Rent-seeking spin vs. the truth

With all the interests, political grandstanding, and cheap punditry surrounding the union demonstrations in Wisconsin, it’s no surprise that a mythology has developed around Gov. Scott Walker’s proposals. Here are some of the most common myths being propagated, and the countervailing facts.

MYTH: Wisconsin is not actually facing a deficit. Rachel Maddow on her February 17 show said, “Despite what you may have heard about Wisconsin’s finances, the state is on track to have a budget surplus this year. I am not kidding.”


FACT: Maddow wasn’t kidding, but she was wrong. She evidently derived her conclusion by reading to page 2 of a poorly structured report from the Wisconsin Legislative Fiscal Bureau. Page 2 does indeed show a $57 million net balance for Wisconsin on June 30 of this year. But that doesn’t account for several other commitments, including Medicaid shortfalls, unpaid bills, and debts to Minnesota, which are spelled out later in the document. The governor of Wisconsin accounted for these in deriving his deficit figures.

MYTH: Wisconsin’s budget shortfalls are not dire.


FACT: The state is currently projected to face a $3.6 billion deficit in 2013. In FY 2010, Wisconsin took in approximately $12.7 billion in taxes. So — depending on income and tax levels in the next two years, obviously — that means deficits between 25 and 30 percent of Wisconsin tax revenue by 2013.


MYTH: “This is not about the budget deficit.” Liberals say that Walker’s proposals can’t really be about the budget because he is also restricting bargaining rights more generally over the long term. Therefore, Walker doesn’t really care about budgets — he’s performing a power grab for power’s sake, QED. This is the theme of Paul Krugman’s latest column, which several protesters have echoed on video.

FACT: Even though restricting bargaining rights over the long term won’t do anything to reduce the deficit immediately, public-sector unions will become more expensive the more political power they have — they, like everybody else, seek greater pay and benefits using the means available to them. So restricting public-sector unions’ political and bargaining power is obviously a component of restoring sanity to the budget in the long term. Krugman’s distinction of the power issue and the budget issue is without a difference.


MYTH: Walker caused the budget shortfall.

FACT: This claim is usually based off of the fact that Walker and the Republican government have enacted corporate-tax cuts. But those cuts haven’t gone into effect yet, so they aren’t responsible for this year’s deficit. And for the future, the state of Wisconsin predicts that the tax breaks will actually increase revenue by stimulating more business in Wisconsin. Liberals may dispute this economic reasoning. But they can’t claim the tax cut is part of current fiscal woes.


MYTH: Walker, if he succeeds, will make Wisconsin peculiarly hard on its employees.

FACT: The governor proposes that public employees contribute 12.6 percent of the cost of their health care. That is still less than half of the national average. He proposes that they pay less than 6 percent of their earnings toward their pensions — that is in line with the national average.

MYTH: Walker is an extremist taking away collective-bargaining rights.

FACT: He’s taking away the right to collectively bargain on pensions and benefits, but not on wages — though wage increases will be capped at the rate of inflation. This is a very modest and sensible reform. Without it, governors and legislatures can be pressured into making unsustainable commitments that — because these expenditures do not show up immediately in yearly deficits and will balloon only in the future — they will not be held responsible for. Under Walker’s proposals, public-sector unions will maintain their ability to collectively bargain for their members’ quality of life — just not to bargain away their grandchildren’s. Further, limits on collective bargaining in the public sector are not rare in the U.S.: Right now, only 26 states operate on Wisconsin’s current model, with collective-bargaining rights for all public employees.


MYTH: Wisconsin teachers live lives of austerity.

FACT: Wisconsin teachers are paid an average salary of $51,000. Annualized to account for their 180-day work year, that’s $68,000, and that is in addition to their very fine benefits, pensions, and job security. The median household income — that is, total household income, including households with two or more earners — was $49,993 in 2009 in Wisconsin. Therefore, after adjusting for the different work years — and not including teachers’ unusually generous benefits — a typical single Wisconsin teacher earns 36 percent more than the typical Wisconsin home.

MYTH: Walker blindsided everybody.

FACT: During his campaign, Walker was explicit about his intention to cut wages and benefits and generally take on the public sector. He ran on it. He had a reputation for anti-public-sector action as county executive in Milwaukee. During his campaign, the unions themselves issued flyers warning that he would take away collective-bargaining rights if elected. He never denied that he would take on collective-bargaining privileges — we would have heard all about it if he had.

If liberals were surprised, it may be because liberal media outlets were more focused on Christine O’Donnell’s past occult activities than Walker’s labor proposals.

MYTH: “This is about democracy” — a familiar rallying cry at leftists protests in Madison.

FACT: Protesters are never explicit about the logic of their claim that the pro-union side of the debate is inherently more democratic. And perhaps with good reason. A set of perverse incentives and structural problems actually make public-sector unions have particularly outsized power relative to the number of people they represent, such that even Left/Democratic icons such as FDR didn’t support the unionization of government employees. It can if anything be called especially undemocratic for public workers to strike — to hold the resources that belong to the public hostage, in order to advance the interests of a minority. This subverts the normal democratic process of directing public resources (namely voting). Legislators’ fleeing the state to prevent a vote by the legislative majority the voters of Wisconsin elected is also not very democratic. Not to mention forcing public employees to contribute to unions whose political advocacy they may disagree with. (Governor Walker proposes to allow public employees to opt out of financial contributions to the unions).


MYTH: There is no reason to believe public-sector unions are responsible for budget crises.

FACT: Think about the logic of that claim. How could there not be a burdening effect on state budgets when workers whose livelihoods are dependent upon government expenditures become more organized and more politically active? Second, look at the data: There is a correlation between the unionization of a state’s public workers and its deficits. There is also a correlation between a state’s level of unionization and Pew’s measures of its management quality. Public-sector unions have historically been not just advocates for workers’ rights, but for bigger government in general.

MYTH: Wisconsin’s public-sector workers are underpaid relative to comparable private-sector workers. Ezra Klein has approvingly cited an Economic Policy Institute study that purports to demonstrate this fact, and the claim has been echoed elsewhere.

FACT: Admittedly, this is not a matter of simple factual truth and falsehood. But Reihan Salam, Jim Manzi, and Andrew Biggs have cast serious doubt on the study, and given reason to believe the relationship may be the other way around.

MYTH: The Kochs are behind this!

FACT: The Kochs have been behind Scott Walker financially, and can be connected to almost any anti-big-government activism in the United States. But a would-be exposé from the New York Times couldn’t establish a single financial interest the Koch brothers would have in busting public-sector unions in Wisconsin. All evidence suggests the Kochs supported Walker because they believe in his policies’ justice, not their own interests.

— Matthew Shaffer is a William F. Buckley Fellow at the National Review Institute.