Conservatives have a "you had me at hello" attitude towards pension reform, but liberals take some persuading, due to their sympathy for public employee unions and their instinct to view every fiscal problem as a revenue problem.
To overcome such hang-ups, liberals should read and reflect on Ezra Klein's argument about why the federal deficit should matter to them. Klein agrees with Paul Krugman about the importance of countercyclical spending and disagrees with Marco Rubio's recent assertion that government borrowing is now crowding out private investment (although that did seem to happen in the 90s). Klein worries about a different "crowding out" effect, namely that of discretionary programs by entitlement cost growth. Social Security, Medicare and Medicaid are not the "most worthwhile" forms of government spending, but rather investments that government makes in our common future, such as education, scientific research, and infrastructure. The latter are what are threatened by sequestration, which Klein implies is not just a political accident, but critical evidence that liberals should not dismiss the deficit.
Klein's focus is on the federal scene, but the same logic applies to state and local governments. Their long term solvency is also threatened by retirement and healthcare costs, although in the state and local case these relate to employee benefits, not entitlements. (Cities don't run massive entitlement programs and the major ones that states run are funded all or in part by the federal government.)
Most cities will never face bankruptcy and states can't declare bankruptcy. But so long as spending on pensions and healthcare benefits continues to outpace revenue growth, there will be that much less room in state and local budgets for all other functions. Consequently, state and local governments now face a crisis of administrative inflexibility, not just a fiscal crisis.
The two most important functions of American city government are public education and public safety. Over the last decade,
As for public education, Democrats have raised alarms about the effect of sequestration cuts on K-12, but federal grants provide only 9% of school districts' budgets. Sequestration would reduce federal spending on K-12 by around 8% annually (relative to the baseline), resulting in a total budget reduction of less than 1%. State and local benefit costs pose a far greater threat to K-12 spending than sequestration.
Liberals believe deeply in the beneficent effect of government spending, but spending's not much fun when there is no money around for anything but employee benefits. Some liberal politicians have grasped this point, but not all.
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