Clearly there may have been flat-out fraud involved in some of these financial institution failures. (I sat up and took notice when Wachovia went down since a subsidiary was accused last year of laundering money for a Mexican drug cartel.) A few angry folks have called for prosecutions of investment bank CEOs and their minions, but it seems to me the main problem is that de-regulation eliminated most of the laws they might be accused of violating, which is why we're in this mess in the first place.
Pressure to delay new jail construction
Since I've been tracking local votes on jail bond initiatives in Texas, including an important upcoming vote in Tyler on a new jail, it's worth mentioning the most immediate criminal justice dilemma created by the crisis - rising cost of commercial paper (debt) used to finance government construction. Some jurisdictions are already canceling debt issues approved by voters. In Houston, "the City Council [decided to] draw $100 million out of cash reserves to fund construction projects, rather than use commercial paper on which interest rates had spiked." According to a Harris County source, "the commercial paper rate was 1.74 percent a week on Sept. 11 and jumped to 5.25 percent a week later. The county also uses commerical paper."
This news makes new jail construction projects like Tyler's a lot more expensive than voters were previously told, and thus a lot less likely to pass, if I had to bet. What's more, past projects without fixed interest rates are likely to cost a lot more than officials or voters expected and could even be canceled as a result.
Rising crime? Maybe not
While the relationship between crime and economics is indistinct, to the extent economic distress worsens crime, crime might worsen, particularly property and addiction-related offenses. The US Conference of Mayors portrays this as a certainty (pdf), but for my part I'd not label that assessment a prediction so much as identifying a possibility. Some argue there's a strong relationship between the economy and property crimes, in particular, but that's not set in stone. Regular readers know that crime has declined in recent years despite a slowing economy. According to the Heritage Foundation:
there's little evidence to suggest that good economic times have much effect on crime. Crime rates rose every year between 1955 and 1972, even as the U.S. economy surged, with only a brief, mild recession in the early 1960s. By the time criminals took a breather in the early 1970s, crime rates had increased over 140 percent. Murder rates had risen about 70 percent, rapes more than doubled, and auto theft nearly tripled.If crime declined during the Great Depression, there's little reason to think this economic downturn must automatically boost crime rates. I'd expect a handful of specific offenses to increase - particularly stuff like theft of copper and other metals or siphoning gasoline. But there's no inherent relationship between being poor and being a criminal.
By the same token, a bad economy doesn't always bring more crime. Crime rates fell about one third between 1934 and 1938 while the nation was struggling to emerge from the Great Depression and weathering another severe economic downturn in 1937 and 1938. Surely, if the economic theory held, crime should have been soaring.
Trouble paying the bills
Corrections and public safety spending makes up a much more substantial portion of local and state-level budgets than they do for the feds, which means declining revenues from property taxes and new housing starts will dramatically reduce the revenue to pay for prisons, jails and cops. Municipalities and counties will immediately feel the pinch, though Texas' state budget will be somewhat protected in the short-term from the fallout because of $100 per barrel oil. Even oil revenues will decline, though, if we enter a full-scale global recession. Plus, reduced consumer demand will reduce sales tax revenues, doing further damage to state and local budgets.
Nationally, states haven't been building many new prison units with private prisons accounting for most of the new growth recently. But those companies, too, rely on commercial paper to build new facilities, so expect either A) a reduced expansion rate for private prison capacity or B) increased costs for their customers.
Gas prices fuel budget woes
Though not directly related to the credit crunch, rising fuel costs remain a core dilemma for criminal justice agencies of all stripes: Police and Sheriffs must pay more for patrols while jails and prisons must pay more to transport prisoners and supplies. High fuel prices can also alter policing tactics. Lewisville PD told the Conference of Mayors that:
When the current fiscal year concludes, the police department budget for fuel is expected to be double the amount budgeted. The police department has implemented measures to conserve fuel such as limiting idling, doubling up officers at times, and requiring each officer during each shift to spend 15 minutes without the vehicle running each day.I've been hoping the dilemma over gas prices might spur more Texas law enforcement agencies to utilize new authority to issue citations instead of arresting for low-level misdemeanors, saving departments gas money transporting penny ante offenders to and from jail and keeping officers out on the streets for greater periods. I'd expect more departments to revisit that option the longer gasoline prices remain at current levels.
What else can you think of? How else might a faltering economy and the credit market collapse affect the criminal justice system?
BLOGVERSATION: Anne Reed wonders if the economic downturn will make juries less diverse, while Scott Greenfield considers how economic distress might influence jurors decisionmaking, advising "If there is any possible way to avoid going to a trial now, do it."