Articles

Obama's Badger State Blues

February 23, 2011

During the past eight days, thousands of Wisconsin teachers walked out of classrooms, shutting down schools. Tens of thousands of public employees staged an apparent wildcat strike, flooding Wisconsin's state capital in a round-the-clock protest. And Democratic legislators engaged in a most undemocratic action, fleeing Wisconsin to deny the state Senate the supermajority required for a quorum.

They did this to oppose Wisconsin Gov. Scott Walker's efforts to require public employees to increase contributions to their retirement and health-insurance plans, and to rein in their collective-bargaining power to negotiate for higher benefits.

President Barack Obama has joined labor's attacks, criticizing Mr. Walker's proposals as "an assault on unions." According to news reports, Mr. Obama's personal political machine, Organizing for America, was thrust into the battle, providing buses to transport striking government workers to the protests, mobilizing phone banks, and rallying protesters from nearby states.

Why is the president trying to bully the Wisconsin governor? After all, Arizona, Utah, Arkansas, Louisiana, Mississippi, Alabama and West Virginia are among the states to explicitly prohibit collective bargaining for public employees, which is far beyond what Mr. Walker is seeking. The answer is found in four digits: 2012.

Unlike those states, Wisconsin is a 2012 battleground. Gerald McEntee, president of the American Federation of State, County and Municipal Employees, told a reporter from this newspaper last week that a union defeat in Wisconsin "can put [Mr. Obama] in some danger" of losing the next election. Labor spent $400 million to elect Mr. Obama in 2008: Mr. McEntee was sending a not-so-subtle message that unions would be unable to spend so generously on his behalf in 2012 if they continue hemorrhaging members and dues money.

And hemorrhage they have. According to the Bureau of Labor Statistics (BLS), last year alone 612,000 U.S. workers dropped their union memberships, each representing as much as $500 in lost dues. While labor is still powerful, its decline has been precipitous among private- sector workers. According to the BLS, just 6.9% of private-sector workers (7.1 million) are unionized, while 36.2% of public- sector workers (7.6 million) are. And the number of public-sector union members is rising.

The growth of public- employee unions has paid off handsomely for some. The BLS reports the average annual wage for a state-government employee is now $48,742, but $45,155 for a worker in the private sector. What's more, the Bureau says the cost of benefits for state and local government workers has risen 50% more than those for private-sector employees since 2001.

This matters to taxpayers. Public-employee unions push to increase their numbers and get more benefits by expanding government's cost and size. This often puts them at odds with the citizens who pay the bills.

Union demands have helped produce an estimated $3.5 trillion in unfunded liabilities for state and local government pension and health-care plans. They've also led to personnel practices that tie the hands of local elected officials, often resulting in perverse outcomes. For example, union insistence on "Last In, First Out" often means the best and brightest teachers are let go when districts downsize or schools close.

Wisconsin's governor knows this firsthand. In 2003, during his first term as Milwaukee county executive, Mr. Walker faced a huge budget deficit. He could have either raised already astronomical property taxes or found savings in personnel costs, the biggest part of his budget. Collective bargaining tied his hands, and once unions refused concessions his only option was to fire people. He reduced the county government's work force by 20%.

Seared by this episode, Mr. Walker now wants statewide local governments and school districts to have the management tools to avoid layoffs. Hence his proposals to limit collective-bargaining rights for benefits and to require public approval of pay raises greater than inflation.

Fortunately for Mr. Walker and others contemplating his course, there's a lesson in the experience of Indiana Gov. Mitch Daniels. Upon entering office in 2005, Mr. Daniels signed an executive order ending collective bargaining for state workers. This and other controversial actions caused his approval ratings to fall into the 30% range.

But by re-election time, Mr. Daniels's decisions had paid off. The state's finances were in good shape and Indiana's economy was doing better than its neighbors'. While Mr. Obama was carrying the state in 2008, Mr. Daniels won a second term with 58%, proving that the right policies are often the right politics.

Events in Wisconsin have offered a vivid contrast between two chief executives. One (Mr. Walker) is taking meaningful steps to achieve fiscal balance. The other (Mr. Obama) is encouraging public employees to violate their contracts while his policies cause record deficits and reckless spending.

Let's hope the differences between the two won't be lost on Badger State residents or the rest of America.

This article originally appeared on WSJ.com on Wednesday, February 23, 2011.

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