What started in Wisconsin is spreading to the rest of the country. The New York Times reports on similar plans to cut state budgets in Ohio, Pennsylvania, Indiana, and Tennessee. The Times also highlights the rhetoric and the reaction that are sparking the protests. Governor Walker of Wisconsin said “he hoped that by ‘pushing the envelope’ and setting an aggressive example, Wisconsin might inspire more states to curb the power of unions.” This may ultimately be an admirable goal. The labor market is changing, and unions that want to hold on to systems with amazing benefits and job security without also facing merit evaluations are wrong headed. That system was designed to protect workers in an economy where labor was just a commodity with near unlimited supply and we feared the results of letting workers compete on the price of their services. America is becoming a nation of professionals, and professionalization requires modernization of the way we think about and manage labor.
Unfortunately, that’s not what’s happening in these states. Governors, especially Republican governors, are using state budget deficits to present state employees with a Hobson’s choice: diminish the bargaining power of unions of state employees or allow the state government to be insolvent. The logic goes like this: the state is facing a huge deficit, that deficit is caused by the pay scales and pensions of state employees, unions won’t allow state employees to take necessary pay and benefits cuts, so QED, we need to eliminate or weaken the bargaining power of the unions.
Let’s break this down one step at a time. “The state is facing a huge deficit.” True. Wisconsin and other states are facing huge budget deficits. States, unlike the federal government (arguably), can’t borrow their way out of that problem. States need generally to balance budgets, so deficits represent the need for real change in the way the budget is currently structured.
“The deficit is caused by the pay scales and pensions of state employees.” Though an extreme statement, I’m willing to go with this one to a point. In California, for example, “the state’s annual retirement costs for public workers have risen to about $6 billion a year, from $1 billion in 1990 and $2 billion in 2000.” Government employees, taken as a whole group which is admittedly a questionable way to do this analysis, make more on average than those working in the private sector, and generally have more substantial health benefits and retirement plans.
“Unions won’t allow state employees to take necessary pay and benefits cuts.” Obviously, it’s the job of a union to make sure it’s members end up with the best pay and benefits possible. It’s also the job of a union to make sure as many of its members as possible get to keep their jobs. So, when states are facing serious budget shortfalls, unions need to think realistically about balancing the competing interests of holding on the current concessions on pay and benefits, and reducing compensation to ensure more employees can continue working. Unions are doing this already. Unions around the country are taking pay-cuts, furloughs, benefit cuts, and other sacrifices to prevent lay-offs. To the extent that unions have been allowed to negotiate around these issues, they have been willing partners in accepting changes to ensure the long term stability and viability of state governments. Even police and fire fighters, who have been exempted from the plans in Wisconsin to avoid the political consequences, are disagreeing with their own exemption and with the plan to reduce the power of other public employee unions. These groups want to be at the bargaining table.
And this is where the governor’s argument really goes off the deep end. “We need to eliminate or weaken the bargaining power of the unions.” Because the unions want to negotiate, and because negotiation necessarily means that both sides will have to give concessions on certain priorities, the response is simply to not negotiate. “The Democrats have offered to concede on the money issues if unions can keep collective bargaining rights, but Walker on Sunday said ‘no.’” Walker then went on to chastise the Democrats, adding “Democracy means you show up and participate.” The unions are trying to participate, and he is simply not letting them. Governors are using the budget crisis and the economic downturn as an excuse to make drastic changes unilaterally, which would never be considered legal under less extreme circumstances.
What makes this action particularly disconcerting is not simply that it’s happening, but the priorities these governors are trying to protect. Republican governors are approaching budget deficits as if there is one clear solution to the problem; cut spending. In fact, a budget deficit is a difference between the amount of money a government takes in in revenue and the amount that it spends on government expenditures. So, that difference can be addressed in two ways, and in extreme cases like we’re seeing right now, necessarily need to be addressed from both. First, spending can be cut to lower government expenditures. Second, and ignored by many politicians, taxes can be raises to increase government revenues. Republican governors are talking about sacrifice and austerity, but they’re really only asking for sacrifice from a segment of their populations. Programs and services are being cut that benefit the poor and middle class workers, while the wealthy are not being asked to give up anything.
Asking for tax increases is understandably politically risky, and requires real leadership and honesty. I have a suggestion for where that leadership could originate: the Obama administration. Obama has pointed out that the situation in Wisconsin looks more like an attack on unions than any real progress toward solving the budget crisis, but his talk is not backed up by action. His own budget asks for sacrifices from the poor and middle classes, without taking steps toward the tax increases on wealthy Americans that could more easily put the budget back on track. After just allowing the Bush tax cuts that put the federal budget into its dire position to be extended, Obama has turned around and asked federal employees (exempting the military, sound familiar?) to accept a pay freeze. He has accepted the line that middle class workers should be responsible for fixing a budget that continues hand outs to the wealthy.
At both the state and federal levels, these budget negotiations are going to continue into the foreseeable future and are very likely to be key to the 2012 election cycle. Republican presidential hopeful Chris Christie has asserted that we are going to have to be honest that Social Security can only be saved by raising the retirement age. FAIR Blog takes Christie and Dana Milbank of the Washington Post to town for accepting as “the ugly truth” a plan that asks working people to make all the sacrifices, when in fact raising the cap on Social Security eligible income would be a much simpler solution to paying for the retirement of Baby Boomers.
As we move forward as a country trying to solve state and national deficit crises, let’s keep in mind that there are two sides to every deficit. Solving deficits from the expenditure side puts the sacrifice on the backs of the poor and middle class. Raising taxes accomplishes the same goal without the same consequences. Progressives, and particularly progressives in power, need to stop accepting assumptions that mask the revenue side of the story. Labor is fundamental part of the American economy, and keeping public employees in their jobs is central to keeping the economy moving. Let’s not give up on working people in favor of continuing to pad the pockets of the rich and influential.