Governor Palin on the Issues: Public Employee Unions and Fiscal Responsibility

By now everyone is aware of the spectacle in Wisconsin where Democrat politicians, fleebaggers, fled the state in order to avoid a quorum in the Wisconsin State Senate.  At first the reason given for such cowardice was that Governor Scott Walker’s proposal that Wisconsin’s pampered public employee unions should, gasp, contribute a small amount to their pension and health care benefits was somehow unfair.  Really? Let’s take a look:

Mr. Walker’s very modest proposal would take away the ability of most government employees to collectively bargain for benefits. They could still bargain for higher wages, but future wage increases would be capped at the federal Consumer Price Index, unless otherwise specified by a voter referendum. The bill would also require union members to contribute 5.8% of salary toward their pensions and chip in 12.6% of the cost of their health insurance premiums.

The PEUs attempt to paint this reasonable proposal as egregious and unfair is ultimately self-defeating as it has served to illuminate just how over-the-top generous their benefits are.  Even far left Democrats Joe Klein and Roland Martin didn’t think it was such a great idea for Wisconsin union members to bring attention to the lavish benefits packages this “privileged class” of bureaucrats have been receiving.  As the Wall Street Journal further noted, the vast majority of the taxpayers who provide these unaffordable riches pay significantly more for their own benefits, if indeed they are lucky enough to have any benefits at all:

If those numbers don’t sound outrageous, you probably work in the private economy. The comparable nationwide employee health-care contribution is 20% for private industry, according to the Bureau of Labor Statistics. The average employee contribution from take-home pay for retirement was 7.5% in 2009, according to the Employee Benefits Research Institute.

Not only do public employee unions maintain that it’s their God given right to have 100% of their pensions funded by taxpayers, but they also insist they are entitled to defined benefit pension plans.  Given the demographic realities of early 21st century America, defined benefit plans, which are really nothing more than legal Ponzi schemes, are unsustainable (see Social Security).   Indeed for most private sector employees, defined benefit pension plans were long ago replaced by defined contribution plans.  Defined contribution plans, such as the 401(k), are subject to risks such as inevitable market fluctuations and, equally important, the inability of retirees to accurately predict their life span.

The taxpayer financed defined benefit plans to which public employee unions think they’re entitled are a mechanism to transfer these risks to the unsuspecting taxpayer.  As long as they have reached their length of service requirement, members of public employee unions can retire, often quite early.  We’ve all read about public employees who are able to retire at age 50, in many cases even earlier, with 90% or more of their pay and taxpayer-provided health care for life.

They can do this, essentially, because they have no fear of burning through their retirement nest eggs before they die, regardless of how long they live or how the market performs.  Unlike the rest of us who have to worry about such matters, they have been able to transfer these risks to the taxpayer who, ironically, not only has to assume this risk for his or her retirement, but for the retirement of public employees as well. The longer the retired public employee lives, the more the taxpayer is on the hook.  Fortunately, if belatedly, states are now beginning to look at converting pensions for new employees to defined contribution plans.

As noted above, whining about their lavish health care and pension plans is a political loser, and this is why they have tacitly accepted some financial responsibility, however little, for their pension and health care benefits, and wisely changed the subject to collective bargaining.  Collective bargaining is a subject about which most voters know little, and for this reason it makes sense for the PEUs to shift gears and highlight this.  Though this may be a smart move politically, there is no divine right to collectively bargain for public employees.  In fact in many states public employees don’t have this right. The fact that both employment opportunities and the state’s fiscal situation is superior in states without collective bargaining for public employees is no coincidence.  As many have noted in the past several days, even union folk hero FDR rejected the concept of collective bargaining for public sector employees.

FDR, to his credit, understood that such an arrangement was intrinsically corrupt if extended to government employees. In the private sector, on the other hand, unionization and collective bargaining made some sense.   This was especially so in the days when the work force was less mobile, and workers were often at the mercy of the local factory since, for many, it was the only employer in town.  Individual workers could work for the meager wages the business offered, or not work at all.  Unions arose as a counter to this, allowing workers to level the playing field.  By organizing, workers were able to create a bilateral monopoly: a monopoly of workers selling their labor to a monopsony of buyers.  Two sides with opposite goals arrayed against each other.

