The Wisconsin Recall Stakes

A test of whether taxpayers can control the entitlement state.

 

WSJ.com

A single election rarely determines a democracy's fate, but some matter more than others. Tuesday's recall election of Wisconsin Governor Scott Walker is one that matters a great deal because it will test whether taxpayers have any hope of controlling the entitlement state and its dominant special interests.

Specifically, we will learn if a politician can dare to cross government unions and survive. Mr. Walker isn't facing this extraordinary midterm challenge because he and a GOP legislature asked public workers to pay 12.6% of their health insurance premiums and put 5.8% of their paychecks toward their pensions. Those are small sums compared to what private employees typically pay.

 

His political offense was daring to challenge the monopoly sway that public unions have come to hold over modern state government through collective bargaining. Public unions aren't like private unions that negotiate labor terms with a single company or workplace. Public unions have outsize influence because they can often buy the politicians who are supposed to represent taxpayers. The unions effectively sit on both sides of the bargaining table.

Thus over time they have been able to extort excessive wages, benefits and pensions, as well as sweetheart contracts like the monopoly provision of health insurance. Their focused special interest trumps the general interest of taxpayers, who are busy making a living and lack the time to focus on politics other than during elections or amid a fiscal crisis.

Democrats—even liberals—once understood this danger and opposed collective bargaining for public workers. No less a Democratic hero than Franklin Roosevelt once said that collective bargaining "can not be transplanted into the public service." As recently as the 1970s, Jimmy Carter signed the Civil Service Reform Act, which reduced collective-bargaining rights for federal employees. But as public unions began to dominate the modern labor movement, collective bargaining became a sacrosanct part of the liberal agenda.

Mr. Walker and his fellow Republicans challenged that status quo, and the unions have reacted with such vitriol because they realize the threat to their long-unchallenged clout. They're especially incensed that the reforms ended the state's practice of automatically collecting union dues. Now dues are voluntary—and lo, many government workers are finding they don't want to join the union after all.

Since Mr. Walker's reforms went into effect, membership in government unions has dropped. At the American Federation of State, County and Municipal Employees (Afscme), membership fell to 28,745 in February from 62,818 in March 2011, according to a Journal report. If the union can no longer guarantee monopoly wages and benefits, workers are better off keeping dues that can add up to several hundred dollars a year.

Shaking off union control of state finances has also been good for taxpayers and Wisconsin's business climate. Statewide property taxes fell by 0.4% in 2011 for the first time since 1998. The Governor's office estimates that the reforms have saved Badger State taxpayers more than $1 billion, as local school districts have been able to renegotiate health-care and labor contracts.

According to a survey released last week by Wisconsin Manufacturers and Commerce, 62% of employers in the state say they plan to add employees over the next six months, an increase from 53% a year ago and 44% in December. Overall, the survey reported, 73% predicted moderate to good growth at their own companies and more than half said they planned to expand in the state in the next two years—the highest rate in a decade.

All of which helps explain why Mr. Walker's Democratic challenger, Milwaukee Mayor Tom Barrett, has made his campaign chiefly about jobs, women's rights, the environment, community safety and especially an investigation into the conduct of aides who worked for Mr. Walker when he was Milwaukee County executive. Mr. Barrett is running on everything except the collective-bargaining reforms.

Meanwhile, Afscme chief Gerald McEntee has criticized the national Democratic Party for not throwing more money into the recall: "We think they could and should have done more." And President Obama, who once promised solidarity with Wisconsin unions, flew over the state on Friday for a fundraiser in Minnesota. Perhaps he doesn't want to associate himself with what might be an embarrassing union defeat.

Students of democracy from Alexis de Tocqueville to Mancur Olson have pointed out that the greatest threat to self-government comes from the tendency of democracies to become barnacled with special interests that vote themselves more benefits than society can afford. This is the crisis of the modern entitlement state, which is unfolding from California to Illinois, Greece, Italy and even Washington. Wisconsin is a critical test of whether democracies can reform before the crisis becomes debilitating.

A version of this article appeared June 4, 2012, on page A16 in the U.S. edition of The Wall Street Journal, with the headline: The Wisconsin Recall Stakes.