AltAusterity Digest #40 March 22-28, 2018

The financial oversight board charged with managing Puerto Rico’s economic recovery following Hurricane Maria has demanded 10% across the board cuts to public pensions. Puerto Rico’s current public employee pensions are already $50 billion underfunded, with payments coming out of the commonwealth’s general budget. Fiscal reforms have proven to be a contested process as tensions are mounting between bondholders and Puerto Rico’s residents and workers.

Despite the Trump administration releasing a spending plan in February to use $200 billion in federal funding as part of a $1.5 trillion program for infrastructure spending, the plan has not advanced since. The spending promise comes at the same time as the $1 trillion tax cut passed by Republicans begins to take effect. While local and state governments wait for the federal money to be allocated, they are relying on locally raised revenues in an attempt to repair outdated infrastructure.

Rankings of the US’s urban public transportation systems unsurprisingly show a link between the size of the city (both demographically and in economic terms) and the quality of the infrastructure. This correlation has troubling implications for people with physical disabilities. Since disability is correlated with poverty, and many large, “wealthy” cities that are equipped to run and maintain reliable public transit networks are “aggressively gentrifying,” persons with disabilities are being displaced from the cities that can best service them.

In a speech to the German Institute for Economic Research, IMF Managing Director Christine Lagarde discussed the next steps of Euro Area economic integration. Among the areas of reform considered were an updated capital markets union, an improved banking union, and greater fiscal integration. Among Lagarde’s suggestions was the creation of a “rainy-day fund” that countries would contribute to in order to build up assets in good times and help offset budget shortfalls in times of downturn.

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