On Public Pensions

March 04, 2011

Unless you have been unconscious for the past month, you know that the Governor of Wisconsin, Scott Walker, who – like others claiming the mantle of the Tea Party — is financed by the Koch Brothers, has introduced legislation intended to obliterate the collective bargaining rights of most Wisconsin public employees. According to Walker, this is necessary in order for Wisconsin to put its financial house in order, and I suppose Wisconsin must be in worse fiscal shape since, right after taking office, the Republican legislature and Walker gave business a huge tax break, choking off revenues to the State.

Wisconsin Protests

Frankly, I have considered Walker’s actions as being much less about hurting labor than attempting to control the politics of this country. Without collective bargaining, unions have no members from whom to collect dues.  And the fact is, union dues give unions the ability to make political contributions and affect politics.  Regardless of how anyone might feel about that, with the Supreme Court’s Citizen’s United decision, corporate behemoths can give as much money as they want to whomever they want, and since the Republican Tea Party stands for less regulation and less taxes, most corporate money is going to its members.  The only counterweight to that money comes from unions, so if you destroy the unions, you’ve pretty much destroyed a fair political debate in this country.  It might sound crazy, but that’s what we have become — money decides our political and social future.

A good friend of mine, Jonathan Karmel, who is an accomplished labor lawyer here in Chicago, sent me an email that describes these events in a rather elegant way that I think bears repeating here.  Jon wrote:

“Public and private pension funds all did the same thing. The employers, the states or Safeway (for example), stopped making contributions when the market returns were flush.  It was an extremely reckless thing to do, not something a “prudent” person would do, since market returns are highly volatile and cyclical and bad markets are never far behind good markets. So together with their consultants and actuaries (and the unions were complicit, as well), they took contribution “holidays” instead of building up the funded status of funds to protect against the inevitable downturn. The bet was that the downturn when it came would not be that severe. Well, they were wrong and now public and private pension funds are in trouble and the workers are getting the shaft. Private funds have sought and received legislative relief which just kicks the can (liabilities and losses) down the road while benefits are being cut. The shareholders of public pension funds, the taxpayers, instead of beating up on the unions and workers, should hold accountable those who caused this mess, and not just via the ballot box. Yet, politicians like Scott Walker continue to cut corporate tax rates in the teeth of this recession and falling tax revenues, in effect, creating these budget crises. The Wisconsin Department of Revenue reported that 2/3 of Wisconsin corporations pay no taxes.

California is the “model” and look where it is. I don’t know (as some argue) that the Right deliberately created this crisis, but they are certainly taking advantage of it. Nonetheless, we are at a scary precipice. Yesterday Paul Krugman nailed it when he wrote that crushing unions, the only effective political “counterweight” in this Country, is part (maybe the final nail after Citizens United) of the Right’s plan to solidify its political hegemony. Or, maybe this is the Howard Beale moment. We can only hope its the latter. “

I don’t know what else to say.


Photo Credit: Emily Mills

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