The election of Barack Obama in 2008 was supposed to usher in a new era of liberal dominance in America. But the horrible financial math of the Long Recession had other ideas. The Pelosicrats got booted from the House. Cap-and-trade crashed and burned. And now government unions seem to have embarked upon a death spiral.
What all three have in common is that they owed their existence to their ability to spend other people’s money. A plausible approach in boom times when the pie is growing, but not now.
This is the era of Zero Sum Politics. In a stagnant economy, there just isn’t enough taxpayer money to go around for all the Left’s redistributionist schemes to avoid a major backlash. The jig is up. And the Great Reckoning is here. David Frum:
The age of austerity will bear hard on public-sector unions, or rather, even harder than it already has. An electorate that has seen its standards of living corrode will not pay taxes to sustain superior pay and benefits for its public sector employees. Over the past 3 years, we have seen the state and local public sector shrink. Over the next decade, we will see its pay relentlessly ground down, as private sector pay has been ground down over the decade past.
And that leveling has only just begun. AEI’s Andrew Biggs:
However, even following Act 10, pension benefits for Wisconsin public employees are roughly 4.5 times more valuable than private sector levels while health benefits are about twice as generous as those paid by larger private sector Wisconsin employers. This difference results in a combined salary-benefits compensation premium of around 22 percent for state workers over private sector workers, with varying but often larger pay advantages for local government employees.
And here is some of the best analysis of last night’s election results.
Today it’s difficult for states and their municipalities, especially those with growing employee retirement costs, to escape the new fiscal reality around them. Tax revenues in some states still haven’t fully recovered from their peak in 2007 or 2008, while retirement and other employee benefit costs have continued rising relentlessly. Some lawmakers have tried to hide from this balance sheet nightmare by employing a host of gimmicks, from borrowing to finance operations to skipping pension contributions to shifting of money among accounts. But it’s hard to continue running from reality in such a long fiscal downturn. Scott Walker decided not to hide from his state’s fiscal woes, and he spent the last year fighting for his political life as a result. Illinois’ lawmakers have been hiding from their budget plight since the downturn began, and they ran away from pension reform again last week to avoid a fight with the state’s government unions. But today it’s Walker’s Wisconsin that is the better for his battle.
Walker won by a bigger margin than he did in 2010, and with more overall votes. He carried 38 percent of union households — a slight improvement from his 2010 midterm tally — a strikingly strong number given how he’s been cast as the villain of labor. It’s a sign of the cultural divide between national Democrats and blue-collar whites, one that is particularly acute for the president.
Obama’s team is taking consolation in the fact that exit polling showed him leading Mitt Romney, 51 to 44 percent. But that’s hardly good news: with near-presidential level turnout (and notably higher level of union turnout), Obama is running five points behind his 2008 performance. Replicate that dropoff across the board, and all the key swing states flip to Mitt Romney.
For all of Obama’s political talent, he’s been a major drag on his party since taking office. In 2009, Republicans won two hotly-contested gubernatorial races in Virginia and New Jersey, with the victors (Chris Christie/Bob McDonnell) now on Romney’s vice-presidential short list. During the heat of the health care debate in 2010, Scott Brown picked up Ted Kennedy’s Senate seat in deep blue Massachusetts. Later that year, Republicans regained control of the House, by winning a whopping 63 seats while picking up six Senate seats. And now, Walker wins the recall by a bigger margin than in the 2010 election, which was already a watershed year for Wisconsin Republicans.
The longer-term impact of Mr. Walker’s vindication will depend on the lesson other political leaders take from it. Some 30 states allow collective bargaining for public unions, and removing that power is the kind of core reform that makes spending control, school choice and property-tax reductions easier. It should be a major goal of reformers who want to limit the size of government.
One disappointment is that Mitt Romney failed to appear in Wisconsin during the recall campaign. We doubt the recall vote is a prediction of what will happen in November, and Mr. Romney will have to make his own sale to Badger State voters. But the presumptive Presidential nominee could do worse than associate himself with the GOP reform Governors who were elected in 2010 and are turning around their states. If voters are in a mood to reward leaders willing to tackle hard problems, Mr. Romney should meet their expectations.
If the election were held today, Obama would likely win Wisconsin. But the election won’t be held till November, and Romney will now inherit Walker’s ground game and the psychological boost Republicans all over the state have gotten.
After all, this is a state Obama carried by 13 points in 2008, so the exit-poll numbers he notched up are a serious fallback from that showing. (Extrapolate that erosion of support to the national level and Obama falls from 53 percent of the vote in 2008 to 46 percent).
Even Obama campaign director Jim Messina is now listing Wisconsin as a tossup state for the first time on his election map. Last September, it was solidly placed in the Obama camp under all five of the scenarios that Messina outlined to donors as leading to an Obama victory.