Every day is Groundhog Day for Mass cities and towns

For at least the fourth time since I started to keep track last year, the Boston Globe’s editorial page again calls for Beacon Hill to step up and empower cities and towns to get a handle on skyrocketing health insurance costs:

The 351 cities and towns could make do with less aid if they could bring down the costs of their employees’ pensions and health care without cutting benefits. Patrick and the Legislature should give them the means and the encouragement to do so.

The most obvious step is to give towns the power to buy health insurance through the state’s thrifty Group Insurance Commission. Right now, even minor changes to health plans are subject to collective bargaining, and current law gives unions a veto over whether a community joins the state insurance group. The Legislature should nix the veto – and even consider bonus aid to towns that sign up.

So far, only a handful of communities have made the change. But the Massachusetts Taxpayers Foundation and the Boston Municipal Research bureau credibly estimated in 2007 that moving all communities into the commission would save more than $200 million in fiscal year 2011 alone. The state currently spends $936 million in unrestricted aid to local governments, so the change would amount to more than a 20 percent increase in local aid. There’s too much money at stake to tolerate the status quo.

Who’s the “Party of the Rich” Now?

The special election for U.S. Senate last week revealed some intriguing demographic trends in Massachusetts that present a unique opportunity for the state Republican Party.

Take a look at this map showing margins of victory by town in last week’s election. Notably, Scott Brown generally performed better in exurban towns and less affluent suburbs such as North Andover, Canton, and Reading than in the wealthiest suburbs west of Boston such as Wellesley, Belmont, and Needham. Brown’s margins in many largely middle-class towns were greater than Mitt Romney’s in 2002, which is the last year there was a truly competitive statewide race in Massachusetts. However, Romney performed better than Brown in the upscale western suburbs. What explains this apparent paradox?

These results reflect a larger shift in the demographic makeup of both major political parties, which has been taking place across the country in recent years, culminating in 2008. The Obama coalition that year was formed of three basic demographic elements. The first element was made up of those with the least money in the country; Obama beat out McCain by 48 points among those earning less than $15,000 a year. The second element was made up of many of the wealthiest Americans.

The first element’s support for Obama is not entirely surprising. However, the Democrats’ gains among affluent Americans are somewhat of a surprise, especially given that Republicans have long held a lock on the wealthy vote. For example, as recently as 2004, President Bush won those Americans earning more than $100,000 a year by 17 points, and won those earning more than $200,000 a year by 28 points. In 2008, Obama beat out McCain by 6 points among those earning more than $100,000 a year, a 23 point turnaround in just four years. And Obama tied for the votes of those earning more than $200,000 a year, a 28 point gain from the previous presidential election.

The third element of the Obama coalition was made up of a large number of Americans in between the income extremes, many of whom likely believed he would fulfill his campaign promise to unite Americans by launching a pragmatic, “postpartisan” political era. Indeed, while Bush tied for the votes of those Americans earning in between $30,000-$50,000 a year in 2004, Obama won this group by 12 points in 2008. And while in 2004 Bush won those earning in between $50,000-$75,000 a year by 13 points, Obama tied for the votes of this group four years later. These middle-class voters make up much of the population of the swing districts/states that were crucial to Obama’s victory in 2008, mostly in the middle of the country or in non-coastal sections of coastal states. And they are the same voters who have abandoned Obama in droves over the last year as his campaign promises of bipartisanship have been revealed to be mostly hollow.

One explanation for the migration of wealthy Americans to the Democrats in recent years has its roots in the boom of the technology and financial sectors between 1995-2008, which resulted in the rapid acquisition of great wealth among many Americans. This argument holds that such quick accumulation of wealth has weakened the connection for many affluent Americans between wealth and the policies that encourage success (i.e. low tax rates), which held more salience in the years when wealth was acquired as a result of many years of hard work. Among the new elite, social issues and environmental causes apparently trump economic self-interest. This is especially true among the very wealthy. For them, the impact of the recession has been minimal and the tax consequences of grandiose policy schemes are of little concern.

I would argue that the change is also generational. Newly wealthy members of the younger generations who have never known the days of tax rates as high as 90% in the early 1960s may not be aware of the possible long-term consequences of supporting Democrats. I imagine some of these wealthy Americans may begin to shift their party allegiances as those consequences (i.e. tax increases) become more clear in the coming years.

One definitive consequence of this demographic shift is the change in the power base of the Democratic Party. While still powerful, blue collar constituencies such as unions, already weakened because of declining membership, have lost ground to special interest groups funded by wealthy donors like George Soros, such as Moveon.org. And increasing numbers of Democratic candidates come from the ranks of the very wealthy, with the likes of Jon Corzine, Ned Lamont, and Maria Cantwell, among others, spending millions to fund their own campaigns.

These trends are also evident in Massachusetts, which last week’s election showed is not as ideologically homogenous as some pundits would lead us to believe. Indeed, the state Democratic Party here mirrors the national party in that it is an awkward coalition of conservative and liberal factions. In recent years, the wealthy liberal faction has taken over the leadership of the state Democratic party in Massachusetts, as evidenced by the nomination of Deval Patrick and the ascension of his top supporters into state party leadership. However, these changes have not taken place without some public dissatisfaction from conservative Democrats.

