WILLIAM MCGURN is a vice president for News Corporation and writes the weekly “Main Street” column for the Wall Street Journal. From 2005 to 2008, he served as chief speechwriter for President George W. Bush. Prior to that he was the chief editorial writer for the Wall Street Journal and spent more than ten years in Europe and Asia for Dow Jones. He has written for a wide variety of publications, including Esquire, the Washington Post, the Spectator of London and the National Catholic Register. He holds a B.A. from the University of Notre Dame and a master’s degree in communications from Boston University, and currently serves on the board of Notre Dame’s Center for Ethics and Culture. The following is adapted from a speech delivered on February 15, 2012, at a Hillsdale College National Leadership Seminar in Newport Beach, California.
MANY SCHOLARS ARE better
versed on the history of public employee unions than I am, but there is
one credential I can claim that they cannot: I am a taxpayer in the
People’s Republic of New Jerseystan. That makes me an authority on how
public sector unions—especially at the state and local level—are
thwarting economic growth, strangling the middle class, and generally
hijacking the democratic process to serve their own ends rather than the
public.
Now in my experience, when one says the words
“New Jersey,” people for some reason think it is a laugh line. Perhaps
you know us from The Sopranos or Jersey Shore. You
might think that such a state has nothing to teach you. If so, you would
be very wrong. New Jersey offers something that can profit the entire
nation: We are the perfect bad example.
As conservatives, of course, we believe in
virtue. We like to point to policies and practices that work—low taxes
and light regulation for the economy, a strong national defense to keep
us safe from foreign attack, and social policies that favor community
over government. These are all valuable. But the bad example has its
honored place as well: It’s how we illustrate our warnings.
As parents, for example, selling virtue only
takes us so far. To make our point when we see a character trait we
don’t care for in our kids, we’re far more likely to say something like,
“You don’t want to grow up to be like Uncle Bob, do you?”
This is the reason Governor Chris Christie’s
reforms have had such resonance. Almost anywhere he points, he has
before him an example of how New Jersey’s bloated public sector is
hurting growth, limiting the efficiency of government services, and
squeezing middle class families. How many state governors and
legislators might be more inclined to do the right thing if before they
acted they first said to themselves, “We don’t want to be like New
Jersey, do we?”
These days, when conservatives get together to
discuss the debilitating role played by government workers, we reassure
ourselves with statements by FDR and labor leader Samuel Gompers about
the fundamental incompatibilities between a union of private workers
working for a private company and a union of government workers laboring
for our city, state, or federal governments. We also trace the line of
expansion to various events, including John F. Kennedy’s executive order
that opened the path for collective bargaining for public employees at
the federal level.
I don’t want to rehash that today. Today I
want to talk about the situation as we find it, and suggest that the
first step toward a cure is to diagnose the illness accurately. This
means changing the way we think of public sector unions. And in what I
have to say, I will concentrate on public sector unions at the state and
local levels.
It’s not that I don’t consider the
unionization of federal workers to be an issue. Plainly it is an issue
when the teachers unions represent one of the largest blocs of delegates
at Democratic conventions, when the largest single campaign contributor
in the 2010 elections was the American Federation of State, County and
Municipal Employees, when union money at the federal level goes at an
overwhelming rate to Democratic candidates, and when the Congressional
Budget Office tells us that federal employees earn more than their
counterparts in the private sector. Nonetheless, I believe that the
greater challenge today—to state and city finances, to democratic
representation, to the middle class—is at the state and local level.
This is partly because state and city unions have the power to negotiate
wages and benefits that their counterparts at the federal level largely
do not. More fundamentally, it is because we cannot reform at the
federal level without correcting a problem that is bringing our cities
and states to bankruptcy.
When I say we need to change our
understanding, what I mean is that we have to recognize that public
sector unions have successfully redefined key relationships in our
economic and civic life. In making this argument, I will suggest that
the elected politicians who represent us at the negotiating table are
not in fact management, that our taxing and spending decisions at the
city and state level are in practice decided by our public sector
contracts, and that when you put this all together, what emerges is a
completely different picture of the modern civil servant. In short, we
work for him, not the other way around.
Who is Managing Whom?
Let me start with the relationship between
government employee unions and our elected officials. On paper, it is
true, mayors and governors sit across the table from city and state
workers collectively bargaining for wages and benefits. On paper, this
makes them management—representing us, the taxpayers. But in practice,
these people often serve more as the employees of unions than as their
managers. New Jersey has been telling here. Look at our former governor,
Jon Corzine.
You Hillsdale folks are a genteel sort. When
you speak about the unions being in bed with the Democratic politicians,
you mean it metaphorically. In New Jersey, we take it to Snooki levels:
Mr. Corzine once shared a home with the New Jersey leader of the
Communication Workers of America, Carla Katz. Back when he was running
for governor, he was asked whether that relationship would compromise
his ability to represent the taxpayers in negotiations with outfits such
as CWA. “As the governor,” Mr. Corzine responded, “you represent
eight-and-a-half million people. You don’t represent one union. You
don’t represent one person. You represent the people who elected you.”
