This is my modest contribution to the debate about the Budget Repair Bill
I would like to start by separating the proposal from the person. But because the person is center and front in this, I will leave only one note. I am willing to give the benefit of the doubt and assume that Governor Walker is an intellegent, thoughtful and successful man. I also believe he is wrong both in the content and the style of his proposal. And people live by their acts and words. Clearly, in his core, he thinks it is ok to dispose of people's livelyhoods, feelings and aspirations, without giving them a chance to defend them, in the name of some higher political purpose. The judgement of his character must have this in consideration.
Now for the Proposal:
Let us start with a premise: the State's budget needs some fixin', and the alternative to Walker's proposal is the lay off of thousands of of State workers (
http://www.jsonline.com/news/statepolitics/115911379.html).
Given this premise, let us look at the alternative. Would Scott Walker fire thousands of State workers?
I think he wouldn't. WI has 3.5 million voters. In the last election, Walker own by 118.000 votes (
http://gab.wi.gov/elections-voting/results/2010/fall-general). That's a 5% margin, or a change of voting direction of 59.000 votes.
Numbers from the WI worknet (
http://worknet.wisconsin.gov/worknet/downloads.aspx?menuselection=da&pgm=CES) indicate that there are 426,000 government workers. Of these, 31.000 are federal workers, 99.000 are state and 295.000 are local government, including 159.000 in education.
After this, all calculations are speculative. It was hard enough to find these numbers. But let us assume that state workers vote the same way as the general population, with the exception of teachers, which will vote 75-25 for democrats (I may be overstating this, but we have to start somewhere). So, 61% of these 426,000 government workers vote, with 151.000 voting Democrat and 110,000 voting Republican.
Also assume each government worker, between friends and family, can influence the vote of just one person. All it takes for Scott Walker to lose the next election is for 24,500 government workers to change their mind (between republicans deciding to vote for dems and stay home, and for registered voters that did not vote to come vote for the dems). This constituency totals 276,000. 24,500 is less than 10% (8.8%, more precisely). It does not seem to be a stretch of imaginations to consider that Walker would not have the guts to lay off "thousands" of workers.
So if he can not "lay off thousands", what should the Governor do?
Given that Scott Walker would probably not fire thousand of workers, how can we interpret this idea that the rights of state workers are the key to balance the budget?
But before we try to answer this, let's look at the other side of the bargain.
The budget gap is $137 million from now until the end of June, and $3.6 billion for the next fiscal budget (2011-13). The annual budget is about $15 billion. This is a number that is seldom referred on news, and I do not know why. You can only find it by reading lots of meaningless notes (check last fiscal budget "in brief"
http://www.doa.state.wi.us/debf/pdf_files/bib.pdf ).
Basic Data About the Budget and The People it Will Affect
So the basic proposal is to reduce benefits to state workers and save a portion of the $137 million shortfall in the next 4 months, and $3.6 billion over the following 24 months. The Governor's office thinks that the proposed measures will save $30 million right away and $300 million in the following two years. Local government and teachers are out of the calculation.
Gut check: let us assume the average state worker (including local government and teachers) makes $45.000. This is probably an overstatement, but lets roll with it.
The proposal is for a contribution of 5% of salary to pensions ($2,250/yr), and 12% of health insurance premiums (assume $15,000/yr in premiums, or $1,800/yr). Simple math: those numbers alone give $133 million in the next 4 months (Mar-Jun), and $400 million per year over the next two years. This is only for the 99,000 state workers.
Side note: the difference between these numbers and Gov. Walker's announcement might be in his decision to leave police and firefighters out of the changes. Either that, or the average salary of State workers is less than $45,000/year (which is the average salary for the USA as a whole, give or take).
If you add the same level of savings to teachers and local government workers, then you are talking about $1.2 billion of savings in 2 years. Meaning, out of an active population of 2.7 million people, the sacrifice of less than 400,000 (or 14%) takes care of 33% of the budget deficit.
