Scott Walker won because he took action against soaring pension costs

By Zachary Karabell
June 7, 2012

Editor’s note: This piece originally appeared on The Daily Beast.

Wisconsin Governor Scott Walker survived his recall vote with surprising ease. This contest is already being used as a proxy for the November general election, with tea-leaf reading being in ample supply. Republicans have been quick to crow that the victory represents a referendum for conservative fiscal policy and austerity in the face of soaring pension and medical expenses, while Democrats have noted that Walker raised far more money, recall elections are notoriously rare and difficult, many voted against the recall on the principle that elections should not be redone, and recalls should not be a recourse to express discontent with policies.

Whether this election has any real ramifications for November is questionable, but it does send a message that Democrats seem to be avoiding: There are real issues with the long-term spending obligations for retirement benefits. Current growth rates in the United States do not support the level of future obligations, and this should not be in dispute. Soaring obligations of municipalities, counties, and states have been so well documented that they should be taken as a first principle in any political debate. Michael Lewis’s searing portrait of Vallejo, California, where 80 percent of the city’s budget went toward benefits for public-safety workers, is a story that could be told across the country. Walker attempted a solution to this problem when he rammed through legislation last spring in Wisconsin that stripped public unions of their collective-bargaining rights and then passed laws reducing pay and benefits.

There have been plenty of arguments against Walker, including that he used the legislation to do a variety of other things – along with the Republicans in the Wisconsin Legislature – such as reducing taxes on the wealthy and corporations and cutting school budgets. His detractors have argued that these measures were odious and objectionable, that they served very particular special interests and not the public good — and they harmed many Wisconsin citizens. But it can’t be argued that those pension and retirement obligations are sacrosanct, especially given that most of them didn’t exist a few generations ago and many of them became more expansive in the past decade.

There are better ways to go about dealing with those issues. You could grandfather current benefits for those older than age 45; you could reduce future commitments over time; you could increase the retirement age. You could also, as Walker failed to do, negotiate and engage unions with a common goal of preserving a standard of living with that old cliché “shared sacrifices.”

Yet here lies the most disturbing part: Democratic Milwaukee Mayor Tom Barrett, Walker’s challenger, did some of that as mayor, and the result was that when he ran for governor in 2010, his support from those public unions was lukewarm at best.

Barrett, in fact, has become almost as much a target for the left as Walker. The defeat of the recall is being chalked up to Barrett being insufficiently pro-labor and hence reducing voter enthusiasm for the recall. In that narrative, Walker is a heartless union buster and a tool of the Tea Party and its billionaire backers, while Barrett is basically a me-too Democrat offering a watered-down version of the same. No wonder that the recall failed and unions are being forced to sacrifice on the altar of privilege.

Walker may be all those things, but that doesn’t mean that the core issue of spending versus growth is null and void. Democrats are showing a disturbing tendency toward inflexibility about future obligations, and the Republican willingness to confront that issue – however harshly – is a profound electoral advantage. In the face of understood and looming challenges, having an answer is always more potent than having none, even if that answer is completely misguided. The federal Simpson-Bowles commission, which was as unequivocal about the untenable trajectory of future spending, enjoined everyone to confront that by addressing all spending and all tools to both boost revenue, sustain growth, and reduce costs. That meant everything from tax increases to healthcare-spending cuts to defense-spending reductions. And it was dismissed.

Europe is currently confronting the mismatch between its social spending and its growth prospects and doing so under extreme market conditions that constrain options and accentuate differences. The United States is not there – yet. Contrary to partisan polemic and entrenched beliefs that those of different political persuasions actually desire harm to large swaths of the country, it is possible to address these issues in a way that causes some adjustments for everyone without intense hardship. For instance, is it a hardship for someone now 35 years old that retirement age will be 67 rather than 65? In fact, it’s clear that the static system we are in already is generating intense hardship for many, so why does the current system even need defending?

One way or another, our current series of public obligations is going to change. Even if the United States realigns on a growth trajectory that eases these tensions, retirement spending, health spending, and – of course – defense spending will need to cease increasing at their current rate. Whether healthcare benefits are stripped or whether healthcare becomes a state-delivered single-payer system, costs must come down, or else other aspects of our lives will be diminished. Decry what Walker did, or celebrate it, but acknowledge that one reason that he has won this round is because he forcefully addressed a real issue and actually devised policies to solve it. Unless Democrats can do the same, this will not be the only losing battle.

PHOTO: Republican Wisconsin Governor Scott Walker (C) celebrates his victory in the recall election against Democratic challenger and Milwaukee Mayor Tom Barrett in Waukesha, Wisconsin, June 5, 2012. REUTERS/Darren Hauck

12 comments

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Public sector organizations have outrun the fiscal soundness required to continue ongoing operations. They learned this from State and Federal agencies who have given themselves these unsustainable retirement packages and let the next guy worry about it. The private sector cannot afford what the public sector has created – and in most cases there is much less accountability and performance in government – because of the politics. This is the outrage that won’t quit until this stuff has been rolled back. Try taking the candy from the baby…. that is what you have in Greece.

Posted by xit007 | Report as abusive

Kindly explain Republican obtructionism in the House and Senate, their refusal to increase revenue under any circumstances and their general lack of ideas in the context of this article. Thank you.

Posted by asrinath3 | Report as abusive

I’m no Walker fan, and I believe that unions do serve a purpose, but the author is right, in one way: Walker won the battle of implementation. While I think he did it in about the most heavy handed manner imaginable, he did offer a solution, whereas the Democrats, both in WI and elsewhere, seem only able to decry the fact that benefits and compensation are being cut or frozen, and failing to acknowledge the larger problem.

