Thoughts, Rants & Raves, and Useful Info

The Public Sector & Collective Bargaining

Sweat shops. Child Labor. Exploitation. Yeah, we get it. Labor unions were formed to address legitimate grievances of labor and to right serious wrongs. And they have served a useful purpose in assuring the quality of the trades.

I have no beef with trade unions, and most especially not with the rank and file union member. Most union workers are hard working honest people who desire nothing more to earn a good living and provide for their families.

Collective bargaining has its place in the private sector free market. Let labor bargain for the best deal they can get! Fair enough.

BUT, if the company over-commits, and agrees to wages and benefits that are unsustainable… they should either downsize or face bankruptcy! It is not the responsibility of the American Taxpayer to bail them out! The workers who bargain themselves into unaffordability will find themselves jobless. And that is a market-based correction to an overreach!

In the Private Sector, the Company exists to make a profit for its stakeholders. Management bargains with Labor, representing the interests of those stakeholders and Labor bargains on behalf of the worker. They arrive at an agreement which provides the needed labor at a sustainable cost which permits the profits which allow the Company to continue to operate and to continue to employ the workers. While there is some latitude for bargaining, both sides recognize that there is a balance that must be maintained to keep both labor and stakeholders happy, and that an imbalance toward EITHER side will destabilize the ability for the Company to continue earning profits and employing labor.

The Public Sector is another matter entirely. Unfortunately, this balance does not exist in the Public Sector, as NO ONE at the bargaining table represents the true stakeholder… the taxpayer!

In the public sector, the employer is the Bureaucratic GOVERNMENT! The Management, negotiating the contracts on behalf of the employer consists of elected officials, who seek power and seek re-election.

The Public Sector Unions exist more to deliver votes to these elected officials than to “represent” the workers… but because of this incestuous relationship, whereby Union Dues support the campaigns of the officials who will ultimately decide the pay and benefits of the unions, the workers get the sweetheart deals.

So it’s a win-win, right? Everyone gets what they want, right?

Umm… Well… The Public Sector Employee gets a nice cushy job with wages and benefits far exceeding the private sector’s equivalent positions. They’re happy.

The Elected Officials get campaign contributions out the Wazoo. They’re happy. Oh yeah – I neglected to mention – Big Labor supports DEMOCRAT elected officials with more than 90% of their political contributions.

So everyone’s happy, right? Everyone except the STAKEHOLDER… The Taxpayer! The guy who foots the bill for both Labor and Management in this enterprise has NO SEAT at the table! Collective bargaining in the public sector is a huge conflict of interest, an incestuous relationship – ripe for corruption, and completely disregards the people the Government exists to serve… the taxpayer.

Wages and benefits grow to the point of unsustainability, as we’re seeing in CA, NY, NJ, WI, OH, IN, MI etc. The Democrats keep kicking the can down the road, avoiding the necessary day of reckoning when the reality comes to light that they simply can’t afford what they’ve promised. But when a Chris Christie or a Scott Walker simply speaks the truth that the State is BROKE and CANNOT continue to fund the goodies these public sector unions have enjoyed historically – the unions go berserk!

The unrest we are seeing in Wisconsin, and which is spreading to other states, is being likened in the mainstream press to an Egypt-style cry for freedom! What a disingenuous comparison! These public sector workers currently receive their healthcare and pensions FOR FREE!! Without any contribution on their parts! Talk about a sweetheart deal!! Show me a private sector UNION employee who gets that today!

No, these union uprisings are not like Egypt at all. They are like France and Greece! The Riots of the Entitled! This is what happens when the Entitled discover their Socialist Utopia has run out of other people’s money!

The fact of the matter is that Walker’s proposals WILL become law. Public Sector Unions WILL lose their right to bargain for benefits, and Right to Work WILL spread to more states. The pendulum MUST swing back from the extremes of its arc.

When a child is told by his mommy that he can’t have a desired toy because Mommy can’t afford it, he’ll often throw a tantrum. This is what we are seeing in Wisconsin today. But when the tantrum doesn’t work and mother and son leave the store without the toy, what happens? After a period of sulking, the boy will eventually accept the inevitable and get on about the business of living his life.

Public Sector Unions had best get the message that concessions are inevitable and accept it. Governments, whether municipality, city, state or federal, are out of money and running out of the ability to borrow! You can’t spend what you don’t have, in perpetuity. A day of reckoning MUST COME! For Public Employees, it’s here.

It IS Time For Draconian Budget Cuts!

