Should North Dakota and Nebraska residents be lying awake at night, worrying about whether the federal budget crisis will mean less money flowing to states with crushing debt loads? States are just as concerned about the annual yuletide federal budget battle as you are, because in the Obama economy we share and share alike.
If you live in a state like Illinois or California, you know what public employees can do to state and local budgets when lawmakers seek to ingratiate themselves with unions. Civil servants make your taxes go up.
As much as taxpayers rely on teachers, police, firefighters, and other public employees, government has made them something to resent. Pension debt in states offering more than they can afford to their government workers could pave the way for new laws permitting states to go bankrupt. Meanwhile, public officials in Washington continue to demand higher salaries for public employees that they know are not sustainable. Illinois’ recent retroactive income tax hike was in large part forced by pension debt, something the state legislature has still failed to address in any meaningful fashion, despite accolades for whatever short-term incremental fixes lawmakers manage to agree on.
How much do taxpayers know about public employee compensation? Do they understand that teachers in many places earn salaries far in excess of what they do? Do private sector workers know that many public employees continue to make close to, or even more in retirement than they earned while working, given generous provisions for post-retirement cost of living adjustments (COLAs)? 401(k)s don’t come with COLAs. The outrage that has met suggestions that public workers survive on the same retirement benefits the rest of us dutifully contribute to has effectively silenced most attempts at the kind of pension reform that will make a difference.
The Obama administration has gone out of its way to resurrect the myth of the neglected public servant. The president and his Education Secretary, Arne Duncan, hail from Illinois and should know full well just how highly teachers and other government employees can be compensated when lawmakers seek the support of big labor.
At issue is whether unions for government employees should be able to deny services to taxpayers that have already been budgeted and paid for. Can government afford to hand control of public employees to unions that exist to further themselves, not the public interest, and that will demand ever higher salaries and benefits because it is the only way they can survive?
Barack Obama’s Illinois roots are showing. How to foot the bill to pay cradle to the grave support to the state’s public sector workers is a dilemma without a political solution, even in the face of fiscal catastrophe. The president is haranguing Washington lawmakers to recreate Illinois’ problem at the federal level by doling out new state bailouts, telling us that “When states struggle, it’s up to Congress to step in and help out.”¹
Why is it that no matter how much our government spends, and no matter what we are promised in return, things never get any better? Democratic stronghold Illinois could be over $8 billion in the hole next year despite a massive, retroactive tax increase (see: Illinois Raises Income Tax, Then Hikes Benefits).
When did dependence become an American value? From the deterioration of Social Security to the crisis over public sector pensions, Democrats and their special interest supporters are warning constituents that their retirements are in jeopardy while claiming that there is an implicit guarantee from government to provide.
An ad hitting Illinois’ airwaves begs taxpayers to not let politicians cut public employee pensions. Accompanied by mournful piano notes, public servants lament the possibility of lost retirements described as “modest.” The ad tells us that most of these employees are ineligible for Social Security, and that the problem with public employee pensions is caused by politicians not making promised payments.
Wisconsin Governor Scott Walker forced states nationwide to consider the cost of union control of their public sector workforces. The outrage from Wisconsin public employees over a modest increase in benefit contributions mocks private sector workers, who pick up the tab for generous public pension and health care benefits while pondering the fate of their own recession-damaged 401(k)s.
Politicians can be masters at using hot-button events to create a dialogue that suits the needs of the moment. Plans for a Ground Zero mosque became a discussion of religious freedom instead of a condemnation of unpardonably bad judgment. The Tucson, Arizona shootings led to partisan pleas to tone down political rhetoric as power in Washington shifted and the GOP took control of the House.