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BALTIMORE'S DECLINE

In the 1950s, Baltimore was home to a host of thriving industries—particularly manufacturing and shipping—which created some three-fourths of all the jobs held by people in its metropolitan region. The city's residents had a median income that was 7% higher than the national median; the percentage of Baltimore families earning middle-class wages was about one-fifth higher than in the U.S. as a whole; and the proportion of Baltimoreans living in poverty was roughly one-fifth lower than the corresponding national figure.

In 1967, however, something very significant happened in Baltimore: city government was taken up by a string of Democratic mayors who have continually held power ever since.

It was William Donald Schaefer, Baltimore's mayor from 1971-87, who set the stage for economic decline in his city by championing an ever-expanding public sector as well as extensive government regulation of private business enterprises. Further, he relied heavily on federal grants and city bonds to finance a host of development projects throughout Baltimore. As the City Journal reports: “[W]hen those monies proved insufficient, [Schaefer] ... created his own city bank to seed development: the Loan and Guarantee Fund. The fund financed itself by selling city property and then leasing it back to itself, and by selling bonds that would stick future taxpayers with much of the bill.”

Along with fiscal improvidence, Schaefer's administration was replete with corruption and cronyism. For instance:

  • The mayor's finance director, Charles Benton, once steered $5.6 million in public money to a repair project on an apartment building owned by a Schaefer political supporter.
  • On another occasion, Benton directed more than $4 million in taxpayer funds to the refurbishing of a hotel owned by a longtime friend of the mayor. Every penny of that money was wasted, however, as the hotel went bankrupt shortly after Schaefer's mayoral tenure ended.
  • In the 1970s, Schaefer's deputy public works director was incarcerated for rigging bids on city contracts.
  • In the '80s, the federal government shut down Baltimore's Urban Development Action Grants program due to its many abuses.
  • According to Baltimore's City Paper: “Fifteen million dollars from a program to provide rent subsidies to low-income families was used to build housing for the elderly (a reliable voting bloc). Another $15 million earmarked for disadvantaged schoolchildren was spent on other items, including the salaries of [politically influential] school bureaucrats.”
  • In 1986 the Brookings Institution reported that during Schaefer's years as mayor, “only projects that had been endorsed by [him] were funded, and only the neighborhoods that were most loyal to City Hall got community grants.”

In 1987 Schaefer was succeeded by Baltimore's first elected black mayor, Kurt Schmoke, who, during his 12 years in office, continued his predecessor's policy of extracting as much taxpayer money as possible from Annapolis and Washington. By 2001, such state and federal subsidies accounted for 40% of Baltimore's operating budget.

Moreover, Schmoke was a close friend of Bill Clinton, who began his first term as U.S. President in 1993. By extension, Schmoke likewise had connections to a number of Clinton administration officials—most notably Henry Cisneros and Andrew Coumo at the Department of Housing & Urban Development (HUD)—ensuring that Baltimore's city programs would continue to receive high levels of federal support. One such initiative—bankrolled by a ten-year, $100 million federal grant—was the establishment of an Empowerment Zone whose goal was to transform “distressed” areas of the city into “neighborhoods of choice” by implementing a host of job-training, workforce-development, home-construction, and drug-treatment programs. All told, Baltimore's Empowerment Zone (EZ) covered nearly 10% of the city's total area.

The results of this endeavor, though, were largely disappointing. As the Baltimore Sun reported in 2002, “the areas that make up the city's federally funded empowerment zone remain deeply troubled.” Some specifics:

  • The poverty rate within the EZ had dropped slightly (from 41.9% to 35.6%), but was still about 50% higher than the corresponding rate citywide.
  • Median household income had risen in slightly more than half of the EZ area, but had declined in the rest and was below the citywide median in 92% of the EZ area.
  • Homeownership rates in the EZ had increased modestly, from 30% to 35%—but not nearly as much as officials had predicted; moreover, homeownership in the EZ was still 15 percentage points lower than the citywide rate.
  • Unemployment in the EZ had increased from 14.9% to 16.5%, and was about 50% higher than Baltimore's overall rate.
  • And perhaps most tellingly, the EZ region had lost population at more than double the rate of the city as a whole.

“Doesn't look good, does it?” lamented Anirban Basu, head of Towson University's Regional Economic Studies Institute.

