Deal Breakers

I have been following the hubbub in Wisconsin, Ohio, and Indiana related to attempts by Republican governors in those states to balance their budgets. This has resulted in these governors going head-to-head with the public employee unions. These governors are not only seeking cuts in pension and benefit plans to these government workers but also to restrict their collective bargaining rights. The goal of these governors seem to be becoming "right to work" states. This would eliminate the requirement that a worker must join a union to get a job. The trend has been toward this with 22 states currently being "right to work" states.

A little background before I tell you what I think. Years ago working for the government was a financial sacrifice. The benefits were okay, salaries were inferior, but job security was good. However, a funny thing happened on the way to the 21st century. Under the tutelage of Democrat governors in strong union states salaries rose steadily, benefits exploded, and job security got stronger. The public employee unions were in bed politically with the Democrats and were rewarded handsomely. Fast forward to 2009 and the financial crisis. The economy is hammered by the recession and job creation is non-existent. Some adults woke up and saw that the deals made by the unions and the government were of the sweetheart variety and were unsustainable. Many states are facing bankruptcy, primarily as a result of unfunded pension and benefit liabilities. So the voters, led by the Tea Party, elected of those adults to legislatures and governorships with a mandate to get the financial house in order.

This brings us to the current situation. The states, just like the federal government, are broke! The states cannot print money and are constitutionally prohibited to deficit spend. So they are faced with two options : cut spending or raise taxes. The governors have correctly identified the problem being with spending and are steadily trying to cut it as they were elected to do. The government workers say that a deal is a deal and we don't care where you get it, just give it to us. That's the squealing pig you hear in the background.

I always like to boil these situations down to a personal example. Let's say you have a son in high school. He is doing great, really making you proud. At the end of his sophomore year you make a commitment to him that, if he keeps up his grades, you will foot the bill for the prestigious private college that he wants to attend. Why not? You have a great job, a good balance in his college fund, and you want to reward him for his efforts. Then a not-so-funny thing happens midway through his junior year of high school. The great job you have turns to crap and you get laid off. One year later you finally get another job but it at a salary of 40% less than the previous one. In the process of finding that job, you had to use a substantial portion of that college fund to keep the family afloat.

Now comes the moment of truth. You sit your son down and explain the situation to him. Instead of that prestigious private college education he coveted he will have to attend a state-supported university and live at home. On top of that, he will need to work part-time to help with the costs. How does your son react? Sure he is disappointed. Does he scream and yell at you cursing you for "screwing up his life"? Does he demand that private college regardless of the circumstances? If so you have raised a great member of the entitlement society, and an excellent future union member. Wouldn't you just be popping with pride if he reacted that way?

What I hope my son would do is to understand the situation, put on his big-boy britches, and take on the responsibility of the man I raised.

That is the situation faced by the various states. Deals were made that shouldn't have been. The future of the state depends on getting their financial house in order and is going to require sacrifice on everyone's part. Yes that means cutting government spending as well as probably raising some taxes. It is time for all of us to put on the above mentioned big-boy britches and assume the responsibility. It will not be fun but it is a mess we made and it shouldn't be left to our children and grandchildren to clean up!