'76 Blog

The high-stakes battle to determine whether the people will serve government or government will serve the people is unfolding in state capitols. Wisconsin is the tip of the iceberg.  Though not as fiscally imperiled as California or Illinois, Wisconsin is symbolic — the birthplace of government employee unions, once considered illegitimate even by liberal icons like FDR and the AFL-CIO. “All government employees should realize that the process of collective bargaining . . . cannot be transplanted into public service,” Roosevelt said. In the private sector, unions bargain for a share of profits.  If management agrees to conditions that are too expensive, the market punishes both sides with lost profits and lost jobs and rewards competitors. Today, unions would be dinosaurs without government employees, who constitute more than half of all union membership. “Unions are government organized as an interest group to lobby itself to do what (government) always wants to do anyway – grow,” writes George Will.  “Governments, not disciplined by the need to make a profit, extract government employees’ salaries from taxpayers.” With political contributions, unions reward politicians for making expensive promises at the expense of taxpayers – including future generations of taxpayers who cannot vote today but will be stuck with the bill tomorrow. So, ask yourself, Mr. or Mrs. Taxpayer, do you think you have more clout with government than government employees’ unions? Wisconsin Gov. Scott Walker grasps the stakes of the battle.  He wants union members to make reasonable contributions toward their pensions — they currently pay less than 1% of salary — and health care.  By limiting unions’ bargaining authority to wages, Walker would remove the temptation of unions and their legislator puppets to make pension promises that will be paid by future generations of taxpayers and government workers. Walker is not alone.  Ohio is set to pass similar legislation, and Indiana and Missouri governors curtailed government unions’ bargaining power through executive orders about the same time former Colorado Gov. Bill Ritter did just the opposite. Here in Colorado, taxpayers and government workers are already paying dearly to bail out the government pension plan, PERA, from an unfunded liability of $27 billion – equivalent to four full years of state income and sales taxes. When the latest bailout is fully implemented, state and local governments, including school districts, will pay more than $700 million a year in perpetuity – taken from worker wages, school classrooms and other budget priorities – solely to pay down PERA’s deficit.  In addition, workers and employers contribute another $1.5 billion annually to support PERA’s existing benefit structure. At a time when the state is pondering a $375 million reduction in K-12 education spending, PERA’s costly benefit structure can be ignored no longer. In fact, the New York Times recently called the state pension plan the most expensive in the nation.  Another inescapable problem is the relentless growth of entitlement spending and the cost of federal mandates – most recently ObamaCare, which locks in minimum levels of Medicare and Medicaid spending. From 2000 to 2010, Colorado’s general fund budget increased by 47% or $2.4 billion.  Health care and welfare grew by 61% ($856 million); K-12 spending by 59% ($998 million); corrections, 75% ($436 million).  That left $90 million over 10 years for all other programs. Although tax revenues haven’t grown in the past three years, “fees” increased by $756 million and 3,400 state workers were added to the payroll. Now Colorado Senate Democrats want to raise taxes by $500 million a year.  Senate Minority Leader Mike Kopp counters, “Colorado government has a revenue shortfall because Colorado’s families and businesses have a revenue shortfall.” Winston Churchill reminded that governments that seek to tax themselves into prosperity are “like a man standing in a bucket trying to lift himself up by the handle.” Government, after all, is supported by the private-sector economy – not vice versa. Mark Hillman served as Colorado Senate majority Leader and State Treasurer.  He is now the Republican National Committeeman for Colorado, and a Centennial Institute Fellow.  To read more or comment, go to www.MarkHillman.com.

Very possibly the principal casualty of the tidal wave of red ink now engulfing almost all  states will be the legendary political clout of public sector unions, and the most consequential collateral damage may be the greatly weakened re-election prospects of Barack Obama. As highlighted by the dramatic events in Wisconsin, Indiana, Ohio and many less visible arenas public sector unions are facing a rolling tide of crisis that threatens their very existence.  As a result their considerable influence, money, and manpower in the next twenty months will be principally focused not on re-electing Obama but rather a desperate state by state battle for their own survival. From a union perspective a new Republican president is a small threat compared to the body blows they are being dealt by new Republican Governors like Christie, Walker, and Kasich. Particularly alarming to the unions is that they are suffering almost as much damage from their friends as from their foes.  Though less visible in the media the budgets presented by Democratic governors Cuomo of New York, Hickenlooper of Colorado, and others are quite as draconian (i.e. realistic) as those of their Republican counterparts.  The President of the New York State Union of Teachers (NYSUT) called Cuomo’s proposed $ 1.6 billion cut to education “our union’s biggest disaster in forty years.” No one sees the gravity of this threat more clearly than Barrack Obama.  His intemperate denunciation of Wisconsin Republicans for conducting “an assault on unions” and his swift dispatch of men and money from the Democratic national Committee and his own political machine- “Organizing for America”- to swell the ranks of protestors in Madison was clear evidence that he fully recognized his own political vulnerability. It is greatly ironic that these events validate the well documented opposition to public sector unions by the greatest heroes of the Democratic Party and the Labor Movement- Franklin Roosevelt and George Meany- who foresaw that “government unions” would ultimately undermine and discredit both government and unions. Just two years ago it would have been impossible to anticipate today’s scenario.  Then, the unions in a spirit of electoral triumphalism, were demanding that the Democratic President and Congress repay their support by making the infamous “Card Check” bill the law of the land thereby conscripting tens of thousands of new union members who would be required to contribute tens of millions of new dollars to expand union power even further. This union dream of enhanced power never came to pass because at that seminal hour in American history a far mightier power was sweeping the country: Fiscal Disaster. Suddenly the reality for unions was not expansion but contraction.  In eighteen months the Recession eliminated 600,000 union jobs.  Overall union membership- 34% of the workforce in 1955- fell to an all-time low of 11.8% in 2010. While private sector union membership hit all-time lows (6.9% of the work force) that threatened extinction for some, the public sector unions counted on their political clout for preservation.  This faith seemed justified when the Democrats rammed through the pork mountain called “Stimulus” and other legislative largesse, but the strategy backfired when the states used the money to backfill their 2010 operating budgets thereby causing deficits for subsequent years to balloon exponentially. Finally, the seismic 2010 election saw the defeat of more union backed candidates than in any election in the history of the labor movement.  This union rout proved most deadly at the critical gubernatorial and state legislative level.  There a host of newly sworn in state officials faced mountainous budget deficits and the certain knowledge that these yawning fiscal gaps could not be bridged without confronting at every level bloated union contracts and the collective bargaining straitjackets that spawned them. The outcomes of these innumerable state and local level battles will vary greatly depending on the extent of fiscal calamity, relevant law, political tradition, union track record, public mood, and the skill of the participants. What is absolutely certain is that unions will never be the same, and that the tide is rapidly running out on their once awesome political clout. The effects of these events will ripple across American history for years to come.  Hopefully the end result will be a politically healthier, and a financially sounder country, one which can sustain the promise of America for our children and theirs far into the future. William Moloney is a former Colorado Education Commissioner (1997-2007) and now a Centennial Institute Fellow. His columns have appeared in the Wall St. Journal, USA Today, Washington Post, Washington Times, Philadelphia Inquirer, Baltimore Sun, and Human Events.  He lives in Colorado.