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Wisconsin: Is President Obama Out of Step with History?

Prof. Peter Morici - 2/22/2011

Wisconsin is ground zero in the struggle to restore fiscal sanity to government.

Budgets are spinning out of control, thanks to union contracts providing overly generous retirement and healthcare benefits and skyrocketing Medicaid costs. President Obama, instead of focusing on systemic problems, seeks political advantage and multiplies the difficulties confronting state governments.

Wisconsin Governor Scott Walker faces a $3.6 billion dollar shortfall over the biennium beginning July 1. He is asking state workers, who currently contribute little or nothing to pensions, to kick in 5.8 percent of wages, and to pay 12.6 percent of the cost of health insurance. In return, he promises no layoffs—compared to private sector workers, those are great terms.

The rub—he wants to curtail, but not eliminate, collective bargaining rights. President Obama, mindful of who provides foot soldiers for Democratic campaigns, oversimplifies the issue by calling Walker’s budget an attack on unions.

Worse, the President is interfering with the outcome of an election. By using his political machine to flood Madison with demonstrators, he encourages Democratic Senators in the minority to flee the capital to deny the upper chamber a quorum and shut down the legislative branch of government.

Apparently, President Obama believes elections have consequences only when his side wins. The people of Wisconsin elected Scott Walker and a Republican Senate to reform state finances and curb union power; the President doesn’t like their methods, so it’s OK for Democrats to shut a branch of government.

Similarly, Americans elected a Republican House to curb spending in Washington, which jumped from $2.7 to $3.8 trillion in four years with Nancy Pelosi as Speaker. The President threatens to veto a 2011 spending bill that imposes $60 billion in cuts, and then portray Republicans as shutting down the government and denying the elderly their social security checks.

In the private sector, unions represent less than 8 percent of workers, because an increasingly educated and professional labor force finds them irrelevant, and simply won’t vote yes for unions in representation elections. Hence, the President backs “Card Check,” a proposal by the AFL-CIO to deny workers of union elections and permit organizers to strong arm workers in restrooms and parking lots to sign cards.

Public sector unions enjoy a superior relevance to their members. If a private union negotiates wages and benefits that make its employer uncompetitive, the business fails and workers lose their benefits. Government workers and their employers face no similar competitive constraints, and they can organize politically to ensure their bosses—governors and key legislators—share Barack Obama’s peculiar pro-union bent, however out of step with popular sentiment.

Now that political strategy has backfired. In Wisconsin and several other states, voters have chosen governments that would rebalance the relationship between public employers and organized labor. The reforms proffered by Governor Walker are not as radical as the law limiting collective bargaining in Virginia.

On health care, the President rammed through an unpopular health care reform law that subsidizes a broken system too much and reforms too little.

Germany, with private insurance and health care systems similar to ours and comparable or better standards of care, spends 12 percent of GDP on health care, while the United States spends 18 percent. Simply, Germans pay less for drugs, hospital stays, administrative costs, and malpractice than do Americans. The President’s health reforms do little to address these issues and instead are driving up costs—witness the numbers of small businesses dropping health benefits for employees, and states and unions seeking waivers from the more onerous requirements of the new legislation.

Bond markets are beginning to treat U.S. federal, state and municipal governments like bonds issued by Athens and Dublin. Rating agencies are downgrading state and municipal governments and considering the same for the federal debt. Investors are demanding higher risk premiums on long-term U.S. Treasuries

Protecting unions and spending too much on a broken health care system may prove shrewd politics for the media savvy and rhetorically gifted President Obama seeking reelection, but it is lousy economics. It goes a long way toward explaining why the federal deficit has jumped from $161 billion to $1.6 trillion in four years, state governments are teetering on fiscal ruin, and investors around the world are increasingly nervous about Washington’s ability to pay its bills.

President Obama’s Intervention in Wisconsin Violates Constitutional Obligations, Abuses Office

President Obama’s intervention in the dispute between Wisconsin Republican Governor Scott Walker and public employee unions violates his constitutional obligations to ensure representative democracy in each of the several states and abuses special privileges he enjoys as President.

Across the country governors and state legislatures are grappling with tough budget deficits made worse by union contracts that guarantee workers more generous retirement and health care benefits than enjoyed by their private sector counterparts.

Governor Walker faces a $3.6 billion dollar shortfall over the biennium beginning July 1. He is seeking legislation requiring state workers, who currently contribute little or nothing to pensions, to kick in 5.8 percent of wages, and to pay 12.6 percent of the cost of health insurance. In return, he promises no layoffs—compared to private sector workers, those are great terms.

The rub—he wants to curtail, but not eliminate, collective bargaining by state workers, and require their unions to submit to annual recertification elections. Notably, many states limit or deny state workers collective bargaining rights.

Democratic state senators in the minority have fled the state to deny the upper chamber a quorum and shut down the legislative branch of government.

President Obama, through his private political organization and the Democratic National Committee, has helped mobilize a massive influx of outside demonstrators in Madison, supporting the shut down and frustrating the outcome of the November election, which brought Governor Brown and Republican majorities to power.

Article IV, Section 4 of the Constitution, states “The United States shall guarantee to every State in this Union a Republican Form of Government…” By supporting and facilitating outside agitators in Wisconsin to extend the shutdown of the legislature, the President is failing in his constitutional obligation to ensure that voters can effect laws through the ballot box.

It is important to recognize the President is not intervening via federal authority to enforce a U.S. law or civil rights, but rather using the prestige of the presidency and personal resources to disrupt in the deliberations and lawmaking functions of a state legislature—acting within its state and federal constitutional authority—and indeed encouraging the shutdown of constitutional government in that state.

In the private sector, unions represent less than 8 percent of workers, because an increasingly well educated and professional labor force does not find them relevant, as did less educated industrial workers who dominated the non-agricultural labor force in the decades after World War Two.

Public sector unions enjoy a superior relevance to their members. If a private union negotiates wages and benefits that make its employer uncompetitive, the business fails and workers lose their benefits. Government workers and their employers face no similar competitive restraints, and often organize politically to ensure their bosses—governors and legislators—are pro-union.

Now in Wisconsin and several other states, voters have chosen governments that would rebalance the relationship between public employers and organized labor. The reforms proffered by Governor Walker are not as radical as laws denying collective bargaining, for example, in Virginia and several other states.

Under U.S. law, the scope of public sector workers’ right to collective bargaining is the legitimate province of state legislatures, and the intercession of the President of the United States into the lawmaking functions of a state legislature is an illegitimate use of federal executive power.

Presidents enjoy a peculiar status in U.S. law. Federal courts are disinclined to adjudicate the acts of sitting presidents, fusing their private and official personality under the law.

President Clinton only faced the genuine litigation—both criminal and civil—from Special Prosecutor Ken Starr and other plaintiffs after his term in office was concluded. Mr. Starr likely concluded that short of high crimes and misdemeanors, which are the exclusive province of the House and Senate, Presidents, as heads of state, can’t be indicted.

President Obama by acting through his private political machine is abusing his special status. He is providing resources to aid and abet the shutdown of constitutional government in Wisconsin.