Unions aren't to blame for Wisconsin's budget

[ProSense]

Unions aren't to blame for Wisconsin's budget

By Ezra Klein

Let's be clear: Whatever fiscal problems Wisconsin is -- or is not -- facing at the moment, they're not caused by labor unions. That's also true for New Jersey, for Ohio and for the other states. There was no sharp rise in collective bargaining in 2006 and 2007, no major reforms of the country's labor laws, no dramatic change in how unions organize. And yet, state budgets collapsed. Revenues plummeted. Taxes had to go up, and spending had to go down, all across the country.

Blame the banks. Blame global capital flows. Blame lax regulation of Wall Street. Blame home buyers, or home sellers. But don't blame the unions. Not for this recession.

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In fact, it particularly doesn't work for what Walker is attempting in Wisconsin. The Badger State was actually in pretty good shape. It was supposed to end this budget cycle with about $120 million in the bank. Instead, it's facing a deficit. Why? I'll let the state's official fiscal scorekeeper explain (pdf):

More than half of the lower estimate ($117.2 million) is due to the impact of Special Session Senate Bill 2 (health savings accounts), Assembly Bill 3 (tax deductions/credits for relocated businesses), and Assembly Bill 7 (tax exclusion for new employees).

In English: The governor called a special session of the legislature and signed two business tax breaks and a conservative health-care policy experiment that lowers overall tax revenues (among other things). The new legislation was not offset, and it helped turn a surplus into a deficit (see update at end of post). As Brian Beutler writes, "public workers are being asked to pick up the tab for this agenda."

But even that's not the full story here. Public employees aren't being asked to make a one-time payment into the state's coffers. Rather, Walker is proposing to sharply curtail their right to bargain collectively. A cyclical downturn that isn't their fault, plus an unexpected reversal in Wisconsin's budget picture that wasn't their doing, is being used to permanently end their ability to sit across the table from their employer and negotiate what their health insurance should look like.

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Excellent piece!

On edit: Check out the second link above to Pax Americana.