Big Labor's Ohio Win Doesn't End States' Fiscal Crises
Everyone knows state governments are swimming in red ink, but how deep exactly is the fiscal hole?
The nonprofit watchdog group State Budget Solutions has conducted an extensive analysis of state government finances, and the results are not unlike what one might find after an audit of a college freshman following her first-credit card spending binge.
Reuters sums up the dismal findings:
"State Budget Solutions combined states' major debt and future liabilities, primarily for pensions and employee health care, unemployment insurance loans, outstanding bonds and projected fiscal 2011 budget gaps. It found that in total, states are in debt for $4.2 trillion."
And keep in mind that state government fiscal calculations, "do not offer a full picture of the states' liabilities and can rely on budget gimmicks and accounting games to hide the extent of the deficit." (If you did that it would be called "illegally cooking the books," but never mind.)
Other estimates of state liabilities are lower. The American Enterprise Institute puts public pension shortfalls at $2.8 trillion; the Pew Center on the States at about $700 billion, and so on.
But that is the truly frightening aspect of this whole debt crisis -- no one seems to know how much is really owed. To put it another way, if you knew you were in debt by about $4 trillion, you'd be screwed, but at least you'd know how screwed you were.
But if you owed so much money that a dozen different accountants couldn't even agree on the amount, well, that's a whole different kind of screwed, isn't it?
How did it get so bad? One clue comes from a joint investigation by the Chicago Tribune and WGN-TV, which has uncovered massive pension abuse by Illinois public-sector unions. Two union lobbyists, Steven Preckwinkle and David Piccioli, reports the Tribune, "... stand to receive more than a million dollars each from a state pension fund," thanks to a legal loophole that allowed them to count their years as union employees toward the teacher pension fund because of a single day of substitute teaching in 2007.
And it is a similar story across the country -- wherever you find an empty public purse, you will nearby find a bloated but still-ravenous government employee union.
Sadly, it is the public that suffers for the gluttony of union bosses, for bankrupt state and local governments have little choice but to cut services an/or increase taxes in an effort to balance their books.
Cuts mean less money for garbage collection, fire and police departments, social services, and yes, education. Higher taxes drive businesses to more hospitable climes, leading to fewer local jobs.
As Walter Russell Mead points out, it didn't have to be this way: "Reasonable reforms could have made things much less painful, but the unions typically threaten to destroy the careers of any politician who tampers with the pension system until the truck actually starts falling over the cliff."
Anyone who doubts the thuggery and rapacity of unions should look to Ohio and Wisconsin, where Republican Govs. John Kasich and Scott Walker, respectively, pushed collective bargaining reforms in an attempt to rescue their states from fiscal collapse -- and were met by vilification campaigns, rowdy protests, and vows of electoral vengeance from unions.
In Ohio this week, unions got their way. After a massive public-relations campaign (one union-coalition group raised more than $24 million for the battle), Big Labor convinced Buckeye State voters to toss Kasich's reforms.
But this decisive victory may not deter other governors from attempting similar reforms, for one reason: For many politicians, the financial danger ahead is more terrifying than the unions behind.
And that is saying something.