That’s the way it ought to be. In real life,
it turned out that during heated negotiations over a contested CWA
contract, Mr. Corzine and Ms. Katz had a long email chain—subsequently
published by the Newark Star Ledger, despite the governor’s legal attempts to keep them private—in which she pressed him on the union issues.
But it wasn’t just the CWA. Scarcely six
months after he was elected, Governor Corzine appeared before a rally of
state workers in Trenton in support of a one percent sales tax designed
to bring in revenues to a state hemorrhaging money. Not cutbacks, but a
tax. Naturally, Mr. Corzine’s solution was the one the public sector
unions wanted: Get the needed revenues by introducing a new tax.
The twist was that there was someone in the
New Jersey government who understood the problem—who understood that a
new sales tax wouldn’t do much to fix New Jersey’s problems, and that
the only way to get a handle on them was to get state workers to start
contributing more to their health care and pensions.
These were the pre-Chris Christie days, so the
author of this bold proposal was the Senate president, Stephen Sweeney.
Mr. Sweeney is not only interesting because he is a prominent and
powerful Democrat. He is also interesting because in addition to his
political office, he represents the state’s ironworkers. And what Mr.
Sweeney proposed for the public sector unions was something private
union members such as his ironworkers already paid for. It was also
common sense: He knew that if New Jersey didn’t get a handle on its
gold-plated pay and benefits for its government employees, it would
squeeze out the private sector that hires people such as ironworkers.
If the leader of an ironworkers union could
realize that, surely so could a governor who had earlier served as a
high-powered executive for Goldman Sachs. But Mr. Corzine was having
none of it. Instead, he told the crowd of state workers: “We’re gonna
fight for a fair contract.”
The question is, whom was he planning on fighting? Wasn’t he management in these negotiations?
Six months later, Governor Corzine proved this
was not simply a slip of the tongue. When workers at Rutgers University
were planning to unionize, he turned up at their rally. This was too
much even for the liberal Star Ledger, which—in an article
entitled “Jon Corzine, Union Rep?”—noted that Mr. Corzine’s appearance
at the rally raised the question whether he truly understood that “he
represents the ‘management’ side in ongoing contract talks with state
employees unions.”
Manifestly, the problem is not that Mr.
Corzine and other elected leaders like him—mostly Democrats—do not
understand. In fact, they understand all too well that they are the
hired help. The public employees they are supposed to manage in effect
manage them. The unions provide politicians with campaign funds and
volunteers and votes, and the politicians pay for what the unions demand
in return with public money.
In New Jersey as elsewhere, most leaders of
public sector unions are not sleeping with the politicians who set their
salary and benefits. They are, however, doing all they can to install
and keep in office those they wish—while fighting hard against the ones
they oppose. And until we recognize the real master in this
relationship, we will never reform the system.
The Tail Wagging the Dog
My second point relates to my first. Not only
have the public unions too often become the dominant partner in the
relationship with elected officials, but the contracts and the spending
that goes with them are setting the other policy agenda. In other words,
even when we recognize that the packages favored by public employees
are too generous, we think of them simply as spending items. We need to
wake up and recognize that in fact these spending items are the tail
wagging the dog—that they set tax and borrowing decisions rather than
follow from them.
Take the case of Northvale, a small, affluent
town of about 4,600 people at the northeast tip of New Jersey. Its
median income is about $99,000, comfortably above both the New Jersey
and national levels, and its budget is $21.8 million. Of this, $13.2
million—or nearly two-thirds—goes to the schools. The lion’s share of
that, of course, goes to salaries and benefits.
Northvale’s school budget is voted on in the
spring. That’s part of the scam, because turnout for these elections is
much lower than it is in November for the regular elections. With lower
turnout, it’s easier for teachers and other interested parties to
dominate the elections. Thus the great bulk of Northvale’s budget is not
determined in the regular elections, or by the mayor and city council.
Effectively, it is determined by the education lobby and school
officials—who in turn are chosen in elections involving only 20 percent
of the electorate.
From the other one-third of the budget,
Northvale has to run its police force and fire department, remove snow,
arrange for garbage pickup, and so on. That means there is not much
discretionary spending left. Even when voters rebel—last spring
Northvale voters overwhelmingly repudiated the budget—they are
frequently ignored, and the back door system ensures there is little in
the way of accountability.
But there are consequences: This dynamic helps
explain why, in the decade before Chris Christie was elected governor,
the property taxes of New Jersey residents went up 70 percent.
Mr. Christie is not in charge of local
spending. But he understands that this is part of an exceptionally
unvirtuous circle. So he’s made some changes. Last year, for instance,
with the help of allies such as Mr. Sweeney, he pushed a reform through
the legislature that required public workers to start contributing to
their health care and up their contributions to their pensions. It’s not
nearly the same percentage as their counterparts in the private sector,
but it’s a start.