Now lets look at the other side of the coin. If we decide not to reduce the expense on the backs of state, local and education workers, then what can be done?
The Tax Option
The logic answer is: cut some other place or raise taxes. Lets leave other cuts aside. Either those cuts have been done already, or they may be too hard to enact.
If you can not reduce expenses, then you need to raise taxes. We all know that Republicans refuse to even talk about this. But a quick look at the budget breakdown on the revenue side gives some immediate answers.
General Purpose Revenue (GPR) is 46% of the budget (or just a shade under $6 billion, for a $15 billion budget). Of GPR, 50% is income tax, 32% sales tax, and 7% Corporate tax.
Lets look at the sales tax first. An increase of 0.5% in sales tax would increase revenues $174 million. That means your $100 grocery bill or your $100 meal would now cost an additional 50 cents.
Next, a little speculation on income tax. The State collects about $3 billion in income tax from all income tax payers. I do not have the data (or the knowledge) to do much more than compare to averages. But if an average worker makes $45,000/year, and we have 2.7 million workers in the State, each worker pays $1,100 (round numbers), or an effective rate of 2.5%. If the effective rate per worker is increase to 3%, or $242 per worker, the State will collect an additional $655 million.
Finally, corporations in Wisconsin pay only 7% of all GPR. That means $478 million. If corporations were to pay an additional 1% of the GPR, that would be another $60 million.
Total all that, and we have $889 million of additional revenue. Spread by all tax payers, individuals and corporations, instead of only on the backs of less than 400,000 people.
The Economic Conclusion
In short:
The governor has a choice of reducing the deficit by $1.2 billion by making 400,000 pay an additional $4,000 from an average salary of $45,000 (or about 9%).
Or he can have all tax payers contribute $889 million to reduce the deficit by paying an additional 50 cents in sales tax for every $100 of purchases, paying an additional $242 on average in income tax, and having corporations increase their share of GPR to 8%.
The Political Conclusion
So the question now becomes this: why is Scott Walker trying this at this moment? Or better: why is he putting as an alternative laying off "thousands" of State workers or reducing expenses by cutting their pay 9%? And why is he not considering an increase in revenue with modest tax raises of 0.5% in sales tax and income tax, and increasing the weight of corporate taxes on revenue by 1%?
Because we are making an effort to separate the person from the proposal, lets assume that Gov. Walker is not an idiot, or a villain who blinks his eyes when he speaks. That means that there has to be a rational reason for him to do this, at this time.
If you have any other idea, I am willing to hear it. But right now, I can only think of one: Gov. Walker has assessed the risk of trying this, and thinks it is a good bet to change the system that the State of Wisconsin has known for many years. This is a political calculation, and he believes he can make a name for himself with very little downside.
Lets remember that the Republican Party modern foundation hero is Ronald Reagan, and he made his name when he broke the air traffic controller strike. I believe that every modern republican has dreams about breaking unions, and becoming an instant prophet for the American right. Walker is on the verge of doing it. He believes that the 2 million votes he received, combined with a majority on both chambers, gives him a unique opportunity to create a name for himself.
At the same time, we all know that it is easier to have a few thousand people pissed off, than everybody. It is easier to paint a group of perceived privileged, educated liberals, than explain why somebody that vowed in public to never raise taxes recant his options. And it is a bargaining strategy to frame something as unavoidable. By doing it, and backing it with the National Guard, the lethargy of the populace, and a legion of goose step walking legislators. And if everything goes wrong, the economy is and will continue to improve. The budget woes will be fixed, either by Scott Walkers actions, or more likely, by th general improvement in economic conditions. So he will look like an hero, who triumphed over odds, even if he does not get all he wants, or because he was decisive, forward thinking and impervious to the pressure of the lobbies.
As an added bonus, Mr. Walker is probably doing a favor to his many contributors, who gave him $9 million. I do not think you will find many State workers making $45,000 a year in this list:
http://www.followthemoney.org/database/Sta...p;p=1#sorttable
I hope this helps to inform you a little better about the essence of what is at stake.