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14Feb/118

Wisconsin

Posted by WGary

My mother was a pioneer in public employee collective bargaining. When she began, it was illegal for public employees to engage in collective bargaining. Conditions were so bad that any teacher who was the primary support of a family had to have a second job, usually selling shoes or cheap suits. I had classes in grammar school of more than 50 students.

Public employees’ unions went on strike until the Illinois legislature changed the law. I distinctly remember my mother hiding out in hotels to avoid being served with injunctions. From this beginning, public employee unionism grew in Illinois.

Those are the stakes here. Both Democrats and Republicans have traditionally considered the right of employees to organize to be a fundamental human right. During the Cold War, our government financed labor movements in other countries whenever we felt that the right to organize was being suppressed.

The claim in this case is that these actions are necessary because the state is broke. Nonsense.

First of all, if that were the problem, then an immediate solution, like reductions in benefits and freezing of salaries, would be sufficient. The Doyle administration utilized such measures. Public employees have borne the brunt of deficit reduction for nearly a decade.

However, what is proposed is not short term austerity; what is proposed is a permanent elimination of nearly all collective bargaining. This is a radical attack on public employees that has nothing to do with the state’s current financial situation.

The state is hardly “broke.” In the current biennial budget, which is the subject of this so-called budget adjustment, the non-partisan Legislative Fiscal Bureau says that we will finish the year with a surplus. Just today, the fiscal bureau said that the “budget repair” actually reduces the surplus by $13.5 million.

Even if the state were to pay out things that it need not pay out this fiscal year, the shortfall would be $130 million; not a cause for panic in our more than $50 billion budget. In fact, Gov. Walker has proposed refinancing the state’s debt, which would produce $165 million, more than enough to cover any current shortfall.

In the coming biennium, it is projected that we could run a deficit of about $3.5 billion, a substantial amount, but a lot less than the $5.8 billion that we dealt with last biennium, when I was on the Joint Committee on Finance. We balanced that budget without the kind of radical measures that are proposed. One cannot help but conclude that the radical measures are the real goal, not a means to a necessary end.

There are some underlying consequences that should chill every citizen. First, there is the continued impoverishment of the middle class. Why would anyone want to do that? Reducing the buying power of the middle class is what led to the current recession and reducing that buying power further will plunge us deeper into recession, or push us over the edge into major depression. That could make American workers as powerless as the third world workers that corporations have been exploiting as they export our jobs.

Another consequence is to move away from two-party democracy to a one party state. Large corporations were given a green light to take over politics by the U. S. Supreme Court in a case called Citizens United. While the Citizens United case also freed unions from limitations on political contributions, destroying the unions will eliminate that source of revenue from one party, leaving the other with all those corporate funds. We have fought against one-party states all over the world. The cold war was all about Russia and China being one-party states. As countries like Egypt move toward greater freedom, are we moving toward the kind of tyranny that so many of our soldiers died to protect us from?

We are told that public employees get more generous compensation and benefits than private sector employees. Actually, this is not factually supportable. Compensation is between 25% and 30% less than for comparable private sector jobs, depending upon the state. Further, Wisconsin compensates its public employees substantially less than the surrounding states, position by position.

Benefits are also not the great deal that is rumored. When I was first elected to the legislature in 1998, I was surprised to discover that the health insurance plan offered was far inferior to the one I had in the private sector. I had to purchase supplemental insurance to protect myself and my family.

Even the much vaunted pension is very moderate by national standards. Wisconsin has a unique system that is supported primarily (more than 75%) by investment income. And, when that investment income exceeds benchmark expectations, the additional funds are split between benefits and reductions in employers’ premiums in a way that is far more generous to the taxpayers than the systems in other states. Our actuaries and auditors repeatedly tell us that we have the best run employee benefit plan in the nation. We tamper with it at our peril.

Unlike the private sector, we have no “legacy costs.” Legacy costs are unfunded obligations to pay retired employees benefits that are not funded, so that the money has to come from current revenue. There is no such thing in Wisconsin. Every benefit plan that our employees have is 100% fully funded on an actuarially sound basis. ETF, our board of trustees on which I served for a number of years, gets audits and actuarial reports on a frequent basis, just to make sure we don’t fall behind.

This is the most fraught political crisis in Wisconsin in my lifetime. I hope that this provides some perspective on what is going on.

Gary E. Sherman

   

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