The Fiscal Crises: Doing vs. Talking

Right From the Start

Put your own house in order.” Anonymous

Most of us growing up heard this telling phrase from our parents when we sought to criticize others. For those of you forced to endure an education in the Portland Public School system, it simply means that you should solve your own problems before telling others how to solve theirs.

It’s advice that President Obama should have observed instead of sounding off about the attempts of Gov. Scott Walker to deal with Wisconsin’s fiscal mess. While Obama in his State of the Union speech and his “earnest” press conferences since last November’s elections talks a good game – he always does – his budget fell dramatically short of his rhetoric – it always does. Having already added $5 Trillion do the national debt, Obama proposed a budget that will add another $7 Trillion over the next ten years.

Wisconsin faces a $137 Million shortfall for the remaining four months of its current fiscal biennium and a $3.6 Billion shortfall for the next biennium. A substantial part of that fiscal mess is attributable to the public employee unions – wages in excess of private sector equivalencies, gold-plated pension plans for which public employees pay practically nothing, and top-of-the-line health insurance for which public employees pay practically nothing. Sound familiar? It should. Oregon’s budgetary mess is almost identical.

Like Oregon, the public employees unions dominate the Democrat party that relies on the bottomless purse of mandatory union dues collected free by the state and transmitted to the public employee unions for all of its political purposes. Like Oregon, the Democrat’s solution to last biennium’s fiscal crises in Wisconsin was to raise taxes and continue spending like there was no tomorrow.

But that is where the similarities end. Wisconsin voter’s, outraged by arrogance of the public employee unions – their rich salaries, their overly generous healthcare program, and the mounting unfunded liability for their pension program – said enough and threw the bums out. Oregon, in contrast, elected a tired, old former Democrat governor and returned a Democrat majority to the Senate – both wholly beholden to the public employee unions because of their limitless campaign contributions. Not since 1938 has Wisconsin undertaken such a clean sweep – a complete change of government from one party to the other.

In Wisconsin, Gov. Walker and his new Republican majority in both houses moved forward with their commitments to roll back spending and curtail the abuses of the public employee unions. You see, in Wisconsin, the Republicans were able to precisely explain that while collective bargaining in the private sector is a cherished right to be respected, the same is not true in the public sector. In the private sector, the unions – responsible to the members – bargain with an independent management – responsible to their shareholders. There is a natural balance between the wishes of the employees to maximize their compensation and the management’s needs to control cost to remain competitive.

But in the public sector, public employee unions bargain with a management whose campaigns they financed and who are dependent on the union’s financing for re-election. There is no balance. That imbalance is exacerbated when the government – controlled by those who financed their elections – collects and remits the money used by those unions to finance their elections, eliminates the right of a secret ballot to determine whether the union should represent employees, and bars the use of private contracting (outsourcing) for any function ever performed by a public employee.

The union movement in America is waning – everywhere but in the public employee sector. A January report by the United States Department of Labor’s Bureau of Labor Statistics noted:

“In 2010, 7.6 million public sector employees belonged to a union, compared with 7.1 million union workers in the private sector. The union membership rate for public sector workers (36.2 percent) was substantially higher than the rate for private sector workers (6.9 percent).”

The report also noted that the union movement had a net loss of 612,000 jobs – all from the private sector.

And therein lies the reason for President Obama’s failure to address the national budget crises while feeling free to criticize the budget solutions in Wisconsin. Historically, the union movement has been a principle player in the Democrat Party. With the continuing diminution of the private sector unions, the Democrats find themselves turning more and more to public employee unions for financial and logistical support. No president has been as beholden to the financial resources of the public employee unions as Mr. Obama. The ability of the public employee unions to raise hundreds of millions of dollars through federal, state and local government mandatory payroll deductions provides virtually unlimited financing for those Democrats prepared to do the public employee unions’ bidding.

To tackle the federal budget not only requires dealing with so-called entitlements; it requires dealing with the same issues confronting Oregon – too many public employees being paid too much in salaries and receiving healthcare and pension benefits far in excess of their private sector counterparts. And trust me, Obama will have to be dragged kicking and screaming to deal effectively with these problems.

Pres. Obama’s debt commission recognized the unsustainable burden imposed by entitlement programs – Social Security, Medicare, and Medicaid. Add Obamacare to that list of budget busting entitlements. Obama declined to address any of these in his budget because he lacks courage and leadership. The debt commission also recognized the problem of the unfunded future liability for public employee pensions. Obama declined to address these because he is beholden to the public employee unions.

But he did recognize the threat to the largesse of the public employee unions in Wisconsin – not because Gov. Walker wants to curtail the areas of collective bargaining, but because a part of the package would require the unions to collect their own dues rather than having the state collect and remit them for the unions. When that happens the financial power of the public employee unions drops dramatically and the political imbalance begins to right itself.

But then again, its much easier to tell others how to correct their problems than it is to correct your own problems. President Obama put your own house in order first. And Gov. Kitzhaber, step up! You cannot address the fiscal problems of Oregon without addressing their cause – the abuses fostered by the public employee unions.