Like Schaefer’s before him, the Schmoke administration was marked by corruption. In the mid-1990s, for instance, federal officials were alerted to the fact that the mayor's housing authority had squandered—via no-bid contracts, massive cost overruns, and blatant cronyism—some $25.6 million in Department of Housing & Urban Development (HUD) funds that had been earmarked for housing repairs. Ultimately, the scandal resulted in federal convictions against 13 contractors.

For awhile it appeared that even Schmoke himself might find his political career in jeopardy when, in 1998, HUD's inspector general announced a probe of the mayor’s handling of federal housing aid. However, both Schmoke and his housing chief, Dan Henson, were able to disarm investigators by playing the race card. West Baltimore Congressman Elijah Cummings demanded that the White House launch a special investigation into the inspector general’s investigation. In the end, Schmoke escaped unscathed when HUD Secretary Andrew Cuomo quashed the investigation.

Even as the nation at large flourished economically in the 1990s, Baltimore’s economy foundered. Contributing to this state of affairs was the fact that in the preceding decades, Baltimore's property taxes, the highest in all of Maryland, had been repeatedly raised on a regular basis. Business, in turn, voted with its feet. Many of the city’s leading private-sector firms, in search of a more business-friendly climate, relocated to the suburbs during the Nineties. Thus, between 1990 and 1999 Baltimore lost some 58,000 jobs. These included approximately 13,000 in the manufacturing sector; another 12,300 in the finance, insurance, and real-estate industries; and 23,400 in retail and wholesale businesses. During the worst of times under Mayor Schmoke's watch, Baltimore's overall work force shrank by an average of 722 people per month. The city's unemployment rate during the '90s was twice that of the rest of Maryland.

While Baltimore's industry and finance were in steep decline, crime was on the rise—thanks, in large measure, to Schmoke's ineffective policing strategy, described by City Journal as a “soft-on-drugs” approach. Insisting that drug use was a health problem rather than a criminal-justice matter, Schmoke largely decriminalized it. The consequences were enormous. By the end of the 1990s, the murder rate in Baltimore was six times higher than in New York (where a variety of proactive policing practices had reduced violent crime dramatically). Throughout the Nineties, Baltimore was the scene of more than 300 murders every year, prompting locals to nickname their city—which had become the second-deadliest in the nation—“Bodymore, Murderland.” Approximately 75% of Baltimore's killings were drug-related—symptoms of an ongoing, brutal drug-turf war that was allowed to engulf many nonwhite neighborhoods. Police, meanwhile, were frustrated by the fact that those drug dealers they arrested were routinely released a short time later, as a result of Schmoke’s “philosophy,” free to resume their criminal activities on the streets. One police sergeant lamented that under Schmoke's leadership, Baltimore had become a city “in love with its own victimhood.”

Baltimore leadership's casual attitude toward the drug crime devastating the minority community, whose champion it pretended to be, was evidenced by the fact that as of 2000, only 23 detectives in the entire city were actively investigating narcotics cases—even while nearly 10% of Baltimore's population was addicted to drugs, and epidemics of heroin and cocaine abuse reached levels unmatched in virtually any other American city. Further, just 4 officers in all of Baltimore were tasked with tracking down the suspects who had been named in some 54,000 open arrest warrants—250 of them for murder or attempted murder.

As a result of Baltimore's widespread political corruption, failing economy, high taxes, and escalating crime rates, the city's overall population fell by more than 120,000 during the 1990s. In the process, tens of thousands of homes were simply abandoned by their occupants.

In 1999 Democratic city councilman Martin O’Malley won Baltimore's mayoral race by campaigning on a law-and-order platform, but in part because of the legacy he inherited, he was ultimately unable to fulfill his crime-reduction pledges. In 2005, criminal-justice statistics for Baltimore indicated that 17.6 violent crimes were committed for every 1,000 residents—a figure almost 80% higher than America's big-city average. Baltimore's murder rate, meanwhile, was nearly three times higher than the big-city average—just as it had been when O'Malley first took office in 2000. Robberies and aggravated assaults (including nonfatal shootings) had dropped slightly since 2000, but were still more than twice as prevalent as in other large American cities.

Also under O'Malley, Baltimore's anemic economy lagged noticeably. Between 2001 and 2004, the city lost nearly 5% of all its jobs, including a quarter of its manufacturing jobs, 15% of its banking and finance jobs, and 5% of its retail jobs. From 2000 to 2007, private-sector employment in Baltimore shrank by 10.4%—a loss of approximately 33,600 jobs. During that same seven-year period, employment in the areas immediately outside of Baltimore grew by 13.9%—after having grown by 25.1% during the 1990s.