Thus, however, is hardly the case with public sector employees.  They are not sitting across the table from evil, greedy, cigar-chomping capitalists out to exploit them (in their minds).  Effectively they sit on both sides of the table as the Wall Street Journal notes:

Public unions have a monopoly position that gives them undue bargaining power. Their campaign cash—collected via mandatory dues—also helps to elect the politicians who are then supposed to represent taxpayers in negotiations with those same unions. The unions sit, in effect, on both sides of the bargaining table.

There is little difference between Democrat politicians and the public employee unions who own them.  Democrats bestow princely salaries and benefits on these unions in return for enormous amounts of campaign cash.  This is facilitated in Wisconsin and other blue states by the automatic payroll deduction of union dues.  The government collects the dues for the union, then the union turns around and sends much of the money back to the Democrat politicians who set up this corrupt arrangement in order to perpetuate it.  This is nothing short of state sanctioned bribery, albeit the funding for the bribery is provided by the one entity who has no seat at the table: the lowly taxpayer. Obama, for his part, has made it clear that he’s on the side of the corruption and not the side of the taxpayers who are paying for it.  This is no surprise, of course, as this is how business is done in Chicago.

As important as this cozy relationship is for Democrats, the aforementioned automatic payroll deduction, along with a couple other reforms are, in my opinion, the real reason the Left is so exorcised over Walker’s modest and necessary plan.  Under Walker’s proposal, which has already passed the Wisconsin state Assembly 51-17, the state would no longer collect union dues via payroll deduction.  Further, unions would have to be recertified each year by a secret ballot of their members and, finally, union membership would henceforth be voluntary with the decision on whether or not to join the union up to the individual worker.  How granting workers rights they heretofore did not have can be characterized by Obama as an “assault” on workers is something I have yet to hear our President explain.  This is not surprising since Obama’s position is ludicrous on its face, and I’d like to think that even he is bright enough to understand that his position is as purposely deceitful as it is untenable.

The above mentioned reforms, though hardly revolutionary, terrify the Left.  For too long Democrats have treated public employee union dues as a personal piggy bank from which to collect virtually unlimited funds with which to finance their political ambitions.  In non-right-to-work states like Wisconsin, union membership is for all intents and purposes compulsory, effectively resulting in a union shop arrangement in which all members, regardless of their political persuasion, are effectively forced to fund Democrat campaigns.  This practice was supposedly outlawed in Communications Workers of America v. Beck in 1988 but, not surprisingly, the self-anointed party of the “working man” has done everything possible to ensure the working man is unaware of his Beck rights or, when possible, have chosen to simply ignore the law entirely (similar to Obama’s recent pronouncement on DOMA).

Notwithstanding the ruminations by union thugs like Richard Trumka, not all union members are Democrats.  Far from it.  Governor Palin has often spoken with pride of her own past union membership and that of members of her family, and none of them support the socialist agenda of Barack Obama and union thugs like Trumka and Andy Stern.  And neither do millions of working people across the country.  And yet in many of the declining, Democrat-run states which don’t support a worker’s right to work without being forced to join a union, workers must support that agenda whether they are in favor of it or not.

By eliminating the automatic payroll deduction of union dues and making membership voluntary, there can be no doubt that the flow of cash to Democrat politicians will diminish, the only question is by how much.  When faced with a real choice, many workers will opt to keep the money they sweated  for rather than use it to fund the jet-setting lifestyles of union bosses or political policies they oppose.  To be sure, the flow of cash won’t dry up entirely as there are still plenty of morons in unions who drink the Obama Kool-aid, such as these folks, who simply are incapable of understanding that the socialist agenda their union dues support will necessarily result in lower current and future living standards.

But that aside, the flow of cash to Democrats will slow significantly, and this is what they most fear about Scott Walker’s proposal.  Especially if, as expected, other Governors across the nation enact similar measures.  Less public employee union members mean less cash to Democrat politicians…and less power and influence for union bosses.

In a post last year, I made the point that one of Obama’s primary motivations in forcing Obamacare on an unwilling American public was to create more federal employees, most if not all of whom would become members of public employee unions.  Obamacare had nothing to do with improving America’s health care system, it was simply a means for Obama to increase the number of government employees whom he could fleece for campaign cash through their union dues.  Obama justified his recent foray into Wisconsin state politics as necessary to defend the working man from the evil Governor.  This, as is the case with most of Obama’s musings, is nonsense.  Obama’s only interest in Wisconsin is to defend the right of Democrats to confiscate cash from unsuspecting working people and to do whatever he could to dissuade other states from stopping this sham.   Indeed the perpetuation of this corrupt arrangement was and is far more important to Obama than performing the necessary duties of the office to which he was elected.

