One of the most vexing things about watching the coverage of the current imbroglio in Wisconsin is the continued failure of our idiot talking heads to make even a half-hearted attempt to explain why the states are experiencing budget crises. Really, it wouldn't be terribly difficult and it would add the all important context to understanding what is happening here and why.
First, the difficulties being experienced by states are attributable to a decline in revenues due to the severity of the current economic difficulties. States typically rely on a combination of income, property, and sales taxes for their revenues. The severe recession, persistent unemployment, and decline in property values have all resulted in tax collections being extremely depressed over 2009 and 2010. Nearly every state in country, regardless of place on the political spectrum and regardless of whether public employees have collective bargaining rights, has seen a major decline in expected revenue. There is an expectation that 2011 will see a recovery in revenues, but many states will not return to peak revenue collection until several years down the road.
Second, the recession has forced states to spend greater sums of money on things like unemployment insurance and Medicaid coverage for the poor and uninsured. This is sort of the opposite of a virtuous circle -- revenues are down and there is a need to spend money to cushion the economic blow to the unemployed. At the same time, states in order to meet requirements to balance budgets, have had to slash other areas of expenditure, including laying off employees, cutting salaries, furloughing workers for some number of days during the year, all of which contributes to further depressing local economies.
Third -- and again this is something that drives me to distraction -- many state pension funds have become underfunded to significant degrees. This is not -- I repeat not -- due to excessive benefits promised to state workers. It is because of the misfeasance and malfeasance of the investor class on Wall Street, which led to such dismal investment results for pension plans during the period 2000-2008, with the 2008 stock market collapse creating enormous long term difficulties for plans. (A relatively small portion of these funding issues are due to certain states short changing needed contributions in order to make their books look better. An even smaller portion is due to some overpromising to public employees -- usually in the emergency services field -- the group ironically that Governor Walker has spared from attack even though almost all instances of abuse from phony disability pensions to unreasonable overtime accumulation is usually associate with police and fire unions.)
Public employees unions have become scapegoats for the extraordinarily bad economy of the last several years, something which is almost wholly attributable to bad economic management by the Bush Administration and the bad behavior of America's financial elite. This attack is a politically motivated, opportunistic, and highly cynical move by Republican elected officials and their corporate allies who want to seize the opportunity to silence their most formidable opponents. It is, as Krugman notes, all about power:
There’s a bitter irony here. The fiscal crisis in Wisconsin, as in other states, was largely caused by the increasing power of America’s oligarchy. After all, it was superwealthy players, not the general public, who pushed for financial deregulation and thereby set the stage for the economic crisis of 2008-9, a crisis whose aftermath is the main reason for the current budget crunch. And now the political right is trying to exploit that very crisis, using it to remove one of the few remaining checks on oligarchic influence.
A few voices in the mainstream media -- Krugman, Herbert, Dionne, and Meyerson are willing to point this out. But by and large, the corporate media is buying into the notion that teachers making a median salary of $48,000 a year are killing us with their disgusting greed. It's really quite amazing.
(Why, by the way, would any talented young person want to go into teaching at this juncture? Really, to be publicly vilified for the outrageous expectation that you be paid a mediocre salary, get some health benefits and a pension, and not be fired except for just cause is really quite amazing. Better I guess to become an investment banker, be paid in a bad year a bonus that exceeds a teachers annual salary, do nothing positive for the economy, and be lionized as a Galtian god.)
Postscript: One of the most frustrating arguments against public employee unions -- and one not just asserted by right wingers, but many who would like to be seen as moderate or even progressive -- is that since there is no corporate management, conscious of profit, sitting opposite them, public employees will get everything that they ask for, especially from political allies. Is there anything to suggest that there is any historical truth to this? Almost every state in the union requires that its budget be balanced. Politicians who give away the store to public employee unions are going to have to find funds with which to pay for such promises. This is not a minor consideration. Payrolls costs for most states account for roughly 50% of their budgets. Large giveaways to employees are almost certainly going to require tax increases. I can't think of too many politicians from either party who would be anxious to enact tax increases to cover the cost of extravagant pay packages for public employees. The desire to be reelected is a pretty powerful motivating force to manage prudently in such matters.
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