Does the outcome in WI alter the debate over unfunded public pensions?

Walter Russell Mead warns teachers (although it applies to all public employees) that, depending on what your states’ politicians have done throughout the years, your pensions are probably a scam that won’t be paid.

John Fund points out that “Nationwide, private-sector workers earn an average of $8.53 in benefits per hour, while government workers earn $14.31 and have far higher job security.”

Frank Keegan gets at the numbers involved in the unfunded promises (to date) in Fiscal Reality Wins a Victory in Wisconsin

It’s not a struggle over collective-bargaining “rights; it’s a pure power struggle over an entrenched elite squeezing more out of citizens already getting by on less…  Fewer Americans working harder for less and paying more taxes to increasing numbers of government employees who get more is not a shared-sacrifice program that wins elections…  For example, without major reforms, the public pensions officially accounted at 100 percent funded actually need $1,563 more from the average household every year for 30 years just to pay benefits already promised, according to an updated study for the National Bureau of Economic Research by Robert Novy-Marx and Joshua Rauh.

Public retiree health-care funding is more than $2.3 billion short, according to the Pew “Widening Gap” study, and the state only paid 45 percent of the last payment due. Somebody is going to have to make up the difference…

To one degree or another what is happening in Wisconsin is happening all over America. The one-third of American workers paying for everybody else is starting to feel squeezed…  Any politicians who think voters who lost jobs, took pay cuts, gave up benefits, and surrendered any hope of retirement will quietly pay more for those who shared no sacrifice are going to be in for a shock on election day.

Kimberley Strassel gets at the crowding-out-other-priorities effect in Scott Walker’s Education Victory:

His argument: Wisconsin is broke. We can continue to pour money into the public-union monopoly, forcing us to cut further from priorities (namely, education). Or we can enact broad structural changes, the savings from which we can use to better our state (notably, schools).

“The argument was two-dimensional previously,” says Scott Jensen, senior adviser at the American Federation for Children. Mr. Walker, “by undoing the bigger state infrastructure that locked in inefficiencies, [has] freed up additional funds to flow to the classroom, all without asking for more from taxpayers.”

…It’s resonating because taxpayers see it working. In addition to limiting collective bargaining, the Walker reforms let schools competitively bid on health insurance, asked employees to contribute to health and pension plans, and introduced merit pay. The Legislative Fiscal Bureau estimates the pension provision alone will save schools $600 million over two years, while competitive health bidding is already saving $220 per student per year.

Charles Krauthammer goes big picture again in What Wisconsin Means:

The unions’ defeat marks a historical inflection point. They set out to make an example of Walker. He succeeded in making an example of them as a classic case of reactionary liberalism. An institution founded to protect its members grew in size, wealth, power, and arrogance. A half-century later these unions were exercising essential control of everything from wages to work rules in the running of government — something that, in a system of republican governance, is properly the sovereign province of the citizenry.

Why did the unions lose? Because Norma Rae nostalgia is not enough, and it hardly applied to government workers living better than the average taxpayer who supports them…

Most important, however, because in the end reality prevails. As economist Herb Stein once put it: Something that can’t go on, won’t. These public-sector unions, acting, as FDR had feared, with an inherent conflict of interest regarding their own duties, were devouring the institution they were supposed to serve, rendering state government as economically unsustainable as the collapsing entitlement states of southern Europe.

 

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