The Line in the Sand
“The private sector is doing fine,” President Obama said at a press conference on Friday, 6/8. “Where we’re seeing weaknesses in our economy, have to do with state and local government – often times, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.
Our President would like to focus on getting more federal tax money to state and local government employees so they can maintain their benefit plans without having to lay off workers in order to afford the benefits.
WI Governor Scott Walker
Alternative solutions like those proposed and implemented by Governor Walker that erased the state’s budget deficit, allowed the state to hire more teachers, reduce class size and reduce property taxes without asking for any additional federal government assistance (tax money).
In 1959 Wisconsin became the first state to allow collective bargaining by government employees. The projected cost of supporting Baby Boomer union retirees now threatens to bankrupt the state, as it does many others. Scott Walker ran for office promising change. The fiscal medicine he is administering may be bitter, but it looks like it is starting to work. The state budget has been balanced. The unemployment rate has been dropping and is now below the national average. Property taxes are down. Fraudulent sick leave policies—which allowed employees to call in sick and then work the next shift for overtime pay—have been ended. The government has stopped forcibly collecting union dues from workers’ paychecks.
Best of all, the myth that union bosses represent their members’ interests has been exposed as a lie. Now that union dues are voluntary, tens of thousands of union members have stopped paying them. Membership in the Wisconsin chapter of the American Federation of State, County and Municipal Employees union (AFSCME) has dropped by half (given the choice, only 28,785 of 62,218 former dues paying union members choose to continue paying). Membership in the state’s American Federation of Teachers (AFT) is down by over a third. Given unions’ influential role in most elections, the national implications of this trend are staggering.
Walker’s message is clear: The key to bringing balance back to public sector labor relations and balance state budgets is to break the iron triangle of closed-shop mandatory unionization, compulsory dues collection, and over sized campaign donations to politicians that promise to do the unions’ bidding. If other governors take his cue and take up the cause, that giant sucking sound you hear will be the air coming out of union bosses’ bloated political action budgets.
In January 2011, the State of Wisconsin faced a state budget deficit of $3.6 billion.
Wisconsin’s fiscal health was the fifth worst in the nation according to the Wisconsin Taxpayers Alliance. Only Illinois, California, New York, and Connecticut were worse.
The Governor’s reforms allowed state and local government to save millions of dollars by utilizing the cost-savings of the free-market system and competitively bidding on their health insurance programs, curbing over-time abuses, aligning staff with service needs, and asking employees to contribute a portion toward their pension and health insurance. The reforms also allowed government to reward employees and make staffing decisions based on merit, not union contracts.
The median property taxes dropped about $300 from school district levy savings dropping.
Governor Walker ran on fiscal responsibility and reforming government spending plans. For example, Wisconsin teachers are now being asked to pick up 5.8% of the actual pension contribution itself. So, if $500 was being contributed to their retirement on a monthly basis, they would be asked to fund their own pensions to the tune of about $29 a month. ($500 x 5.8%), or about $348 a year.
As far as healthcare goes, the Wisconsin teachers are being asked to contribute 12.6% of the overall cost of their healthcare. Using the same $500 a month number, this would equate to coming out of pocket $63 a month to cover these costs.
Bill Fezza, Forbes Magazine Online
The word “corrupt” is not too strong for a system that worked like this: Unions worked to elect Democrats. Once elected, Democrats passed laws that permitted states to withhold union dues from state employee paychecks, further enriching and entrenching public sector unions. State governments then signed contracts with the unions giving far more generous pay, work rules (like teacher tenure) and benefits than the average taxpayer receives. Unions thus elected the people who sat across the table from them in contract negotiations. As Victor Gotbaum, a New York City union leader boasted, “We have the ability to elect our own boss.” That mutual backscratching has burdened taxpayers with pension and other liabilities mounting into the trillions.
This Is What the Tea Party Movement Is About Mona Charen
The shift in mood and assumption is. The vote was a blow to the power and prestige not only of the unions but of the blue-state budgetary model, which for two generations has been: Public-employee unions with their manpower, money and clout, get what they want. If you move against them, you will be crushed.
Mr. Walker was not crushed. He was buoyed, winning by a solid seven points in a high-turnout race.
Governors and local leaders will now have help in controlling budgets. Down the road there will be fewer contracts in which you work for, say, 23 years for a city, then retire with full salary and free health care for the rest of your life—paid for by taxpayers who cannot afford such plans for themselves, and who sometimes have no pension at all. The big meaning of Wisconsin is that a public injustice is in the process of being righted because a public mood is changing.
What’s Changed After Wisconsin – Peggy Noonan WSJ
Still A Long Way To Go
A March 2012 report by the Congressional Budget Office concluded that the average federal worker receives almost 50% more paid time off than similar private sector workers. Moreover, federal workers’ retirement package combines a traditional defined benefit pension with a defined contribution pension that provides an employer match, along with retiree health care that in total is 2.7 times more generous than benefits paid by large private sector firms
Read more: Walking in Scott Walker’s footsteps
Only time will tell if the approach adopted by Wisconsin will catch on and spread to other states or if federal tax money will be called on to bail out state governments. Either way, if is something that we should all keep a close on as our state is in horrible financial shape and significant changes will have to happen here sooner or later.
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