Well-Heeled in the Windy City
Rahm Emanuel inherited a tough challenge when he became mayor of Chicago in 2011: the city faced hundreds of millions of dollars in budget shortfalls and crippling unfunded pension liabilities. Yet Barack Obama’s former chief of staff managed to make things worse by pursuing a policy of elite-oriented urbanism, or what Joel Kotkin and Fred Siegel have dubbed “gentry liberalism”: increased spending on amenities and subsidies targeted at the elite, accompanied by painful cuts in basic public services for the poor and middle class. In 2012, for instance, Chicago slashed its library budget by $8 million—nearly 10 percent—forcing reductions in hours and staffing levels. The city also closed half of its mental health clinics.
These cuts could perhaps be justified for budgetary reasons if the pain were spread evenly. But Emanuel—relying heavily on tax-increment financing (TIF) subsidies greatly expanded under his predecessor, Richard M. Daley—has doled out a nearly limitless stream of money for upper-tier benefits. Hoping to lure talented young professionals, Emanuel has brought protected bike lanes and a bike-share program to Chicago. The city is spending $100 million on a lavish, six-block “riverwalk” along the Chicago River and $54 million on Chicago’s answer to New York’s High Line—the Bloomingdale Trail, a project first conceived under Daley’s administration. Chicago gave $30 million in TIF subsidies to the developers of a new office tower, one of many special breaks offered to downtown businesses and developers. Perhaps most infamously, the city extended another $50 million in TIF funds to DePaul University for a dubious arena project that actually takes commercial property off the tax rolls....
Stanley Druckenmiller: How Washington Really Redistributes Income
Stan Druckenmiller makes an unlikely class warrior. He's a member of the 1%—make that the 0.001%—one of the most successful money managers of all time, and 60 years old to boot. But lately he has been touring college campuses promoting a message of income redistribution you don't hear out of Washington. It's how federal entitlements like Medicare and Social Security are letting Mr. Druckenmiller's generation rip off all those doting Barack Obama voters in Generation X, Y and Z.
"I have been shocked at the reception. I had planned to only visit Bowdoin, " his alma mater in Maine, he says. But he has since been invited to multiple campuses, and even the kids at Stanford and Berkeley have welcomed his theme of generational theft. Harlem Children's Zone President Geoffrey Canada and former Federal Reserve Governor Kevin Warsh have joined him at stops along the tour....
...Which brings him back to his thieving generation. For three decades until 2010, Mr. Druckenmiller ran the hedge fund he founded, Duquesne Capital. Now retired from managing other people's money, he looks after his own assets, which Forbes magazine recently estimated at $2.9 billion. And he wonders why in five years the massively indebted U.S. government will begin sending him a Social Security check for $3,500 each month. Because he earned it?...
...While many seniors believe they are simply drawing out the "savings" they were forced to deposit into Social Security and Medicare, they are actually drawing out much more, especially relative to later generations. That's because politicians have voted to award the seniors ever more generous benefits. As a result, while today's 65-year-olds will receive on average net lifetime benefits of $327,400, children born now will suffer net lifetime losses of $420,600 as they struggle to pay the bills of aging Americans.
One of the great ironies of the Obama presidency is that it has been a disaster for the young people who form the core of his political coalition. High unemployment is paired with exploding debt that they will have to finance whenever they eventually find jobs....
...As an added bonus, wiping out the corporate tax eliminates myriad opportunities for crony capitalism and corporate welfare. "How do the lobbying groups and the special interests work in Washington? Through the tax code. There's no more building plants in Puerto Rico or Ireland and double-leasebacks and all this stuff. If you take corporate tax rates to zero, that's gone. But in terms of the fairness argument, you are taxing the shareholder. So you eliminate double taxation. To me it could be very, very good for growth, which is a huge part of the solution to the debt problem long-term. You can't do it without growth."...
