A storm’s a raging in Madison, Wisconsin between responsible government and what the BIG, BULLY Union thinks its public workers are owed. With 14 million Americans out of jobs (9% unemployment) and many more private sector employees suffering pay and benefit cuts, unionized public workers have the audacity to refuse to budge an inch on their demands. News flash unions, the country is in a recession and your wages aren’t off limits from cuts. Facing a $3.6 billion state budget shortfall, Wisconsin Governor Scott Walker wants to reduce state employee benefits and end the ability of some public unions’ collective bargaining rights. Governor Walker is right not to bow to the unions and drag “this on as long as it takes.” For years, unions have gotten outrageous deals, private sector workers only dream of because of their bullying tactics.
It’s shocking President Obama called Governor Walker’s attempt to balance the state’s budget an “an assault” on unions. But upon further examination, we understand why Obama inappropriately came to the defense of unions. In 2008, Unions dumped over $400 million in contributions to Democrats and Obama. Let’s hope they drain down their coffers battling states like Wisconsin, so they have little left to buy off politicians in 2012.
There are 170,000 state employees in Wisconsin. Under Wisconsin’s Budget Repair bill, public workers could not receive salary increases that exceed a cap based on the consumer price index (CPI). In addition, public workers would be required to pay their share of their pension plan, 5.8% of their salary in 2011 which would fund 50% of their pension and pay a modest 12.6% of their healthcare premiums up from the tiny 6% they pay now.
This seems reasonable when you consider for years, private sector workers have been required to pay 20%-40% of their healthcare premiums and contribute to their retirement through 401(k) plans. But over the last twenty years, as Newt Gingrich commented this weekend on Meet the Press, the unions have evolved into a “special class in America” that must be treated exceptionally compared to everyone else. In a cowardly move, 14 Democrat state senators fled the state to obstruct the political process and prevent the Senate from having a quorum to vote on the bill, which has enough Republican votes to pass.
A research paper published in the Journal of Economic Perspectives in 2009 by professors from University of Chicago and Northwestern University’s Kellogg School of Management found state pension funds in all 50 states combined are underfunded by $3.23 trillion. Total state debt including pension liabilities is 4.5 times the value of outstanding state bonds.
Even more shocking, researchers found before the 2008 market collapse, state pensions were severely underfunded, even though the states depicted a rosier outlook in their actuarial reports. The writers note a state pension plan “creates a financial liability for taxpayers” because the state is obligated to pay state employees a fixed amount upon retirement. If the funds are low or zero when workers retire, states have to “raise taxes or cut spending at that time, or default on their obligations to retired employees.”
Ultimately, “taxpayers are on the hook for the shortfalls.” States in the most dire straits of pension underfunding are Ohio, Colorado, Rhode Island, Illinois and Alabama. These states would have to spend 6 to 8 years or more of tax revenue to close their pension gaps accrued by workers. Another paper published in 2010 by the Northwestern professor concludes if states can’t solve their pension liabilities, it is highly probable a federal taxpayer bailout would be required.
Looks like Governor Walker is on the right track and if he wins his battle against Big unions, other governors are sure to follow. With their unyielding demands for more benefits and costly programs like the Jobs Bank (where workers were paid almost 100% of salaries not to work), the United Auto Workers union was the demise of the US auto industry, note GM and Chrysler bailouts.
For some odd reason, union workers think they should have their cake and eat too, in excess. Well, I’m sorry those days are over. The day of reckoning has arrived for unions in Wisconsin and hopefully across the country. Unions are economy drainers and their greedy, shakedown tactics must be stopped. Furthermore, the President of the United States certainly shouldn’t be defending unions or their mobs, which are actually an ASSAULT on American taxpayers and an INSULT to Americans who’ve lost their jobs and those struggling to cling onto the ones they have.
