Thursday, February 17, 2011

Cairo, Wisconsin?

I have written 3 posts on public sector unions. 
 "What Exactly Is The Purpose of Public Sector Unions"
 "The Demise of Democrats...Or Taxpayers?"
 "How Public Unions Took Taxpayers Hostage".

In the first of these posts written on January 3, 2011 I wrote...

My guess is that public sector unions will come under increasing scrutiny over the next decade.  We are in for a tumultuous period as the issues of government spending and our debt loads are so inextricably tied to these public sector unions.  These interests are firmly entrenched and will not go easily into the night.  We are likely to see many of the things occurring in Europe begin to also occur in the U.S as budget pressures intensify.
Whether public unions will survive in the future might very well depend on how responsibly they participate in the needed restructuring of government spending, jobs and pensions over the coming years. 
I must admit that I did not foresee that this issue would move as quickly as it has.  Witness today's demonstrations in Wisconsin in which the Democrat legislators actually fled the state to avoid a vote on a package that would make public sector employees pay half of their pension costs and at least 12.6% of their health care coverage costs and eliminate collective bargaining rights.

To put this in perspective, a generous private sector plan would consist of a 401(k) plan where the employee receives a 50% match on their contributions to their retirement plan.  Thus, $2 saved by the employee gets $1 from the employer.  The private sector employee pays 67% of the total cost.  Similarly, a generous private sector health plan would have the employee paying 2 or 3 times what the state of Wisconsin is asking of its public sector employees.

It also appears that all the calls for civility that we heard last month after the Tucson shootings has been quickly forgotten. Take a look at a few signs that circulated in the protest.  I can only hope these were hired union operatives rather than the people who are educating Wisconsin's children. Some of this looked more like it belonged in Cairo than in Madison.

This is likely to be the first of many big battles we will see involving public sector unions.  The stakes are huge.  Remember that this is more about political power and money than it is about union rights.  The union bosses need the dues.  The Democrats need the union money and organizational support.  This leads to this vicious cycle as I wrote in "The Demise of Democrats...Or Taxpayers?".

American taxpayers pay taxes to pay the wages and benefits of its public sector employees. A portion of these wages goes to pay union dues which are then used to lobby for increased public sector wages and benefits.  This, in turn, requires more taxes on the taxpayers.  Keep repeating this vicious cycle and you can see why we are in the position we are today.  
The lines are drawn pretty well in this battle.  Is it the taxpayers or the unions?  Our legislators have to decide which side they are on.  And leaving the state (or the country) is not an option.

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