Government in Wisconsin, one probably has heard by now, is paralyzed. And the ultimate losers may be future generations of taxpayers. Last Thursday, February 17, up to 25,000 protestors, led by public-sector union officials, rallied in the state capital of Madison to intimidate legislators out of voting in favor of new Republican Governor Scott Walker’s budget austerity plan, which includes major concessions from unions. Demonstrators crammed the Capitol Building to give GOP lawmakers hell. Democratic state senators, knowing their absence would block a quorum for a vote, fled the state en masse. Two-fifths of Madison teachers called in sick, prompting school officials to cancel classes. Union leaders are threatening an illegal strike. The showdown may escalate given that over the weekend the crowd grew to nearly 70,000. Welcome to war.
The word “crisis” in this country tends to be overworked these days, yet it’s hard to avoid using it when looking at the fiscal condition of state and local government. Unfunded pension and other liabilities for states and localities now exceed $3 trillion. More than 40 states are facing a combined budget shortfall of $125 billion for fiscal year 2012. Texas faces a projected $27 billion deficit over its coming two-year budget cycle. Labor costs are heavily driving this situation. According to preliminary Bureau of Labor Statistics data, state and local government employees in 2010 on average received a total compensation of $39.60 an hour, compared to the private-sector full-time employee equivalent average of $27.42 an hour. Wages in the public sector were 35 percent higher and benefits were 69 percent higher. Public employees, moreover, enjoy greater security. From late 2007, when the latest recession began, through mid-2010, the private sector shed a net roughly 7 million jobs, while state and local governments added 110,000 jobs. Wisconsin mirrors the larger picture. The state faces a projected $3.6 billion budget gap over the next biennial cycle. And at present, it faces a $58 million shortfall in its Medicaid program even taking into account a $194 million federal contribution.
There is a certain poetic justice here. Wisconsin back in 1959 was the first state to pass legislation mandating collective bargaining in the public sector. Many states followed during the Sixties and after, triggering a revolution in public-sector unionism. Only a dozen states, generally among the least-populated, still bar public-sector bargaining. The year 2009 represented a milestone. For the first time, union members in the public sector outnumbered those in the private sector, 7.9 million to 7.4 million. These figures represented 37.4 percent and 7.2 percent of their respective labor forces, falling somewhat in 2010 to 36.2 percent and 6.9 percent. Government employees, regardless of union density, have a natural incentive to behave politically, for it is through politics that they have obtained and expanded their sinecures. Enlarged government and enlarged union bargaining power go hand in hand. And governors and legislators typically have gone along with union demands, lest they be blamed for service shutdowns.
But as states are facing unsustainable commitments, a growing number of voters have decided that fiscal responsibility requires electing a different breed of governor, the kind willing to take political hits in curtailing organized labor’s power. In New Jersey, Republican Governor Chris Christie, elected in 2009, succeeded last June in persuading a Democratic legislature to pass a wide-ranging emergency fiscal plan over the strenuous objections of public employee union officials. Wisconsin Gov. Scott Walker, for the previous eight years Milwaukee County Executive, is also bent on getting state finances under control. He had won election last November by a 52-to-46 percent margin over Democratic opponent Tom Barrett, knowing that, if victorious, he would make his share of enemies.
And he has. Protestors on Thursday carried signs likening him to Adolf Hitler and Hosni Mubarak, while others, more furtively, issued threats of physical violence against GOP lawmakers. The governor’s fiscal plan, which is almost assured passage in the Republican-dominated General Assembly, would close the looming $3.6 billion two-year budget gap through a variety of measures. Among labor provisions, the plan would require public employees to: 1) contribute 5.8 percent of wages or salary to retirement plans, up from zero percent for most employees; 2) pay for 12.6 percent of their total health care coverage, up from about 6 percent; 3) limit annual pay raises to the increase in the Consumer Price Index, unless approved by voters; 4) forgo collective bargaining rights over benefits and working conditions, though not over wages and salaries; and 5) enter only into single-year contracts. The law also would bar public-sector unions from deducting dues payments from paychecks and would require the unions to undergo annual recertification as a collective bargaining agent.
The public employee austerity plan, which supporters say will save Wisconsin $300 million over the next two years, might seem draconian but in fact is cushioned in key ways. For one thing, it wouldn’t apply to police, firefighters and state troopers. For another, if passed, it would rule out the possibility of layoffs. And finally, the plan would not affect existing contracts. Perhaps the best indicator of the plan’s reasonableness is to put its benefit curbs in the context of the private sector. The average employee retirement contribution in private industry in 2009 represented 7.5 percent of take-home pay, according to the Washington, D.C.-based Employee Benefit Research Institute. That’s well above the proposed 5.8 percent for Wisconsin public employees. And private-sector employees pay on average around 20 percent of their total health care costs, notes the Bureau of Labor Statistics, well above the proposed 12.6 percent for public employees.
