Walker's War on Unions Has Nothing to Do With This Year's Deficit

Wisconsin Gov. Scott Walker's assault on collective bargaining has won him cheers on the right and jeers on the left. But no matter what you think of unions, you can't call this part of the plan "deficit reduction."

Not this year, anyway. 

The state's entire $137 million budget shortfall for 2012 is basically covered by the governor's quiet proposal to restructure the state's debt to the save $165 million in the short term. In other words, unions have nothing to do with closing this year's budget shortfall. Stripping the collective-bargaining rights of the state's public-employees doesn't save Wisconsin anything today.

National Journal's Tim Fernholz explains:

In January, the Wisconsin Legislative Fiscal Bureau reported that the state would face a $137 million shortfall before the end of the fiscal year on June 30. The governor's budget repair bill proposes a debt restructuring that would save the state $165 million in the near term, more than covering the shortfall.

The legislation would also borrow money from a federal welfare program to cover further state shortfalls, and it includes a provision that would allow the sale of the state's public utilities without a bidding process or public oversight.

While public unions have agreed to almost $30 million in pay cuts this year if they can keep their bargaining rights, Walker and other Republicans argue that restrictions on union bargaining are necessary to maintain the cuts over time.

In the medium term, of course, pension obligations to public sector union employees do weigh on state budgets. Rather than outlaw unions, many states and cities have moderately restructured these contracts to require employees to pay more now and/or expect less later. This is an important discussion for states and municipalities to have. But marching for the end of bargaining laws under the banner of 2012 deficit reduction is disingenuous. Read the full story at NJ.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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