In Wisconsin this past week, Democratic legislators fled the state to deny the quorum necessary for newly elected Republican Gov. Scott Walker to push through laws that scale back public sector workers' rights. These dramatic events have brought significant attention to the already festering issue of public sector workers' pensions and the impact of those pensions on state budget shortfalls.
Gov. Walker's efforts mirror initiatives under way in other states. Ostensibly aimed at confronting Wisconsin's fiscal problems, they are, in reality, the latest salvo in a generation-long attack on unions in particular and ordinary working Americans more broadly. Many explanations account for union decline in America over the past 30-odd years, but a concerted political attack on them is one central cause. In spite of the overall decrease in unionization, public sector unions—those representing teachers, firefighters, sanitation workers, librarians, police and other federal, state and municipal employees—have remained strong. Walker's proposal is clearly targeting this last bastion of robust unionism in the United States.
Walker claims he must trim public employees' benefits to close a dire fiscal shortfall in his state. But his own state agency for assessing budgetary matters, the Wisconsin Legislative Fiscal Bureau, says that the tax cuts and other giveaways to favored constituencies that Walker supported are primarily responsible for this year's projected shortfall. (A much larger deficit does loom for next year.)
Nationally, there is no clear relationship between the bargaining power of state workers and the extent of state deficits. Some states with strong public-sector rights, like California, have enormous deficits. But other states with extensive workers' rights, like Massachusetts, have relatively small deficits. And some states that prohibit collective bargaining by public employees, like North Carolina and Nevada, have relatively large deficits.
Walker's plan to require unions to recertify themselves every year is intended, quite obviously, to break the unions, not to directly address fiscal problems.
The biggest factors contributing to the explosion in federal deficits in the past few years have been the Bush tax cuts, the wars in Iraq and Afghanistan, and the recession of 2007–2009, itself brought about by the bursting of the housing bubble. The major beneficiaries of these three drivers of deficits—people making more than $250,000 a year, businesses profiting off the military-industrial complex, and the financial sector—have all continued to make out like bandits with the full support of their faithful servants in the Republican Party.
Our recent economic problems have, of course, had real and severe impacts on states. With the exhaustion of stimulus funds, federal aid to the states has been reduced dramatically, exacerbated by Republicans' staunch refusal to throw states a lifeline. Because most states have to balance their budgets, and because the recession led to a drastic reduction in tax revenues, they have had to cut back on basic services. In North Carolina, not atypically, those cutbacks have and will continue to fall overwhelmingly on health and education and, of course, will disproportionately affect the less well-off. Most states, North Carolina included, refuse to consider raising income taxes.
The economic crisis (and the politics of giving a free pass to those most responsible) comes with a "look over there" fake-out to distract public attention from the real sources of our current problems. The supposed crisis in public sector pension funds is one such fake-out—a ripe new opportunity for the GOP to press its attack against the unions.
Rather than confront the most significant sources of deficits, they're manufacturing a fake crisis to prosecute their class war by new means. According to the most reliable estimates, the total shortfall of all state pension obligations is now roughly $1 trillion, which is largely due to the dip in the stock market over the past few years. That's the shortfall for expected payments over the coming 30-year payback window, representing perhaps 2 percent of total expected state revenues during that time. The burden is both manageable and likely to abate considerably if the economy returns to more normal levels of employment and gross output in the coming years.
It's worth remembering, too, that the wages and benefits union workers earn affect the wages and benefits of similarly employed nonunion workers. Contrary to standard anti-public sector propaganda, when one adjusts for education levels, public sector workers don't make more money than similarly situated private sector workers. However, their successful efforts to negotiate for themselves decent wages, benefits and retirement packages do help set the bar for comparable private sector workers. In other words, it's not only public sector workers whose wages and benefits will be adversely affected by these intended rollbacks; low- and middle-income workers will also pay the price.
Particularly since 9/11, we've heard incessantly about the need for "shared sacrifice." But that's a hollow cry. The direct burden of fighting our wars has fallen overwhelmingly on less well-off and disproportionately on minority Americans. The indirect burden, especially since 2007, has fallen to middle- and lower-income Americans, millions of whom have faced foreclosure, medically induced personal bankruptcy and growing pressures of all kinds on their already stagnant standards of living, while the rich have continued to live in the manner to which they've become accustomed.
A recent New York Times article on the nationwide attack on public sector unions noted that the Republicans are opposed to a "squalid deal in which public sector unions spend generously to elect allies to office and then those allies lavish generous wages and benefits on union members."
As opposed to the "squalid" deal in which corporations spend billions on campaign contributions and lobbying and, in return, get perks like far-reaching deregulation, enormous tax breaks and a multitrillion-dollar bank bailout.
Democrats have been party to the latter squalid deal. But only the Republicans en masse have been so bracing in their hypocrisy as to bitterly oppose the trade-off that begets decent wages and benefits for millions of workers—while eagerly consummating the one that yields record bonuses and profits for Wall Street firms.
In a world in which shared sacrifice were more than empty sloganeering, asking public sector unions to do their "fair share" to deal with state financial burdens might be reasonable. But that's not the world we're living in. In the America of 2011, Republican leaders like Walker are playing a thoroughly dishonest game—whipping up a frenzy about deficits of which their policies are a primary cause, and then pointing fingers at their favorite demons, unions among them, all while continuing to serve the interests of the already best-off. Walker isn't going after public sector unions because he's worried about deficits. He's going after them because they represent among the few remaining obstacles in the Republicans' prosecution of a class war that has already achieved great "success," but is never enough.