The dire fiscal circumstances faced by all levels of government, along with energy, are the two most important issues of our time, both from a national security as well as an economic standpoint.  If these issues are not addressed in a realistic manner, and soon, America will no longer be the land of opportunity we’ve all grown up in.  On both of these crucial issues, the difference between Obama and Governor Palin could not be more clear.

With regard to energy Obama’s plan, if you can call it that, is to entice friendly CEOs to waste billions of dollars on his “green energy” fantasies by handing out taxpayer provided subsidies so that they’ll produce non-economic “energy alternatives” that have no chance of surviving in the market unless those subsidies are maintained.  The Chevy Volt and ethanol boondoggle are only two of many examples that come immediately to mind.  Governor Palin, on the other hand,  has long advocated an “all-of-the-above” approach to energy.  From her time as Governor and oil and gas regulator until the present, she has taken the sober view that we can’t ignore proven energy resources and hope that technologies yet to be invented will suddenly be available and we’ll all live happily ever after in a land of rainbows, unicorns, and white rabbits.  This is delusional, at best. At worst, suicidal.  Had we been developing our resources all along, as Governor Palin has advocated, the events of today in Lybia Libya would be of far less concern to us than they are.

With regard to the fiscal mess the states find themselves in, Obama’s only goal is to exploit the situation for his own political gain.  The President wants the states, particularly the blue states who are in the most fiscal trouble, to continue the status quo with public employee unions.  His policy recommendation is essentially “keep wasting money you don’t have”.   If they take Obama’s advice and go bankrupt, they needn’t worry, as Obama will solve all their problems by tossing another bailout their way.

This is wrong on so many levels, not the least of which is the fact that the federal government is broke.  Obama’s fiscal policies have seen to that.  Where, one wonders, will Obama get the additional money for his next bailout?  Will he borrow it and drive the federal government deeper into debt?  Will he raise tax rates on those few who are still producing, further slowing the economy?  Will he direct Bernanke to print it via a QE3?  Who knows.  What we do know, of course, is there’s no free lunch, and every dollar the public sector spends is one less dollar available for the private sector. You know, the sector that creates wealth.

Equally important is the fact that another bailout will have the unintended consequence of giving irresponsible state politicians an excuse to further delay the implementation of responsible fiscal policies which are crucial to the fiscal health of their states as well as the nation as a whole. The longer these needed reforms are put off, the more drastic they will have to be.  Social Security comes to mind.  States are reaching a tipping point, and if they don’t act soon, it may well be too late (see Greece).

While Obama exacerbates state’s fiscal problems, Governor Palin has actually taken the tough but necessary steps to address them before anyone ever heard of Scott Walker or, for that matter, Chris Christie.  As Governor of Alaska, she actually cut year-over-year spending.  With regard to the important issue of unsustainable public employee pensions, she boldly enacted much needed reforms to Alaska’s Public Employee Retirement System (PERS) and Teacher’s Retirement System (TRS). In so doing, she ratcheted down taxpayer exposure by using a tiered system for current employees that allots their pensions according to seniority. In addition, she enacted a totally new system for those who are newly employed while honoring past commitments which she was legally bound to do.  She further discussed the necessity of these changes in a speech in Sacramento last fall and, most recently, at her Q&A in front of the Long Island Association.  Reining in public employee unions is not only a matter of fiscal necessity, but an issue of basic fairness to those taxpayers who foot the bill for the wild promises made by irresponsible politicians.

On the two most salient issues of our time, fiscal responsibility and energy independence, Governor Palin stands in stark contrast to Obama.  While the President either ignores or exacerbates the problems in these areas, Governor Palin has a history of proposing and implementing actual solutions to them.  Political opportunists, like Obama, obfuscate and demogogue problems, hoping they remain hidden long enough so they don’t have to deal with them, hoping their chickens don’t come home to roost until after they leave office.

True visionary leaders anticipate and attempt to deal with problems before they become acute, regardless of political considerations. If last fall’s mid-term blowout is any indication, voters seem increasingly likely to reward politicians who tell them the truth as opposed to telling them (voters) what they think they want to hear.  This will inure to Governor Palin’s benefit, and Obama’s detriment, in 2012 should she run for President.

 



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