Economic and Domestic Policy
In Wisconsin, the real struggle is over power
You've probably heard politicians fret that state governments - or, worse, the federal government - will default on their debts. House Speaker John A. Boehner called the prospect of a federal default "a financial disaster not only for our country but for the worldwide economy."
And why will it be so bad for the economy? Because the powerful actors who make up the entity we loosely refer to as "the market" - that means everyone from banks to hedge funds to China - will go nuts. They'll realize we're fiscally irresponsible. They'll stop lending us money, or at least start charging us more when they do. Interest rates will skyrocket, and the economy will grind to a halt.
So America's various governmental entities are looking for ways to avoid defaulting on their debt - or at least defaulting on their debt to the powerful. That addendum is important, because one of the strategies that's emerging is to default on debt to the less powerful, the people who don't have the power to wreck our economy.
This is a crucial fact about the economy: Power matters. It's worth more, in many cases, than money. And that's what's really at issue in Wisconsin.
It's why Gov. Scott Walker (R) is uninterested in taking concessions from the unions on wages and benefits if they don't come alongside concessions on collective bargaining. What he wants isn't a change in the balance of payments. It's a change in the balance of power.
The deal Wisconsin made with its state employees was simple: Accept lower wages than you could get in the private sector now in return for better pensions and health-care benefits when you retire. Now Walker wants to renege on that deal.
Rather than stiff the banks, in other words, he wants to stiff the teachers - but the crucial twist he's added, the one that's sent tens of thousands of workers into the streets, is that he wants to make sure they can't fight back once he does it.
The reason you can't stiff bondholders is that they can make a state or country regret reneging on the deals they've made. They can increase borrowing costs far into the future, slowing economic growth and, through the resulting economic pain, throwing politicians out of office. That gives them power. An ordinary teacher does not have access to such artillery. Unless, of course, she's part of a union.
Unions - through collective bargaining, strikes and other means - give workers power. They make reneging on contracts with their members painful. They also make negotiations less lopsided.
They're not perfect, of course. They sometimes negotiate bad deals, or misbehave, or hand good money over to bad people, or put their short-term interests ahead of the public's long-term interests. But then, so do corporations and politicians.
But their power matters for more than just debt repayment. For all their faults, unions tend to see their constituents as not just their own members, but the "working class," broadly defined. That's why you'll find labor's fingerprints on everything from the two-day weekend to Medicare to the Civil Rights Act of 1965 - none of which require you to flash a union card before you can benefit from them.
To get a sense of what a world without unions would look like - a world where power is distributed radically differently - you need look no further than Walker's own proposals. In his State of the State speech, he said, "The decisions we face are not easy and the solutions we must approve will require true sacrifice." He's already called for plenty of it from not only state employees, but also the low-income residents who rely on Wisconsin's BadgerCare program.
But some won't have to sacrifice nearly so much. Walker's campaign platform called for sharp cuts in corporate taxes, including "eliminating corporate taxes for the first two years of operation." His budget repair bill proposes to allow the state to sell energy plants "with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state," and goes on to say that "any such purchase is considered to be in the public interest."
What you're seeing there isn't necessarily a world where deficits are lower. Rather, it's a world where power is distributed very differently. Maybe that's a good thing. But let's not confuse a discussion over political power with a discussion over deficits.