President Obama has submitted his budget proposal, and unsurprisingly it calls for an even bigger deficit and more spending! Fortunately, the GOP-controlled House is sending the Administration a message reminiscent of Tip-O’Neal’s “dead on arrival” response to Reagan’s austere budgets.

Obama is calling for a 3.5 Trillion dollar budget. Of that, more than $1.5 Trillion is deficit spending, meaning that for every dollar we spend, nearly 43 cents is new debt. Borrowed money which future generations must pay back, with interest!

Said another way, wherever we can afford $57, we spend $100!

The President claims his budget will cut $1.1 Trillion over the next decade. Even if that were true (and there’s no evidence to suggest that it is!) that is a cut of $110 Billion a year on a $3.5 Trillion budget with a $1.5 Trillion deficit! Correct me if I’m wrong, but that’s a reduction of the deficit by a factor of around 1/15!

Let’s apply that formula to something a little closer to home. Let’s suppose I’m spending $45,000 a year more than I make, and I’m half a million in debt.

Do you think my cutting $3000 a year from my spending habits would keep me from bankruptcy?? Of course not! But the Keynesians STILL believe that they can spend themselves into prosperity!

Keynesian tax-and-spend economics, the mainstay of Progressive economic policy for nearly 100 years, has been attractive to Socialist Utopian Academics… because it fits their narrative and agenda. When tested in the laboratory of REAL LIFE, however, their hypotheses fall flat time after time. The failed “Stimulus” of 2009 should have erased any vestige of doubt and put the final nail in the coffin of the Keynesian model. Keynes is to economics what the Flat Earthers were to Geo-Science!

The Left decries conservative proposals to cut the budget as “Draconian”… but pay attention to the numbers!

Remember that a BILLION is 1000 MILLION, and a TRILLION is a MILLION MILLION!

Our current deficit is 1.5 Trillion. Obama is willing to cut 110 Billion!! But he says he has to raise taxes to do it!!

Congressman Ryan recently complained about not having a “baseline” for budgeting. May I suggest using the FY 2006 Budget as your starting point?

This was the last budget passed by a GOP congress before Pelosi/Reid took the reigns of Congress and began spending us into oblivion, tripling the deficit every 2 years and raising our debt from 6 Trillion to 14 Trillion in 4 short years! In 2006 our deficit was only around $120 Billion… it’s currently almost 15 times larger! Why don’t we START with a BASELINE that undoes Pelosi/Reid spending?

In the 4 years that Pelosi/Reid were in power, our debt more than doubled. They increased our debt by 8 TRILLION in 4 years! When President Bush took office, our debt was only 4 (FOUR) Trillion dollars! After 6 years, the debt was increased by 50% to 6 Trillion, and Bush was roundly (and deservedly) criticized. In 2003 the deficit was around 420 Billion. This was after 9/11, the dot-com bubble burst, and the runup and execution of the combat phase of 2 wars!

In 2003 Bush and the GOP Congress passed tax cuts, and consequently the deficit was reduced each of the following 3 years, so that when Pelosi/Reid took the reins, we were on track for a balanced budget in a year or two! When the GOP lost control of the house, they had reduced the deficit to 1/3 of the 2003 level – around 120 Billion.

It is now time to wake up and smell the coffee. We are 14 TRILLION in debt, so the INTEREST on that debt has more than doubled in 4 years. We are in a hole we may NEVER be able to climb out of… but certainly the first step MUST be to STOP DIGGING!

You will hear a lot of talk about “discretionary” spending. This encompasses our Military spending (both wartime operational expenses and the baseline expenses to maintain a standing military), as well as all other regulatory and operational costs of government. The sum total of our “discretionary” spending is around 1.2 or 1.3 Trillion dollars.

The remainder of our budget is the so-called “mandatory” spending. This is a misnomer. These expenses, with the exception of interest on the National Debt, are “ENTITLEMENTS”. Since the constitution neither mandates nor authorizes these “take from Peter to pay Paul” transfers of wealth, how can they be termed “Mandatory”? But I digress!

It is essential that we address the problem of entitlement spending. Congress must acknowledge that if we were to eliminate ALL discretionary spending and ONLY fund entitlements and interest on the debt, we’d still be left with a budget shortfall of around 250 BILLION DOLLARS!! Without operating a government AT ALL except to transfer money, we’d STILL be a quarter of a Trillion dollars deeper in the hole every year!

STOP DIGGING!! We must cut entitlements, significantly. Yes, there’s discretionary spending that can be trimmed. But again – cutting ALL discretionary spending won’t be enough to balance the budget. Entitlements MUST be addressed. It’s fiscal Armageddon if we don’t.