Jun 14, 2012

Futile Recall: Wisconsin Voters Vs. Illinois Lawmakers

Chuck MisslerBy Dr. Chuck Missler
Koinonia House

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"We're headed in the right direction," Wisconsin Governor Scott Walker said many times last week. "We're turning things around. We're moving Wisconsin forward."

Walker won a highly visible recall election June 5th by a strong majority, demonstrating that Wisconsin voters are not ready to fire their governor, despite the crowd of protestors camping for months outside the capitol. The reality is, his policies have been working.

Scott Walker

Tough Decisions

Walker made headlines with his efforts to keep the state of Wisconsin within its budget by eliminating unions' collective bargaining rights for public workers, including the state's teachers. The purpose of the legislation was to cut spending without having to raise taxes in order to pull out of a $3.6 billion budget deficit. It meant that state employees would have to pay a portion of their own medical insurance and pensions in order to keep more public workers from being laid off. The unions in the state made a major clamor over the legislation and led continual demonstrations in protest.

This is not an easy, prosperous time for most states, and some are in serious trouble. California's budget is a voracious monster with a $16 billion deficit. Illinois needs to magically produce $83 billion worth of pensions from an empty savings account. Yet, rather than dealing with desperately required pension reform, the Illinois legislature used the last hours of the session to vote on qualifying miniature horses as service animals.

Ralph Benko quipped at Forbes.com,

"So… a miniature Cavalry rode to the rescue of the citizens of the, too-aptly nicknamed, Sucker State. The session closed with miniature horses being elected service animals and without the people of Illinois being nefariously saddled with the pension obligations."

The problems are real. Everybody sees them. Too few legislators want to be that bad guy who votes to cut spending—who makes the hard decisions to chop off limbs to save the rest of the body.

The Recall

The unions poured millions into a campaign to oust Walker and replace him with Democratic Milwaukee Mayor Tom Barrett, and fiscal conservative groups spent even more on television ads, mail, and phone calls to keep Walker in office. At least $66 million total, which could have been better spent elsewhere, had been put into the recall battle by the 21st of May, and the unions have credited Walker's win last Tuesday to the deeper pockets of the Republicans. Yet, the controversy was in the news on a constant basis and both sides of the matter were well known. And as Ramesh Ponnuru at Bloomberg pointed out, it may be that Walker's campaign received more money because his was the more popular position after all.

Wisconsin's taxpayers are apparently more practical than Illinois' legislators. The fact that local school districts can renegotiate contracts with their employees is saving the Wisconsin state government (taxpayers) $1 billion. Indiana is also a success story. It got rid of collective bargaining for state workers six years ago and during the recession has managed to both avoid raising state taxes while also largely avoiding layoffs.

Taxing Business

A major temptation during financial crises is to go after the big businesses or "rich," to capture much-needed funds. There's a rationale that argues that the rich don't really deserve their money (they only have it because they're corrupt and their great granddaddies were moonshiners anyway). Robin Hood is still a hero. There's a hole in that way of thinking, though; people who are successful in business tend to seek environments where business is good and avoid situations in which business is bad. In other words, if Illinois raises and keeps high taxes, the financially savvy leave the state and move elsewhere. In December, 2011, the nonpartisan Illinois Policy Institute issued a report that an average of one Illinois taxpayer moved out of state—primarily to right-to-work states with lower state and local tax burdens—every ten minutes between 1995 and 2009, taking with them $26 billion in taxable income.

One of the complaints waged against Walker in the recent recall battle was that he was cutting spending to schools while giving tax cuts to the rich and to corporations. The 2011-2013 budget did save $800-900 million on K-12 education over two years compared to the previous budget. It also offered tax breaks that favored businesses, both small and large, tax breaks that would mean a loss of about $200 million during those same two years. However, those tax cuts could mean bringing business into the state, providing jobs, conveniently at a time when neighboring Illinois' high tax rates are driving people out.

If Wisconsin's experience is similar to what has been seen in Indiana, the municipalities that now have more control over what they pay their workers may have the budgets to hire more employees as years go by.

America should probably not look at Wisconsin as a crystal ball for what will take place in November. Even those who voted for Obama were unwilling to kick out Walker. What Wisconsin does say, however, is that legislators should stop treating the electorate like greedy children that demand full faces and recognize that voters are adults—who know the value of balancing a checkbook.