In Wisconsin, a battle for America’s soul

Dr. Mark W. Hendrickson's picture

[Editor’s note: A version of this article was first published by the Christian Science Monitor.]

It is hard to overstate what is at stake in the dramatic showdown between Wisconsin’s teachers and their Republican governor and legislature. The political and economic course of our country hinges on how the issue of public-sector unions is resolved, in Wisconsin and elsewhere.

For the sake of our country’s political and economic future, Gov. Scott Walker and his Republican colleagues need to prevail in the current contest with the Wisconsin teachers’ union and their allies.

That isn’t easy for me to say. As an educator, I have great respect for all those (and they are many) in my chosen profession who capably and even brilliantly serve our nation’s youth. The fact is, though, that the status quo is untenable.

The budget crunch isn’t merely a projected crisis some 30 years in the future. Right now, several state and local governments are careening toward fiscal disaster. There are many factors, of course, but a major one is that retirement plans for public-sector workers are spectacularly underfunded, perhaps by as much as $3 trillion nationwide.

Gov. Walker is being cast as the ogre for proposing to avert the onrushing flood of red ink, but the blame properly belongs to his predecessors who made unaffordable and unkeepable promises.

All but the most zealous ideologues will admit that you can’t spend what you don’t have, and even some Wisconsin teachers are now indicating a willingness to help balance the state’s budget by contributing more to their pension and health benefits.

Politically, this battle is the ultimate partisan clash. Unions and the Democratic Party are joined at the hip. Unions collect mandatory dues from their members, then contribute massive financial and human support to the electoral campaigns of their political allies (overwhelmingly Democrats).

Democrat office-holders repay these favors by granting unions generous legislated benefits, both monetary and in the form of rules that strengthen the political power of union officials.

Wisconsin’s Democratic senators took the extraordinary step of fleeing the state in what appears to be a desperate ploy to preserve the flood of union money coming to them, while Republicans seem every bit as hopeful of reducing the flow of tax dollars to their political opponents.

Indeed, it is the use of tax dollars to lobby for more government spending, and thus for more taxes, that is the crux of the problem. Public-sector unionism is the ultimate conflict of interest, because the necessary objective of these unions is to capture control of the very legislatures that vote on their compensation packages.

Even the strongly pro-union Franklin Roosevelt believed that key tactics employed by private-sector unions were inappropriate for workers on the public payroll. In his words, “The process of collective bargaining, as usually understood, cannot be transplanted into the public service” due to “distinct and insurmountable limitations.”

I share FDR’s conviction that, in a government of the people, by the people, and for the people, those who work for the government must be servants of the people.

When public-sector unions threaten to withhold their services unless the taxpayers, through their elected representatives, pay up, it creates a process of political extortion by which the majority of citizens is made subservient to the public-employee minority.

This is the way things work under feudalism or socialism, but is the exact inverse of the proper order in a truly democratic republic.

Some have called the Republican proposals in Wisconsin “union busting.” This is inaccurate. Walker is proposing to reform unions, not to abolish them. He seeks to make the payment of union dues voluntary instead of compulsory.

If teachers believe that what the union leadership is doing is worthwhile, they can continue to support those activities through voluntary contributions. If, on the other hand, Republican teachers would rather not contribute to Democratic candidates, they could follow their conscience and opt out.

In a democratic republic, people should be free from being coerced into supporting candidates and causes to which they are opposed.

What is really at stake in the Wisconsin donnybrook is whether individual liberty or government power has the upper hand in our country. We are witnessing a battle for the soul of the republic.

[Dr. Mark W. Hendrickson is an adjunct faculty member, economist, and fellow for economic and social policy with The Center for Vision & Values (www.VisionAndValues.org) at Grove City (Penn.) College.]

albion
albion's picture
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False premise

"...even some Wisconsin teachers are now indicating a willingness to help balance the state’s budget by contributing more to their pension and health benefits."

Wisconsin public sector workers already contribute 100% of the dollars in their pension fund. How can they contribute more than 100%?

By the way, they earned that money. It IS NOT taxpayer money. It comes directly from the wages of the workers. Shortfalls in the fund have more to do with fund managers playing the market and speculating on risky financial products than anything attributed to waste, fraud or abuse of taxpayer money.

Union dues being funneled to political campaigns is a different issue, and one that should be taken up within the rank and file. If corporations can contribute unlimited funds to political candidates, campaigns and parties, then organized workers ought to be able to do the same, and engage in the great American political "sport" of influence peddling.

Make no mistake, this is a purely ideological battle. Pro-business conservatives hate the government so much, that they are blinded from any telling of the facts in this matter. This is an attack on the middle class, an attack on the wages of workers.

There is a pattern of attacks on this, and other economically sound parts of the economy including Social Security and Medicare. These programs along with the state pension plans save the taxpayer money. They all have something in common, keeping retirees off the welfare rolls.

The Wedge
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This is new, Albion

I have not done research on this so I would like a clarification. Is the pension plan for the state teachers of Wisconsin completely self funded? For example, if a given teacher has a gross salary of $60,000 does their pension fund come from witin that gross salary? I find this hard to believe, but am curious as to which premise is false.

Chris P. Bacon
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Joined: 02/28/2010
Pension Funding Shortfalls.
The Wedge wrote:

I have not done research on this so I would like a clarification. Is the pension plan for the state teachers of Wisconsin completely self funded? For example, if a given teacher has a gross salary of $60,000 does their pension fund come from witin that gross salary? I find this hard to believe, but am curious as to which premise is false.

I've been reading up on that funding business. Evidently some years ago the union worked a deal where instead of a raise given to employees, the state would fund the pension plan with the employee's pre-tax contribution.

Two factors have since contributed to a budget shortfall. They used standard actuarial tables and historical rates-of-return:

1. Older actuarial tables showed the average pension recipient kicking the bucket at age 72. Even taking into consideration the amount of heavy drinking done by the average Wisconsonite, people live quite a bit longer today than 72 years, especially women (the vast majority of teacher pension holders)

2. The historical rate-of-return on pension investments was something like 8.4%. Interest rates have not been anywhere close to that for some time now, resulting in a significant funding shortfall.

These two factors should have been revisited on the last union contract (20/20 hindsight rule) but for whatever reason were not. Result: pension funding shortfall.

R. Butler
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Not sure what the fight is about...

According to the recently issued PEW report on underfunded state pension liabilities, Wisconson is one of the few states that is actually "fully funded" related to projected future payouts. They come in at 99.6 percent funded. By comparison, Georgia comes in at 92% funded (still enough for an excellent grade).

The data in this study is from 2008, but so far I have not seen anything numberwise which would support the contention that Wisconson can no longer afford to meet their future pension obligations.

The study is available at http://www.pewcenteronthestates.org/report_detail.aspx?id=56695

Setting aside the political issue related to the political power of public sector unions, there doesn't seem to be much hard data that supports the financial side of this fight.

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