In 2007 O'Malley was succeeded as mayor by fellow Democrat Sheila Dixon, who was forced to resign three years later when convicted of embezzlement and perjury. Replacing Dixon was city council president and Democrat Stephanie Rawlings-Blake.

Baltimore's economy remains weak to this day. The city’s residents have a median household income of $38,721 (about 45% below Maryland's state average) and a poverty rate of 25.7% (about 1.7 times the national average). Among America's 100 most populous cities, Baltimore ranks 87th in median household income.

The violent crime rate in Baltimore is currently 3.7 times higher than the national average. This figure includes astronomical rates of murder (6.6 times the national average), rape (twice the national average), robbery (4.8 times the national average), and assault (3.2 times the national average).

Another telling statistic is the $15,483 in taxpayer funds that the Baltimore City Public Schools (BCPS) spend, on average, for each K-12 student in their jurisdiction. This figure is almost 50% higher than the national average, but students throughout the city perform near the bottom on the National Assessment of Educational Progress (NAEP), a standardized test that measures the academic abilities of children in elementary and junior high school. In 2013, for example, NAEP results indicated that only 14% of Baltimore's fourth-graders, and 16% of its eighth-graders, were able to read proficiently. In math, the corresponding proficiency figures for fourth- and eighth-graders were 19% and 13%.

Notwithstanding this abysmal track record, the Baltimore Teachers Union, which consistently supports Democratic Party causes and candidates, vehemently opposes any calls for the implementation of voucher programs that would enable low-income parents to take their children out of the city's failing public schools and send them instead—for a fraction of the cost—to a private school where they might actually have a chance to experience academic success. Union opposition to vouchers is rooted in the fact that such programs would siphon money away from the public schools, thereby decreasing the funds available for teacher and administrator salaries and, by extension, diminishing the member dues collected each year by the unions. And of course Baltimore Democrats, knowing that a substantial portion of those union dues are funneled directly into their party's coffers, likewise abjure voucher proposals—just as Democrats have done in city after city across the United States. Joel Klein, former chancellor of the New York City Department of Education, once explained candidly: “[P]oliticians—especially Democratic politicians—generally do what the unions want. And the unions, in turn, are very clear about what that is. They want, first, happy members, so that those who run the unions get reelected; and, second, more members, so their power, money, and influence grow.”

Baltimore's stratospheric property taxes, which are twice as high as those of any other jurisdiction in Maryland or the District of Columbia, help to fund the colossal educational train wreck that is the BCPS. These taxes, to be sure, are part and parcel of a long trend of high taxation that has plagued Baltimore for decades. As economists Steve Hanke of Johns Hopkins University and Stephen Walters of Loyola University write: “In modern Baltimore, the machine has exploited class divisions, not ethnic ones. Officials raised property taxes 21 times between 1950 and 1985 … causing many homeowners and entrepreneurs—disproportionately Republicans—to flee.” For 31 of those 35 years, the city was led by Democrat mayors.

But just as these high taxes have failed to buy a decent education for Baltimore's schoolchildren, so have they failed to cover the costs of runaway government spending under a long succession of fiscally irresponsible Democrats in high office. By December 2012, the unfunded pension liabilities that Baltimore owed to its retired public-sector workers had reached an unprecedented $765 million.

As a result of Baltimore's multiple social, economic, and educational problems, the city's population has declined from 939,000 in 1960 to just 622,000 today. In silent, gloomy testament to this prolonged exodus, some 47,000 abandoned houses and 16,000 vacant buildings now stand like pulled teeth in Baltimore's urban landscape.


This piece was posted in May 2014.

 

RESOURCES

How Property Taxes and the "Curley Effect" Are Killing Baltimore
By Steve Hanke and Stephen Walters
August 26, 2011

Baltimore As a Democrat City
By John Perazzo
April 30, 2015

How Black Skin Privilege Destroyed Baltimore ... and a City Near You
By John Perazzo
August 24, 2015

Can Mayor O’Malley Save Ailing Baltimore?
By Van Smith and Fred Siegel
Winter 2001
 
Saint or Sinner? William Donald Schaefer’s Unexamined Legacy in Baltimore and Beyond
By Edward Ericson Jr.
May 11, 2011

 

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