In my last column, I documented how California’s pro-union Attorney General Kamala Harris provided an unfair and dishonest title and summary to a pair of pension reform initiatives submitted to her office, thus effectively killing the measures. Last week the unions tried—and almost succeeded—with an even nastier stunt designed to undermine democracy.
In San Diego, unions are fearful of a new pension reform measure referred to by supporters as Comprehensive Pension Reform, or CPR, that has qualified for the June 2012 ballot. Instead of simply gearing up to fight this political battle, the unions petitioned one of those ridiculous commissions that most Californians have never even heard of, the Public Employment Relations Board, which is unfriendly turf for taxpayers. The union said placing the initiative on the ballot amounted to an unfair labor practice, and PERB called for an injunction to stop the election until it could complete its sham proceedings.
In essence, the unions and this unelected board insist that the people of San Diego have no right to vote on pension reform. This is just the latest reminder of the totalitarian ethics of a public-sector union movement that doesn’t care about anything other than protecting its benefits.
“Never in the history of this state ... has there ever been a requirement to meet and confer over a citizens’ initiative placed on the ballot by voter signatures,” wrote city attorney Jan Goldsmith in a toughly worded letter to PERB. Pension reform advocate Carl DeMaio, a councilman and mayoral candidate, criticized PERB's assault on Californians' constitutional rights. Fortunately, a judge agreed with the city, but expect the unions to head back to court if their campaign against CPR fails.
The unions that dominate Sacramento are not about to let any serious reform take place given that real reform—especially in light of frightening new unfunded pension liability numbers—means that the days of millionaires’ pensions (one would need millions in the bank to receive the amounts commonly received by recent California government retirees) eventually have to end. Unions don't mind undermining the public's right to vote. They don't care if our taxes go through the roof and businesses flee the state. They don't care if services are slashed. They want their money.
Even Gov. Jerry Brown’s modest pension reform proposals are going nowhere in a Democratic-controlled Legislature that continues to promote expanded benefits for public employees, including a recently introduced Public Employees Bill of Rights. That leaves few other choices than a continuing gallop toward the brink.
While other liberal states such as Rhode Island are addressing their pension problems, and some Midwestern states such as Wisconsin, Ohio, and Indiana are fighting battles over union power, California does basically nothing. I appreciate the governor’s pension proposals, but he continues to view hefty tax increases as the only real solution to the state’s budget problems. The deficit has shrunk a bit, and Standard & Poor’s pushed up the state’s credit rating a tad, but the fundamentals have not improved here very much.
Where does that leave us?
Economist Allan Meltzer once quipped that “Capitalism without failure is like religion without sin. It doesn’t work.” Americans have been witnessing this axiom on a broad scale, as government efforts to prop up industries, bail out the financial sector, and protect select private businesses from failure have only caused a prolonged financial crisis. Without failure, there is no day of reckoning and no effort by the failed party to make the fundamental changes needed to avert future crisis.
The problem in the public sector is that government never is allowed to fail. There never is a day of reckoning no matter how poorly a government agency may provide its so-called services. Often, the worst agencies are rewarded for their failure by being granted additional public dollars. California governments have continually ramped up pension promises, but governments can’t go out of business, so they just keep piling up the debt.
When there’s no money left, officials play games with the numbers or—as Gov. Brown continues to do—make it their main objective to raise taxes.
Since reform can't take place because of union control, some have proposed wider use of the bankruptcy option so municipalities can reorganize their debt. The main critics of the bankruptcy option are the unions. They know that bankruptcy would enable governments to abrogate these unaffordable contracts. The public-employee unions championed a bill, signed into law by Brown in October that makes municipal bankruptcy more cumbersome by forcing localities to get approval for such actions by additional committees.
Some even see the bankruptcy option as something that should be allowed for states. In January 2011 GOP pols Jeb Bush and Newt Gingrich ignited this debate with a Los Angeles Times op-ed titled, “Better Off Bankrupt” that argued that an organized bankruptcy process might help states overcome staggering budget deficits. But other conservatives, concerned about the impact of bankruptcy on bond markets, have been campaigning against this idea. They note that the highly publicized Vallejo bankruptcy ultimately did little to reform that city’s super-sized pensions for public employees.
I’m not advocating for bankruptcy per se, but what happens when all other reform options are taken off the table? What happens when the politics of a state won't allow the reforms necessary to save that state? In other words, what happens when failure is not an option? If the likes of Harris and PERB and the unions continue to get their way, we very well may get to see the answer here in California.
Steven Greenhut is vice president of the Franklin Center for Government and Public Integrity. He is based in Sacramento.