Is Scott Walker a Pro-Union Mole?
Forget the pitiful polling performance, the shucking of friendly legislators, the phone punk that will live in infamy. Wisconsin Gov. Scott Walker's greatest gift to the left is hidden in plain sight: He managed to turn a consensus position based on straightforward math into what looks like a partisan issue.
Just two weeks ago, the crisis of government employee pensions was an issue for Democrats. If you look closely at states around the country, it still is. New York Gov. Andrew Cuomo, California Gov. Jerry Brown, even Rahmbo himself, all are engaged to varying degrees in open campaigns to roll back compensation packages for government employees. In the Nutmeg State, Gov. Dan Malloy is seeking billion-dollar cuts in public sector compensation spending in his next budget. These Democratic executives and candidates are not alienating their union donors out of limited government principle; they're doing it because they see the logarithmic cascade of pension liability as a threat to public parks, environmental programs, rail transit, and other budget items Democrats like.
All that has now been lost in a fog of Republocrat positioning. You'd think everything was going swimmingly until the meddlesome voters gave Republicans the upper hand in so many states.
It was probably inevitable that the government employee unions would find some Republican villain to be the foil for a George Lakoff-style reframing of the state fiscal crisis -- and what do you know, here's great Lakoff himself to suggest a new conceptual framework in which public employees' unions, by seeking the maximum payout from taxpayers, are "raising deeper issues in which wealthy corporations and individuals play a huge role."
But Walker's angle of approach has allowed this national issue to bog down in sniping between people who think there's a difference between the two parties. I can't blame Walker for trying to use this moment to weaken the political power of government employee unions. (Though it's not totally clear that collective bargaining is the decisive factor in fat government worker contracts or government employee political clout; some of the most crushing burdens -- including California's SB 400 -- were accomplished legislatively rather than at the bargaining table.) But as Arnold Schwarzenegger found out with his failed ballot initiatives of 2005, directly targeting union political power is a great way to get your ass kicked. And Walker seems to have even less finesse than Arnold.
The problem is that once you've moved this national issue into the realm of left-right politics, you open the floodgates of horse pucky. Sure enough, The New York Times now would have us believe most Americans want to increase their own taxes and save less for their own retirements so that so that higher-paid cops, firefighters, and teachers can retire earlier with better pensions and benefits. Public Policy Polling claims Republicans in the Badger State are turning against Walker.
And for a true escape from reality, try this post by Forbes' Rick Ungar, bearing the breathless headline "Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Employee Pensions." In the New Normal of public union politics, "nothing" apparently means "100 percent." Ungar has updated his original post with a retraction (er, clarification) that's almost as long as the original article.
Ungar ran off half-cocked in this manner after half-reading a David Cay Johnston piece that boldly (i.e., wrongly) claims, "Out of every dollar that funds Wisconsin' s pension and health insurance plans for state workers, 100 cents comes from the state workers." The Johnston piece has been getting a lot of attention on the left, so here are some things to bear in mind:
1. Deferred compensation isn't being paid for by state workers because it isn't being paid for at all. Wisconsin has a $77 $63 billion unfunded pension liability.*
2. Unless Wisconsin has some black budget of funds it gets by selling arms to Minnesota, all compensation of public employees -- present and deferred -- is funded by taxpayers.
3. To go from the true statement that the employer pays 100 percent of the benefits package -- part of which is takehome pay and part of which is deferred -- to saying that the employee pays 100 percent is a lie. If you were to count the full 100 percent -- regular pay and all fringe -- as one compensation package, the total size of a public sector worker's compensation would go up substantially, and the $64k/$42k ratio of average annual public-to-private employee compensation would be much wider than it already is.
4. These are not 401(k) or other defined contribution plans, where your payout is based on the performance of the fund. These are defined benefit plans, which means your payout is guaranteed whether the pension plan is funded or not. The taxpayers (who, again, are actually paying that 100 percent of this money -- see point 2) have to kick in to cover the shortfall (see point 1).
5. The total amount it costs your employer to employ you is your total compensation package, and public workers cost a lot more than private sector workers. It is pettifogging to pretend the form of the compensation changes this math.
But this is the kind of nonsense that has been unleashed by the Wisconsin political firestorm. Maybe Walker will become the game changer he clearly hopes to be. (In a real investigative coup, U.S. Snooze's Jamie Elizabeth Stiehm speculates that the governor "must have read Niccolo Machiavelli's classic Renaissance power tract, The Prince.") But right now it looks like the game has changed in favor of political speech and away from a bipartisan consensus about pension costs and discretionary spending that was a generally recognized problem long before we had Scott Walker to kick around. For a return to reality, dig the Sacramento Bee's ed board – hardly a band of Republican zealots – describing a new report from California's Little Hoover Commission:
Many local government workers earn more the day they retire than when they worked. And given earlier retirement ages – 55 for most public employees and 50 for firefighters, police and prison guards – and longer life spans, many retired state workers will actually pick up more retirement checks in their lifetimes than paychecks. Such high costs are unsustainable, economically and politically.
The report predicts that in coming years, cities like San Francisco, San Diego, San Jose and Los Angeles will spend one-third of their operating budgets to finance their pension systems. It's not just citizens who risk loss of vital government services as retirement obligations overwhelm state and local budgets. Public employees, the report says, "will pay a price for inaction – salary freezes, layoffs increased payroll deductions and the threat of a city or county bankruptcy. A pension not tied to a job is worthless."
That's the reality in states around the country. The numbers don't add up, and they will keep on not adding up until somebody – Republican, Democrat or other – succeeds in changing the formula. Math is no respecter of politics.
* Corrected. Thanks to David Cay Johnston, who takes on all comers in the comments. As is the case with such popular phrases as "California's $500 billion pension time bomb" and "America's $3 trillion unfunded pension liability," all pension liability numbers deal with future shortfalls estimated through projections about actuarial tables, market performance, changes in tax policy, future demographics, and related mumbo jumbo. As such they should be viewed only as best guesses or rhetorical gongs and should not be considered numbers that are quantifiable today. Except in a few states (such as California) where pension liabilities have actually begun to eat into discretionary spending, the pension crisis exists mainly in the future.
