Wednesday, June 6, 2012

Walker’s Rebellion


Wisconsin Governor Scott Walker won his recall election by nine points.  He carried most of the state except some precincts in Madison and Milwaukee.

That’s good news for conservatives and a message to government agencies.

Among the take-away messages:
  • People are recognizing that public sector benefit packages are not sustainable.
  • Unions can no longer run the table by buying elections.  PAC money is available to fight back.
  • Recall efforts to hijack the process don’t always work.  (We needed that after Russell Pierce was booted out of the Arizona State Senate.)
  • Democrats at the federal level are shying away from the public pension debate.  Obama doesn’t want to touch it.
  • Rahm Emanuel is coming down hard on Chicago Teachers, telling them they’ll have to work longer hours and trim their expectations when it comes to pensions.
But we have all come late to the party.  The Tea Party was first to tell us this spending can’t go on.  To have Illinois Governor Pat Quinn sound the alarm is startling news, but far too late to do much about it.  It is a train wreck.  Government agencies have not planned for the payouts.  You need to set money aside in interest-bearing accounts to cover the costs over the years.

Of course, the fallback is that the taxpayers are required to make up the difference.  And that is a heavy burden.

What is needed is to convert these pensions to IRAs, just like the private sector did 30 years ago.  Unless you were a union industry like autos.  Not coincidentally, those industries are having the same trouble as public unions; not enough money to pay for what they promised their employees. 

Obama bailed out GM, but doesn’t have the money or the political will to bail them all out.

We shall see what all this means in the future.  Walker may have stopped the bleeding, but undoing the Gordian Knot is a much more complicated matter.

On the national level, Obama is going to have to do some dancing during the campaign while Romney is in the catbird seat.  The middle class Obama talks about is really public employees with good paying jobs and union protection.  Andy Stern of the SEIU has stopped calling at the White House because he’s bled the turnip dry and only reminds us of the source of the problem.  Obama is on record pumping stimulus money into state budgets and school districts in 2009 and 2010, a strategy that only made matters worse and delayed the inevitable.

In short, his solution didn’t work. If Romney dares to talk about it and offers a solution, he can gain some votes among moderates and blue dogs.  But if Mitt just swallows his tongue to avoid controversy…well, then he gets what he deserves.

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