federal stimulus bill for keeping the city solvent, stating, “we would be in a depression [without it].” Wrong verb, Mr. Mayor.

Philadelphia is already insolvent, so there are only two explanations for Nutter’s incoherence:

1. He has no idea how dire his city’s situation has become.

2. He absolutely knows, but will use smoke-and-mirror tactics to get re-elected next year, passing the buck to his successor.

Here’s betting on the latter.

Nutter’s 2007 election was met with great fanfare from business leaders and city residents. They naively believed Nutter would usher in a new era by cutting taxes, slashing bureaucracy and playing hardball with union leaders. Uh . . . hello?

As a city councilman, Nutter repeatedly voted for bills that served only to increase the exodus of companies and people from the City of Brotherly Love. The result? Philadelphia achieved the nation’s highest murder, violence and poverty rates, while leading the way in school dropouts. Nutter’s track record as mayor has been worse.

Crime is rampant, union contracts are unaffordable, public schools are deathtraps, the government workforce has swelled, and the city pension is bankrupt. And we expect college grads to stay here?

The stimulus is gone, bailouts are over, and the rent is due. But if Nutter can hold off a challenger, life is good.

Whenever a politician admits something bad, reality is always worse.
Nutter conceded the city pension is underfunded. Translation: it’s insolvent.
The funding level stands at 45 percent — catastrophically low — and anyone with one eye open knows accounting gimmicks can easily inflate that number.

According to last week’s Financial Times, of all American cities, Philadelphia has the most immediate cause for concern because “current pension assets for plans sponsored by Philadelphia can only pay for promised benefits through 2015.”

So in a few short years, the city could be sending letters that may read:

Dear Retired City Worker,
Sorry, we didn’t exactly manage your pension very well. Actually, we bankrupted it by paying for pet projects and not funding it when we should have. But hey, stuff happens! Here’s 40 percent of what you’re owed.
 
Think it can’t happen?

It did in Greece, and riots brought the government to the edge of collapse. Only when the European Union and International Monetary Fund intervened did Greece somewhat stabilize, although the situation is still tenuous. But there’s no bailout in Philadelphia’s future.

Nutter hasn’t comprehended that the “game” is over. In years past, Philly sought, and received, state and federal bailouts. But this recession is different, and things are getting worse.

Pennsylvania has a $5 billion deficit, so no bailout there. And the U.S. government (soon to be under Republican control) , with its $14 trillion debt will take a pass.

Hence the riots that will inevitably sweep through the city.

Nutter’s answer? He hiked the city portion of the state sales tax 100 percent and deferred pension payments for two years. In year three — conveniently after he’s re-elected — the mayor will write a check for $800 million to bail out the pension. Or so his plan goes.

Except there’s not a snowball’s chance of that happening.

Short of the city declaring bankruptcy, Philadelphia will further descend into chaos, being rightfully viewed as a Third World town. Why? Because Mayor Nutter, like so many politicians, believes government creates jobs and wealth, when in reality, the opposite is true.

Rather, it’s free people in a competitive environment who are the engine of a thriving democratic society. Government should be there to serve the people, not the other way around. Nowhere is that more apparent than in once-great cities like Philadelphia, where the economic lights are on their last flicker.

Michael Nutter can pretend all is rosy. But just because he chooses not to acknowledge the real problems doesn’t mean they’re not there. Amazingly, many residents still prefer to live in a fantasyland belief that, at the end of the day, their pension will be there, intact. And no amount of rioting is going to change that fact.

It’s time to show Mayor Nutter that the pillaging of citizens is coming to an end by electing a leader willing to right the ship, regardless of political fallout.

Chris Freind is an independent columnist, television commentator, and investigative reporter who operates his own news bureau, FreindlyFireZone.com. He can be reached at  CF@FreindlyFireZone.com


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