Union leaders might not have a persuasive case, but they do have a persuasive ally in President Barack Obama. In a Wednesday sit-down White House interview with Milwaukee NBC affiliate WTMJ-TV, the president, parsing his words somewhat, stated: “Some of what I’ve heard coming out of Wisconsin, where they’re making it harder for public employees to collectively bargain generally, seems like more of an assault on unions. I think everybody’s got to make some adjustments, but I think it’s also important to recognize that public employees make important contributions to our states and our citizens.” The White House is providing more than talk. The president’s political operation, Organizing for America, starting Monday made phone calls, distributed Twitter and Facebook messages, and sent e-mails via group lists, in an effort to build mass support for the unions. This campaign came on the heels of a speech by Democratic National Committee Chairman Timothy Kaine exhorting Wisconsin union leaders.
If the White House is providing encouragement, the state Senate is making headlines – and mayhem. In what has to rank as one of the most bizarre stories in the history of state politics, all 14 Democratic Party members of the Wisconsin Senate fled the state in unison and decamped, temporarily, at the Clock Tower Resort, a hotel and water park just across the state line in Rockford, Illinois. By Friday, the lawmakers left the complex, as their presence would have interfered with a scheduled Chocoholic Frolic. Their whereabouts currently are unknown. What triggered the exodus was the prospect of a vote on the governor’s proposal by the General Assembly and then, presumably, by the Senate. Though Senate Republicans outnumber Democrats by 19-14, they still were one member shy of the state-mandated quorum of 20 to take a vote. Rather than invite defeat, the Democrats, unified in opposition, refused to meet an 11 A.M. Thursday quorum call and simply took off. The Senate adjourned without a debate. Senate Majority Leader Scott Fitzgerald, R-Juneau (Dodge County), requested Capitol police to track the Democratic colleagues down. Gov. Walker termed the mass flight “disrespectful to the hundreds of thousands of public employees who showed up to work today and the millions of taxpayers they represent.”
Public school teachers unions were a major part of the Capitol shutdown. During the course of Thursday, 15 local school districts throughout the state, including Madison, had closed down because so many teachers were attending the rally. Mary Bell, president of the Wisconsin Education Association Council, an affiliate of the National Education Association, said over the weekend that members should report back to work Monday and Tuesday even as they oppose the governor’s proposal.
It wasn’t just teachers jamming the State Capitol Building or standing outside. All manner of union rank and file, most of them sporting logo T-shirts, were part of the scene. Thousands of people continued to occupy the Capitol Building into Thursday night, creating the political equivalent of a mass slumber party. Part of the crowd marched on the governor’s residence. A number of private-sector workers and their representatives joined in. Dave Boucher of United Auto Workers Local 833 (representing Kohler employees in Sheboygan County), with typical hyperventilation, explained his union’s position to the Communist publication Workers World. “It is time for working people to come together, put aside our petty differences and confront the corporate and right-wing assault on our justice, dignity, prosperity, way of life and ultimately, our families,” he said. “This is a fight over who controls and governs our country and its people: corporate and right-wing America, or the multitude of working people.” Not one to miss out on a historical moment, documentary filmmaker Michael Moore (“Bowling for Columbine,” “Fahrenheit 9/11,” “Sicko”) tweeted followers: “Madison is the new Cairo! Wisconsin teachers, nurses, firefighters – shut the state down! All of working America is with u!”
Aside from their deluded sense of popularity and revolutionary possibility, such protestors overlook one overriding fact: The State of Wisconsin is running out of money. Thanks in large measure to outsized union contracts it is rolling up unsustainable debt, imposing potentially crippling burdens on future generations. Gov. Walker is highly reluctant to lay off up to 6,000 state employees. But he would prefer to go that route than raise taxes and risk driving jobs out of the state. Similar showdowns may be brewing in other states with cost-cutting GOP governors such as Indiana’s Mitch Daniels and Ohio’s John Kasich. Political leadership means making tough choices. As the impasse in Wisconsin enters its second week, it’s important to remember that these choices largely have been forced upon Gov. Walker and other officials because public employee unions, for all intents and purposes, can’t deal with the word “no.”