Democrats in Washington declare that they will absolutely, positively allow no changes whatever in the nation’s unsustainable entitlement programs – Social Security and Medicare.
But out in the states, politicians of both parties aren’t averting their gaze from impending fiscal crises. They are working to change policies that put state governments on an unsustainable trajectory.
The most obvious example was the passage of a right-to-work law last week in Michigan, the birthplace of the United Auto Workers union.
This was retaliation for a failed power grab by both the UAW and public sector unions – Proposition 2, which would have enshrined collective bargaining in the state constitution.
Michigan voters defeated Prop 2 last month by a 58 to 42 percent margin. It won in the two counties that include the effectively bankrupt cities of Detroit and Flint. It lost in the other 81 counties.
Right-to-work means that no one can be forced to join a union. The law also stops the automatic deduction of union dues from public employees’ paychecks – which is to say, taxpayer funding of the public employee unions that have driven costs and pensions on an unsustainable path.
Gov. Rick Snyder was initially reluctant to push right-to-work. But he saw that neighboring Indiana was attracting new jobs after it passed right-to-work last winter, while Michigan was losing jobs.
Michigan’s law is similar to Wisconsin Gov. Scott Walker’s law limiting public employee unions’ bargaining powers and stopping the automatic flow of taxpayer money to union treasuries. Unions there protested, but Walker prevailed in a June 2012 recall election.
The Michigan and Wisconsin laws were partisan Republican measures, opposed by all local Democrats. Republicans have leverage elsewhere, as well.
They hold the governorships and legislative majorities in 24 states with 52 percent of the nation’s population (25 states with 53 percent if you count Nebraska with its nonpartisan single-chamber legislature). They also hold governorships but not legislative majorities in five more states with 6 percent of the nation’s population.
In contrast, only 13 states with 30 percent of the nation’s people have Democratic governors and legislatures. But even where Democrats are dominant there are stirrings of reform.
Consider Rhode Island, where Democratic state Treasurer Gina Raimondo has worked to limit the state’s unsustainable pension obligations. The state pension fund is currently paying out more to retirees than it’s taking in from current employees, and instead of getting an 8.25 percent return on investments, it has been getting 2.5 percent.
Rhode Island has hired Democrat super-lawyer David Boies to bring a lawsuit to reduce the state’s pension obligations. “There’s no contract,” Boies said. “Even if there was a contract, the state, pursuing the public interest, has the right to modify contracts.”
Or consider New Jersey, where Republican Gov. Chris Christie has famously opposed the public employee unions. He has formed a coalition with Democratic legislators with roots in private-sector unions.
Those Democrats, like Christie, argue that public employees should not get far more generous benefits and pensions than the taxpayers who are paying for them.
Another example is the state of Washington, where last week two Democrats joined with Republicans to form a new governing coalition in the state Senate. That wouldn’t have happened four years ago, when Democrats had a 31-18 edge.
But in the Obama years that margin was whittled down to 26-23, and with two defections the new coalition is ahead 25-24. It installed a supporter of charter schools and critic of teacher unions as education chairman and a skeptic on Obamacare as health care chairman.
If you look back on the great conservative public policy successes of the 1990s, welfare reform and crime control, the initiative came from the states and localities, mostly from Republican governors and mayors, but from many Democrats, as well.
Something similar seems to be happening on pensions and union contracts. A few large states, notably California and Illinois, are trying to solve their problems by raising taxes. The result seems to be unemployment above the national average.
But in many states, reform is taking hold, led by Republicans in some cases but by Democrats, as well. The fiscal squeeze is felt more urgently in the states: They can’t print money and can’t count on Ben Bernanke’s Federal Reserve to buy 70 percent of their bonds.
Some Democrats in Congress recognize that entitlement programs are on an unsustainable path. But they’re not saying much in public.
Meanwhile, Barack Obama seems to be heeding the advice of those who say entitlements must never, never be reformed.
