The word is getting out there: that unions and state deficits are not terribly related. What we really see out there is a revenue problem, not a spending problem. It is no accident that we live in a time of historically low taxes (in the US, not in Quebec) and high deficits (Quebec tends have both high deficits and high taxes, plus high subsidies from Canada, etc, but manages to have lousy services, but that is a rant for another day, or a previous day).
Some would argue that this has been a deliberate effort by the Republicans to starve the various levels of governments of money so that they can then claim that government needs to be gutted. Whether they were clever enough or not to do this, the reality is the same--lots of hate for taxes despite the low rates, states having cut their taxes find it hard to raise them, and an economic crisis that make past tax cuts bite even harder as tax bases go down and spending on safety nets goes up (basic macroeconomics).
The problem we face if we are good Keynesians* is that we ought to be spending our way out of the bad times and then collect the taxes in the good times (this is what happened under Bill Clinton, more or less). But we seem to be hitting the wall, more or less, on how much we can borrow. So, should we raise taxes and perhaps hurt the growth that is just starting to develop in the economy? Well, cutting budgets is also bad for growth, if conventional economics is correct. All these budget cuts are going to mean less money going to less people, which means they can spend less stuff and so on. So budget cuts are just as bad, if not worse, for fostering growth.
* The caveat here is that all my economics I got long ago in college, so I could be wrong about this. All I do know is that the Republican stands on these issues tend not to be based in reality at all.
As lil' Steve put it, it is about Revenues, stupid! If we have to fight deficits, then I would rather see taxes increased than spending cut. Of course, the Republicans would rather use the deficits to bust unions and gut states and the federal government
The structural problem is that the defined-benefit pension plans (including both pay and benefits) are untenable as constructed - and given demographic trends may never actually be tenable at all. That is why Christie - NJ, Daniels - IN, Walker - WI and Brown - CA are moving to get the public employees unions to minimally contribute to their benefits and pensions. At best, that is a band-aid on a bullet wound.
ReplyDeleteThe legal problem is that collective bargaining by public sector unions definitionally impinges on sovereign immunity. The government can offer whatever pay and benefits it wants and employees are free to either accept it or reject according to the civil service code. In any other circumstance the government must consent to suit - but here - the government gave away the store to the public sector unions in exchange for votes - a Public Choice explanation, perhaps?
The moral problem is the one that all governments must overcome - to wit - taking by force from some to give to others. Additionally, there is the underlying immorality of those working for the enforcer getting the enforcer to give more and better compensation and benefits to the employees of the enforcer than the enforcees themselves enjoy.