Ann Larson: Wall Street, Coming to Your Town! and Destroying It.

The European debt crisis, and the ensuing austerity fueled chaos, can seem to Americans like a distant battle that portends a dark future, yet a closer look reveals that the future is already here. American austerity has largely taken the form of municipal budget crises precipitated by predatory Wall Street lending practices. The debt financing of US cities and towns, a neo-liberal economic model that long precedes the current recession, has inflicted deep and growing suffering on communities across the country. In July 2012, Mayor Christopher Doherty of Scranton, Pennsylvania, reduced all city employees' salaries to the minimum wage. With a stroke of his pen, wages for teachers, firefighters, police, and other municipal workers, many of whom had been on the job for decades, dropped to $7.25 per hour. The city, the mayor explained, simply could not pay them more. Ron Allen, who reported the story for NBC Nightly News, repeated this assessment. Cities like Scranton, he said, "just don't have the money" to pay city employees more than the minimum wage. Officials blamed the crisis on a declining tax base, on reduced revenue from the state, and on public sector labor contracts that the city could no longer afford. What does it mean to say that a former steel town in decline "just doesn't have the money" to pay its bills? It means that it no longer has access to credit markets controlled by the big banks. For years, Scranton officials, like officials across the United States, have been selling municipal bonds to finance everything from basic services to development projects. Scranton's problems careened out of control, when the city's parking authority threatened to default on its bonds. Wall Street responded aggressively by cutting off its credit line, and city workers paid a steep price. American style austerity arrived in Scranton under the guise of budget cuts blamed on public employees, whose salaries and pensions had nothing to do with the economic crisis.