Recalling Scott Walker

Posted by Jeff Carter
on June 4th, 2012

Big election in Wisconsin tomorrow. Big. There is a lot on the line for people that consider themselves fiscal conservatives.

Many of my Democratic/Independent friends will tell me, “I am fiscally conservative and socially liberal.” Fine, I am cool with that. People on the social divide of issues like abortion will never agree. But they should be cool with supporting Walker since this election has nothing to do with social issues.

Warren Buffett likes to say that everything is great when the tide is in, but when it goes out, you see who has swimsuits on and who doesn’t. That’s what happened when the stock market crashed in 2008. The tide went out. It hasn’t come back.

One entity that didn’t have a swimsuit on was government. Government at all levels. Federal, state, local, muni, county, township. You name it, there was excessive spending in government. When taxpayers are plodding along with their lives and the economy is growing, they don’t notice all the spending. But now they do. It’s naked and online for all to see.

Pension liabilities are a huge part of the cost of government. Entitlements at every level of government make up the primary spend. In our national budget, entitlements are larger than military spending. Both can be cut, but until we do something drastic about entitlement spending we aren’t being serious about cutting the budget-or the size and scope of government.

Wisconsin Governor Scott Walker ran on that platform. He was elected. He pushed through reforms and governments around the state of Wisconsin were able to finally get their budgets under control. Many aren’t balanced yet-but they are on the right path.

It is critical for fiscal conservatives everywhere that Scott Walker be kept running the government in Wisconsin. He hasn’t ended public unions, but he has made it easier for government to negotiate with them. We ought to be banning public unions period. I am all for paying government employees a decent wage. As a matter of fact, I’d get rid of defined benefit pensions and have them pay for their own. But, I’d raise their annual salaries to give them the money to do it.

Don’t confuse public versus private unions. Private unions have different microeconomic incentives than public ones, and run correctly can actually improve company performance rather than adversely affect it. We are talking strictly about public unions.

All over the country, we are having similar debates. In Michigan, the governor is trying to reform the way they do business. New Jersey, Ohio, Indiana, and other states have tackled some reform. The states that have avoided it like California, Illinois, and New York are the worst off.

Interestingly, in the debate over campaign financing, it seems that everyone only talks about public corporations donations to politicians. Why aren’t they talking about union donations? Union donations far outstrip what corporations donate. The reason for that is public unions have huge economic incentives to elect politicians favorable to their cause. Stronger than public corporations because public corporations generally don’t derive their income from government, and they can avoid a lot of the tax and regulatory frameworks put in place through other means.

If you want to see the math on one segment of how we should be looking at the public pension crisis, check out how much a teacher really makes. If you want a business case on how public unions screw up society, look no further than the structure of our educational system.

If you are a Wisconsin resident, I strongly urge you to support Scott Walker. If you aren’t, you can donate money or your time. This is a bellwether election for the future of America. We need to get government out of the way and let the entrepreneurs take over.

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