The price paid by American families for the reckless greed of Wall Street has been well documented and includes severe losses of household wealth – more than half for African American families and two-thirds for Latino families – due to the decline in housing values and employment. The Great Recession has had a tremendous negative impact on the public sector also. While theresponse to Hurricane Sandy demonstrated the important role that public sector workers play in American society, what hasn’t been talked about is the decimation of the public sector by the preventable tragedy of the financial crisis.
Among the casualties of the financial crisis are the workers who haul your garbage, drive your kids to school, provide emergency services, deliver health care, operate libraries, protect your family’s water supply, and more. This segment of the US workforce has lost 605,000 jobs since 2008. In addition, over half a million new public sector workers should have been added to keep pace with population growth since 2009. The combined effect of layoffs and failure to hire is that over a million public service workers are missing and unable to provide these critical services.
State and local economies – and their citizens – continue to suffer serious harm from the financial crisis in many ways. Residents who are in foreclosure do not spend in the local economy, nor do unemployed workers. Businesses do not hire where there are no customers, nor do they invest in locations surrounded by foreclosed homes. Local governments generate 29% of their general revenue from property taxes, but sales and income tax revenues have also declined due to the wealth effects of the financial crisis. The deception of local governments by Wall Street has further eroded their ability to provide needed services.
As David Callahan points out, the government response to the carnage wrought on the US economy by Wall Street’s greed has not matched the response to Hurricane Sandy. Americans who depend on public services must call on the Obama Administration to protect them from the casino mentality of greedy bankers who have nothing to lose. These bankers and their well-paid, well-connected lobbyists are succeeding in stopping regulation in its tracks by applying a specious “cost-benefit” rule to new regulations.
It is ridiculous that measures to prevent another $7 trillion meltdown are being sabotaged by litigation and more importantly, fear of litigation. Regulators must act to implement the Volcker Rule and the remaining Dodd-Frank provisions. Fraudulent bankers must go to jail as a deterrent to future criminals. And American voters cannot look the other way until we are safe from financial predators who see our economic assets as poker chips in their winner-take-all casino.
This entry is part of the series New Rules for Wall Street, where Demos analysts and members of the Coalition for Sensible Safeguards make the case for what should be on the financial-reform agenda in the next four years. Read all the entries here.