In a wise move, Scott Brown took advantage of this intraparty split by making a specific (and successful) appeal to conservative Democrats tired of the obvious elitism of their party leaders. In doing so, he laid out a political blueprint that may serve other Bay State Republicans well this fall.

Indeed, the intraparty split among Democrats is an important development that could be crucial towards making some serious Republican gains in November. It certainly should be eagerly exploited by state Republican leaders, who should take advantage of this dynamic by recruiting candidates from among the ranks of the middle-class “Brown Majority,” especially conservative Democrats and independents. These candidates could, like Scott Brown, begin to represent a new perception of the Republican brand in this state, and attract conservative Democrats as well as large numbers of middle-class independents who are fed up with the arrogance of state and national Democrats. Let’s hope our state Republican leaders take advantage of this unique opportunity. Their decision to do so could be crucial towards exponentially increasing Republican power from the local level on up this fall.

Scare Mongering?

Can’t Gov. Patrick ask his buddy in the White House for help?

Massachusetts Gov. Deval Patrick says the state is on track to be $600 million in the red this fiscal year. The governor is planning another round of spending cuts to balance the budget.

Patrick was legally required to assess this shortfall by Oct. 15. The $600 million figure is how much the state thought it was going to get in revenue this fiscal year that it now thinks it won’t get due to sagging sales tax and other revenues. Legally, he has until the end of the month to say exactly what cuts would cover that projected shortfall.

Gov. Deval Patrick faces reporters during a news conference in Boston on Thursday. (AP)
“There are no quick fixes,” Gov. Patrick said, “No easy choices. And no low hanging fruit.”

Over the next two weeks, the governor wants his staff to make those hard choices more clear. Patrick is going to press unions to make concessions; he wants government executives to take furloughs; 2,000 state jobs may have to go.

Patrick said that, as much he doesn’t want to cut human services, he’s going to have to. “There are some things we do in state government that we’re not going to be able to do anymore,” he said.

Exactly what things will be named by the end of the month. One thing is clear: municipal funding is on the chopping block. The governor is asking state lawmakers to give him the authority to cut state aid to cities and towns.

UPDATE: More from the Globe, Boston Herald, Michael Graham and Holly Robichaud.

SECOND UPDATE: From the AP.

Globe Off The Market

Looks like the Boston Globe will remain the property of the New York Times Company.

The New York Times Co said it has given up its plan to sell The Boston Globe and related businesses after drastic cuts it imposed on the daily newspaper earlier this year improved its financial position.

The announcement caps a painful odyssey for the 137-year-old Boston Globe that began earlier this year when the Times threatened to close the paper if it could not get its unions to agree to deep cost cuts.

Selling the Globe would have been a dismal exit from Boston for the Times. The company spent $1.1 billion to buy the Globe in 1993, at the time the most money ever paid for a single U.S. newspaper. The offers it reportedly received for the Globe this month were less than 10 percent of what it paid.

The Times did not mention the bids and officials were unavailable for comment about whether they played a role in the decision to stop the sale. The company instead said the Globe’s financial outlook has brightened.

“The Globe has significantly improved its financial footing by following the strategic plan it set out at the beginning of the year,” Times Chairman Arthur Sulzberger Jr. and Chief Executive Janet Robinson wrote to Globe workers on Wednesday.

“All along, we explicitly recognized that a careful restructuring of the Globe was one possible route and, thanks to your hard work, that is precisely what has been done,” they wrote.

Who still even reads the Boston Globe?

Globe Survives…For Now

Seems like the Globe may be lasting a bit longer…

The Boston Globe’s largest union reached a tentative deal with the New York Times Co. shortly after 3 a.m. this morning, agreeing to a substantial pay cut, unpaid furloughs, and modifications to the lifetime job guarantee provisions that protect almost 200 employees in the Boston Newspaper Guild, according to sources familiar with the deal.

With the agreement, the guild, representing more than 600 editorial, advertising, and business office employees, became the last of the newspaper’s major unions to agree to concessions with the Times Co. The Globe’s parent company now has the $20 million in concessions that it demanded a month ago. And perhaps more importantly, the Times Co. succeeded in changing the job guarantee language, which was widely considered a roadblock to any potential sale of New England’s largest newspaper.

It was a complex deal, a source with knowledge of the agreement said, with cuts across the board in various compensation and benefits categories. But further details about the changes to job security language and the proposed wage cuts were not available early this morning.

Standing before reporters after more than 10 hours in negotiations early this morning, guild president Daniel Totten chose to disclose very little.

“These negotiations have concluded and we have a proposal to bring before the members of the Boston Newspaper Guild,” Totten said. “Out of respect to our members, we will not disclose any details until we meet with membership.”

Moments later, the Globe management released a statement: “We have completed negotiations with the guild but have agreed not to release any details until the leadership speaks with guild members on Thursday.”

I guess we may still have a daily paper that will lose $65 million this year.