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May 22 2012

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Wisconsin Recall – The First Shot of 2012

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The Start of a Political Prarie Fire

If there is to be a mighty political wave that washes over Washington and casts out President Obama in November, it will have begun in Wisconsin.

On June 5th, Wisconsin will hold a gubernatorial recall election that will pit incumbent Republican Scott Walker in a rematch against his 2010 opponent, Milwaukee’s Democratic Mayor, Tom Barrett. The vote will represent a final citizens verdict in a ferocious eighteen-month battle over the power and influence of public unions in state government, as well as the larger narrative of how to effectively allocate state resources to promote economic growth, wealth creation and jobs.

 Taking office in 2011, Governor Walker faced a $3.6 billion budget shortfall. In addition, between 2008 and 2010, Wisconsin had hemorrhaged 150,000 jobs, causing unemployment to spike, and state revenues to drop.

The solution on the table, left by Walker’s Democratic predecessor, was a tax increase.

Walker came into the job committed to fixing the state’s budget  and economic problems but without raising taxes. “If businesses are failing, you don’t raise prices on your customers,” Walker said.

The robust Walker program included tort reform and simplified business regulation, as well as a fresh focus on small business as the driver for economic growth. But the measures that triggered liberal outrage, mass protests and culminated in the recall, were reforms impacting public unions.

Walker’s program required public union members to pay 5.8% of their salaries for their pensions and 12.6% to their health insurance premiums.  By way of comparison, Wisconsin public sector workers had previously paid nothing for their pensions, and the increased contribution for health insurance was well below private sector norms.

Even worse for liberals and union officials, Walker’s program ended public union collective bargaining rights for pensions and health-care (exempting police and firefighters), and ended mandatory public employee contributions to unions as part of a “paycheck protection” measure.

Taken together, the two provisions effectively undid the existing rationale for public unions; to use mandatory employee dues (public money mind you) to fund favored politicians who supported and protected ever greater public union benefits, that were effectively untied from any revenue to pay for them, burdening future taxpayers with ever greater liabilities and growth-eroding debt.

The general liberal hysteria that followed passage of the Walker plan was accompanied by dire predictions of mass layoffs of government workers, including the attendant challenges of “teacher-less schools.”

But a strange thing happened.

Walker’s reforms have worked.

It’s early days for a program whose impact will be more pronounced as time goes on, but initial results are not in dispute.

The $3 billion deficit?  It was turned into a $300 million surplus.

Property taxes are down, modestly,  for the first time since 1998.

In the first two months of 2012, Wisconsin created almost 18,000 new jobs, while the state’s unemployment rate is a full point lower than the national average.

No wonder then that Chief Executive magazine has moved Wisconsin from the 37th out of 50 for the best states to do business to number 20 since Walker took over.

Even more compelling are the positive results from the collective bargaining changes.

The Governor’s office estimates that the reforms have saved taxpayers nearly $1 billion, including $65 million in changes in health care plans and $543 million in local savings.

Contrary to the warnings of mass layoffs, the new flexibility at the local level has prevented layoffs. According to the Wall Street Journal, savings created by pension and health-care contributions from employees allowed the the Brown Deer school district to prevent layoffs and save $800,000.

The introduction of greater flexibility at the local level allowed school districts to introduce competitive bidding for health insurance, rather than having to automatically go through the WEA Trust – the favored provider of the Wisconsin Education Association. Thus far, the savings have amounted to $220 per student in the 52 schools in the state that tried the process.

Embarassingly, Democratic nominee Tom Barrett’s Milwaukee saved $19 million on health-care costs as a direct result of Walker’s reforms.

In addition, Walker’s paycheck protection measure represents a de facto pay raise to government workers on the order of $1,400 annually, for those who choose not to pay dues. It has been a corresponding disaster for the unions, which has had to lay off 40% of its staff last year; a not inappropriate consequence for organizations that drew sustenance entirely from public money to lobby on behalf of ever expanding public benefits.

The “tell” that Democrats realize their predicament came in nominee Tom Barrett’s victory rally on May 8th. “This race is not about the past.”

What?

The whole reason for the election is because of the past.

About the past eighteen months. About undoing the Walker reforms. About re-activating collective bargaining rights, about restoring public unions to their proper place.

But suddenly, given Walker’s results, that is not what the Democrats are running on.

Barrett has been focused on jobs, education the environment, and making communities safer.  He has even picked up on stray national threads by accusing Walker of a “war on women.” But not a whisper of collective bargaining.  Even the union’s preferred candidate for the run off, Kathleen Falk, made only passing reference to collective bargaining during her ill-fated campaign.

All of that jibes with a recent Marquette University poll which found that despite the flood of union cash and mass demonstrations, only 12% of Wisconsin voters believe that restoring collective bargaining rights is their top priority.

All of this has happened so quickly, and with so much controversy, that the true dimensions of Walker’s policy victory are understated. Indeed, while it is too early to predict victory for Walker, it is not too soon to see the wisdom of his courage in taking on powerful, entrenched interests for the greater good of Wisconsin’s citizens.

That the program Walker instituted resulted in a budget surplus, a property tax break, new private sector jobs, no public sectorlay-offs and new government efficiencies – without new taxes – shows that conservative principles are actionable, and if implemented, successful.

For this, conservatives owe Scott Walker a debt of gratitude.

If re-elected on June 5th, Walker’s victory will be the unmistakable message to liberals and unions in the state who have consumed the public debate for a year and a half.  It will  also be an ominous warning to Democrats nationally that their days – and their ways – are numbered.

 

 

 

 

 

 

 

 

 

 

 

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