Mr. Christie also put through a property tax
cap that forces cities to go to the people for a vote if they increase
property taxes by more than two percent. And just last month, he signed a
bill that will allow towns to move their school budget votes to the
November ballot—not only saving money, but also ensuring that more
citizens vote, not simply those who have a vested interest.
At the same time, Mr. Christie has begun to
campaign against abuses using language that people can understand. His
most recent target is the practice of awarding six-figure checks to
public employees who are allowed to accumulate—and cash out—unused sick
pay. In New Jersey these payments are called “boat money,” largely
because retired government workers often use the money to buy pleasure
boats when they retire. Across the state, cities have liabilities of
$825 million because of these boat checks.
And what’s been the opposition’s response?
Instead of agreeing to reasonable cuts, the Democrats keep thumping for a
millionaire’s tax. New Jersey being New Jersey, the millionaire’s tax
aims at people making far less than a million dollars. But even if it
didn’t, it’s hard to see how driving millionaires out of the state will
help it meet its huge and growing unfunded pension liabilities.
To summarize my second point: You and I make
spending decisions the way all households do. We take our income, and we
live within our means. In sharp contrast, public employee unions have
introduced a whole new dynamic: They negotiate pay and benefits in
contracts we can’t rewrite. When the revenues to meet these obligations
fall short, they push to raise taxes to make up the difference.
The Corruption of Public Service
That leads me to my third and final point: If I
am right that the public employee unions are in fact the managers in
the relationship with politicians, and that public sector spending is
driving tax and borrowing policy, the inescapable conclusion is that you
and I are working for them.
That’s not how we usually understand and speak
of public service. Traditionally, the idea of a public servant is
someone who is working for the public, with the implication that he or
she is sacrificing a better material life to do so. But can anyone
really define today’s relationship this way? Especially when health care
and pensions are included, government workers increasingly seem to live
better than the people who pay their salaries. How many of you walk
into some local, state or federal office these days and leave thinking,
“The men and women here are working for me”?
In some ways the change has been driven by
larger changes in union life. From one out of three workers at its high
point in the 1950s, today fewer than one out of 14 private sector
workers belongs to a union, and the percentage continues to drop.
Conversely, the unionization of government employees continues to grow,
to the point where public sector union members now outnumber their
private sector counterparts for the first time in American history.
In a recent interview with the Wall Street Journal, Fred Siegel notes that public sector unions havebecome a vanguard movement within liberalism.
And the reason for that is it’s the public sector that comes closest to
the statist ideals of McGovern and post-McGovern liberals. And that is,
there’s no connection between effort and reward. You’re guaranteed your
job. You’re guaranteed your salary increase. There’s a kind of
bureaucratic equality.
“This vanguard,” Siegel continues, “becomes in
the eyes of many liberals the model for the middle class. Public-sector
unions are what all workers should be like. Their benefits are the kind
of benefits everyone should get.” So instead of the private sector
defining the public, the public sector is thought to define the private.
As public employees unionize, their dues—often
collected for the unions by the government—fund a permanent interest
constantly lobbying for bigger government. To pay for this bigger and
more expensive government, they advocate for higher taxes on those in
the private sector. Only when they are threatened with layoffs are they
inclined to compromise, and sometimes not even then. That is what I mean
when I say that we work for them.
Where to Go From Here
One of the few silver linings of our tough
economy today is that it is forcing tough decisions. Big city mayors and
governors are having issues with their public employees, because we’ve
reached a point where we simply cannot afford business as usual. With a
sluggish economy—and fewer taxpayers—the problems that have piled up are
becoming too difficult to ignore.
Across the nation we have governors and mayors
trying to solve their public employee problems with varying degrees of
seriousness, from Chris Christie in New Jersey to Jerry Brown in
California to the great experiments going on in the Rust Belt—in
Indiana, which has done the best, and Wisconsin, Ohio, and Michigan.
Only Illinois, led by Democratic Governor Pat Quinn, has opted for
business as usual with a mammoth tax increase that is now being followed
up, in today’s typical way of Democratic governance, with tax breaks
for large companies threatening to leave Chicago because of the tax
burden.
In most of these places, there’s probably
little we can do about the contracts that exist. What we can do is bring
in new hires under more reasonable contracts and pro-rate contributions
for existing employees. Even marginal changes can have a big impact, as
Wisconsin found out when Governor Scott Walker’s collective bargaining
reforms for public workers helped restore many of the state’s school
districts back to fiscal health.
My father was a federal employee, as an FBI
agent. I spent some time as a government worker in the White House. I
also know many fine and devoted people on the public payroll who work
hard, are good at what they do, and earn everything they get. But there
are also those who work without results. I believe Americans are a
generous people who can recognize the difference. We need to restore our
public sector to a place where those in charge can make those
distinctions and allocate rewards and resources accordingly.
In the meantime, I think the best thing we can
do is speak honestly. That is what Mr. Christie is doing in New Jersey.
His style isn’t for everyone. Yet his popularity suggests that
Americans appreciate a politician willing to talk about the reality of
public employee unions today—and the unreasonable costs they are
imposing on our society.
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