I do though think xit007 is confused…with private sector leadership pay being what it is, the private sector could MORE than afford what the public sector has created. They just don’t want to, hence they did away with the Pension Benefit Guarantee Act in 1974, and since, our govt is increasingly lenient to corporations regarding tax payments and the like.

All this begs the question of healthcare. Without doubt, healthcare is driving the horrendous increase in the cost of public sector pension benefits. Switching those workers to defined contribution plans will do two things without doubt: It will wash states’ hands of the burden of providing these benefits, and it will do NOTHING to solve the problem of skyrocketing healthcare costs. This is something which negatively affects all Americans, private sector, public sector, pensioners, retirees, and active workers.

We must remove the profit motive from the healthcare industry, or we will never solve this problem. You can pass the buck a thousand times, the only thing that will change is the size of the buck being passed. Soon, nobody’s going to be able to catch it when it comes their way.

Posted by Adam_S | Report as abusive

You say: scott-walker-won-because-he-took-action- against-soaring-pension-costs

Maybe its because he out-spent his opponent 8-to-1…?

Maybe because the pensions are for individuals who need them, not for corporations who count them as expenses and can get rid of them by abusing, or changing, the law.

Wake-up, this is the result of too much money in politics, not reason nor democracy.

Posted by pmagellan | Report as abusive

Regardless of your politics, there is no denying that states and municipalities are coming under ever increasing financial pressure. This is a trend that will be with us for many years. We are a nation in economic decline. States and municipalities can not run big deficits or print money like the federal government so budgets must be balanced. We are seeing the beginning of the end of government employee pension plans. Health care costs will soon usher in a dramatic reduction in the number of government employees. More and more of the tasks performed by government will be farmed out to the lowest private bidder. I’m not saying this is a good thing. It is simply inevitable.

Posted by gordo53 | Report as abusive

Just a few points. Anyone who points to the comparitive spending level of campaigns or ground game or whatever thinks of this as a lost PR battle in place of a win for the taxpayer. The author fails to complete the thought on Simpson-Bowles, which is the very man who commissioned the effort, President Obama, ditched the recommendation. He lacked the political courage to do the right thing. And, my recollection was their were attempts to work with the unions prior to pushing the legislation. The unions felt they had the upper hand and felt threatened by the legislation, considering it political intimidation. So, they stood pat, daring Walker to go forward with his implementation. They thought they could bully Walker and everyone else into doing it their way. They lost tactically. They lost strategically. They lost politically. Finally, on health care costs. Ask yourself a couple of simple questions. Do you consider yourself as having enough common sense and intelligence to make your own decisions about mitigating your personal health problems? If your answer is yes, ask yourself if you would do all that is done each time you see a doctor or HCP for illness or injury. If the answer comes up no sometimes, speak up. You know what you’ll find? Your out of pocket cost will go down, but your premium cost won’t. Why? It’s determined by the risk of the entire pool of people you’re grouped with to determine premiums and whatever government-mandates have to be satisfied with coverage. That’s why many of us whose doctor encounters in 2010 and 2011 actually went down saw premiums double. Or more. Obamacare.

Posted by wildbiker | Report as abusive

The author’s statement ‘…against soaring pension costs’ could more forthrightly be stated ‘against soaring healthcare costs’, as we are all aware of the villain’s true title. Not a mention here of healthcare reform, nor the controversial plan in scotus limbo. Eliminating some of the beneficiaries of health coverage is not the answer to reforming the cost of it – we have plenty of part time laborers who will vouch for that

Posted by auger | Report as abusive

It’s the same-old refrain — we’re all spoiled and need to face up to paying for our past sins. The Wisconsin unions acceded to all of Walker’s budgetary demands. What they objected to was the reduction in collective bargaining rights, which was a blatant political and ideological move having nothing to do with the fiscal health of the state. But these facts don’t fit well with the narrative that the unions are greedy and out-of-touch.

We have an economy that serves the 1% very well while deserting the rest of us. When it’s in trouble, suddenly we’re all in this together, except that the benefits for the 1% are somehow sacrosanct. Let’s start with a return to the tax rates of the 1990′s. Or better yet, to the Reagan tax rates. And don’t tell me how this won’t really contribute to reducing the deficit. It most certainly will, but that’s not really the point. Talk about shared sacrifice has no legitimacy among us plebes if it doesn’t start with those who have most benefitted.

Posted by Sanity-Monger | Report as abusive

Walker won, in part, because American public is brainwashed beyond belief… I’ve dealt with Soviet propaganda, let me tell you it was a lot less sophisticated than the US corporate one.

Posted by UauS | Report as abusive

The Wisconsin public union members accepted a much lower salary than they would have gotten in private industry solely because of the benefits that they were promised. Walker is repulsive, and that’s the nicest thing I can say about the sub-human specimen.

Posted by palmer1619 | Report as abusive

I was with the author until he started talking about Simpson-Bowles, which recommends cutting the top tax rate even more.

Also, it isn’t mentioned often enough, Walker’s plan didn’t include police and fire unions, which tend to be Republicans — his political friends.

Also, Walker should have been voted out because he didn’t tell Wisconsinites what he was planning, or if he did he didn’t make sure people heard him loud and clear. That’s a principle. Walker gets an F in statecraft, for all the division he’s caused.

Posted by Calfri | Report as abusive

The crux of the matter is the public employee unions had already agreed to Walker’s financial issues. They just didn’t want labor law gutted. The expenditures of the 1% of the 1% will now visit 1913 upon the population of the U.S. No safety net, political corruption, and unregulated outrage. Meanwhile the U.S. will lose its ability to compete as the school systems are allowed to crumble.

Posted by Elrond | Report as abusive