Notes on the war for Wisconsin

The battle between some public employee labor unions and the state government in Wisconsin means a great deal in the modern political landscape, as numerous pundits have suggested.  I'm going to weigh in by juxtaposing a pair of recent stories from David Cay Johnston and Robert Tracinski.

Johnston's story bemoans the media's mistake in adopting Gov. Walker's language in calling for public employees to bear a greater share of the expense for their medical and pension costs:

Out of every dollar that funds Wisconsin' s pension and health insurance plans for state workers, 100 cents comes from the state workers.

Johnston's point is trivially right.  The Republican-controlled state is asking public sector workers to take a reduction in its overall compensation.  But Johnston's point also misses the point.  There are two corporate entities involved, the state and the public workers.  The state is the employer and 100 cents out of every dollar that funds Wisconsin's pension and health insurance plans comes from the employer since the employer is paying for both salary and non-salary benefits.

The point is that Johnston is silly to make a big deal about the money coming entirely from the workers.  Walker would fire a bunch of them if the bill didn't pass, simply because the state's budget could not bear the costs.

The answer to Johnston's point clicked entirely into place when I read through the fourth paragraph of Tracinski's column:

There is something that almost amounts to a twisted idealism in the Democrats' crusade. They are fighting, not just to preserve their special privileges, but to preserve a social ideal. Or rather, they are fighting to maintain the illusion that their ideal system is benevolent and sustainable.

Johnston's trying to sustain the illusion.

Think about those deferred wages.  Suppose for the sake of argument that a Wisconsin employee put in 10 years at $30,000 per year and earns a pension of 50 percent of their salary in perpetuity.  Suppose the employee goes on to live for 50 years on that pension.  The state will have paid that employee, using Johnston's terms, $750,000 in deferred salary.  So the employee did not make a mere $300,000 over ten years but over $1 million in 10 years.

The example is made up, but the principle is real.  Some of the union deals are too expensive, and the employers (the people and their representatives) need to do some serious work to get them back in line with fiscal reality.