© 2012 THE WASHINGTON EXAMINER
DISTRIBUTED BY CREATORS.COM
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Michael Barone
While feds dawdle, states tackle fiscal problems
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Slower rise in health care spending is a big deal
The sky isn't falling. The train is not wrecking. The end is not nigh. And to drag this out a bit, the tidings are not all bad.
The Social Security and Medicare trustees have spoken in their latest annual report: Social Security's not-too-serious condition remains unchanged from last year. But the outlook for Medicare, the more shaky program, has brightened modestly. -
Permission sometimes easier to get than forgiveness
Forgiveness is easier to get than permission, an old adage holds. But that’s not always the case.
In local government, however, it’s usually better to let everyone know what you’re doing and offer a convincing justification before taking action. -
CENTRAL KENTUCKY SHINES IN GLOBAL DEMILITARIZATION EFFORT
Too often, news is made when things go wrong. TV, print and radio and the internet are filled with worrisome headlines about international terror and wars, making it easy to feel confused, overwhelmed and helpless. But recently, Central Kentucky witnessed a positive development of which it can be proud: the attention from international disarmament leaders to our efforts to destroy lethal chemical weapons at the Blue Grass Army Depot.
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Squawking about pension reform doesn’t make it so
Recently, I was a panelist on KET’s “Kentucky Tonight” program about the commonwealth’s public-pension crisis.
Much of the discussion reminded me of an annoying rhetorical tactic generally reserved for parrots, but often employed by cheerleaders for bigger, more -costly government: repeating the same nonsense over and over until viewers cave to the pure monotony. -
Americans deserve the IRS
Individually, Americans do not deserve to be subservient to such a fear-mongering, intimidating and powerful agency as the Internal Revenue Service; but collectively, we do. Let's look at it.
Since the 1791 ratification of our Constitution, until well into the 1920s, federal spending as a percentage of gross domestic product never exceeded 5 percent, except during war. Today federal spending is 25 percent of our GDP. State and local government spending is about 15 percent of the GDP. That means government spends more than 40 cents of each dollar we earn. If we add government's regulatory burden, which is simply a disguised form of taxation, the government take is more than 50 percent of what we produce. -
Graduation Day
It is that time of year again.
Some years ago, I was invited to speak at the graduation ceremonies of a liberal arts college. Later, many in the audience told me they expected a very political speech. Some of them were relieved; others were disappointed. I don't do politics at graduation.
Graduation is about life.
My high school graduation was OK. I gave a speech. My family was there, intact, probably as happy as they ever were (But did I know?). We went out for Chinese food afterward. -
Coal problem worth tackling in Washington and Frankfort
Despite hysterical cries from radical environmentalists, neither Sen. Rand Paul’s Defense of Environment and Property Act nor Sen. Mitch McConnell’s Coal Jobs Protection Act would allow activities that bring harm to Kentucky’s wildlife or waterways for the sake of propping up the coal industry.
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Peter Perlman — Life lessons from a lawyer’s lawyer
One of the great moments of my life was sitting next to legendary Louisville attorney Frank Haddad at a luncheon when he learned he had received the first Peter Perlman Outstanding Trial Lawyer award from the Kentucky Academy of Trial Lawyers.
As they started his bio, the surprised Frank started crying like a baby. A sudden heart attack took him less than a year later. Winning the Perlman award was the crowning achievement of his career. -
Credit score insanity
Frequently, people stop me and ask me personal finance questions.
The most common is how to improve their credit history score.
If you need to improve your credit score, it means you have lousy credit. Before fixing the score, people need to ask how their credit got so bad to begin with. -
‘Tells’ about who will blow their money
Kentucky Derby week is one where gambling takes a forefront in my life. Along with the non-stop activities in my home state, I am speaking at a dinner for the Society of Settlement Professionals in Las Vegas and a film crew from Italy is flying in from Rome to interview me for a documentary about lottery winners.
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