...all these bubbles bursting. Only it ain't champagne, more like sewage.
The housing market boom has turned to bust, and with it topple many cherished ideals of the Republican party platform: specifically, in this case, the tax cut.
When Bush proposed his tax cuts, coming on the heels of the first balanced budgets in decades and the first budget surplus in centuries, it was assumed that much of the tax burden would shift down the government scale: states and localities would be forced to raise revenue in order to finance unfunded mandates the Republican Congress was throwing their way, like, say No Child Left Behind.
States and localities, of course, were having their own tax battles. No one in their right mind, in the greed infested environment so polluted with the nonsensical notion that tax cuts were actually *good* for the economy, was about to impose new taxes.
Salvation came in the form of the housing bubble. A community could merely tweak the tax rate slightly, and generate brand new revenue based solely on the fact that house values were skyrocketing and all the community had to do was keep appraisals in line with that valuation.
Worked fine until the bubble burst:
The real estate frenzy that once filled public coffers with property taxes has over the last two years given way to a devastating bust. Rather than christening new facilities, the mayor [Eric Feichthaler, Cape Coral, Florida] finds himself picking through the wreckage of speculative excess and broken dreams.So let me draw the picture for you: a lower tax base from the Federal government on down to your city or town; a crumbling infrastructure in terms of bridges (remember the I-35 bridge in Minnesota?), highways, streets, and public facilities like schools, hospitals, and services like police and fire departments; a shrinking tax base as baby-boomers begin to retire, forcing Social Security to call in its chits from the general tax revenue; an aging population demanding health care reform; a horribly tragic, wasteful war that's drained one trillion dollars plus from our collective nest eggs-- and the worst is yet to come.
Last month, the city eliminated 18 building inspector jobs and 20 other positions within its Department of Community Development. They were no longer needed because construction has all but ceased. The city recently hired a landscaping company to cut overgrown lawns surrounding hundreds of abandoned homes.
“People are underwater on their houses, and they have just left,” Mr. Feichthaler says. “That road widening may have to wait. It will be difficult to construct the high school. We know there are needs, but we are going to have to wait a little bit.”
Waiting, scrimping, taking stock: This is the vernacular of the moment for a nation reckoning with the leftovers of a real estate boom gone sour. From the dense suburbs of northern Virginia to communities arrayed across former farmland in California, these are the days of pullback: with real estate values falling, local governments are cutting services, eliminating staff and shelving projects.
Next year, another two million or so mortgages will have to be re-assessed as they are due for drastic rate hikes. That's going to create yet another contraction in the real estate market (barring a drastic intervention by the Fool On The Hill, George W Bush) that's going to fling off yet another wave of revenue cuts for states and communities.
And yet, Republicans nationwide applaud this kind of shit. I guess living in a gated community has some advantages but what happens when the gatekeepers can't get to work or can't get to an emergency room? Gates can trap inside as well as keep people out.
Not a pretty picture for the holiday season, huh?