Shared sacrifice

Given the budget impasse in Harrisburg, things have not been going too well in Pennsylvania lately. Schools, senior centers, libraries and more have suffered debilitating cuts in state funds and have been forced to cut back services. Some pain is being felt across the income spectrum, but one can’t help noticing that the poorest and most vulnerable in society are taking the biggest hits. Against this background, Gov. Ed Rendell’s recent decision not to impose a severance tax on the natural gas drilling companies strikes a particularly sour note.

Rendell’s solicitude for the gas drilling corporations is touching, but before we pull out our hankies it is worth noting that the CEO of Chesapeake Appalachia, LLC, one of the major gas drilling players in the Marcellus Shale area, was the 25th most highly compensated executive in the Forbes 500 last year, taking home a little over $36 million. His five-year compensation total was $189.67 million.

It is estimated that a severance tax would yield about $90 million in its first year, and of course only a small chunk of that would come from Chesapeake, as there are many other drillers in the state. Pardon us if we decline to shed a tear at the thought that Chesapeake might have to contribute its mite to this total, given that its CEO took home two times that amount as his personal pay in the past five years.

Rendell says that $90 million is not enough money to make a big difference in the budget standoff. There might be some truth in that (though try telling it to, for example, the libraries: last year Pennsylvania’s total allocation for them came to $94 million). And to be fair, it is not Rendell, but Pennsylvania Republicans who want to settle the budget standoff in such a way that cuts in many social services would inevitably become permanent.

But it seems to us that not just in Pennsylvania but across the nation, the tender care shown to corporate executives and “too big to fail” multinationals, while ordinary people suffer, is the expression of an increasingly serious problem: sacrifice is being asked—but only of those who can least afford it.

The fall of Wall Street took down millions of homeowners and retirees with it. Yet the bailout went straight to the elite who made the mistakes that caused the recession. According to a study released last week by the Institute for Policy Studies, a Washington, DC-based think tank, the heads of the 20 banks that received the biggest financial industry bailouts were paid nearly 40 percent more last year than other CEOs on average. Those same banks laid off more than 160,000 employees early last year.

Meanwhile, the Treasury Department recently reported that only 230,000 of the up to four million homeowners eligible for help under the government’s Making Home Affordable program have gotten such help, according to a CNN investigation, because the banks are giving people the runaround.

There is no doubt that we are in hard economic times and that a lower standard of living must be accepted for a while. But the impact of this on morale, and the degree to which community spirit can buoy us out of the recession, depends to some extent on everybody tightening their belts together. This is why the severance tax in Pennsylvania is so powerfully important, whether or not the actual sum is considered significant.

Standoffs like that occurring in Harrisburg right now don’t generally end with one side getting everything it wants. Most likely, Rendell will have to agree to cuts in some social services, and the segments of the population that receive (or earn their living delivering) such services will have to make a sacrifice. And most likely, Republicans will have to agree that some taxes will have to go up. And if they do, it would certainly make sense that those who see higher taxes are those who can best withstand it. The irony is that, given Rendell’s comments on the severance tax, it’s pretty hard to trust him on the subject of who it is that should be taxed. If not the gas drillers, who? Small businesses? Middle- and lower-income households? Farmers?

The well-to-do—and that emphatically includes the energy industry—need to contribute their bit. If not, the blow to this country’s spirit could be grave enough to drive it into something that could be called a “depression,” in every sense of the word.

Also in this issue:

• Questionable placement for Damascus cell tower

Dr. Punnybone

Curling up with a good book