From Wisconsin to the West Coast, voters Tuesday sent a message: The era of gold-plated pay packages for civil servants is coming to an end.
Actually, they sent two messages. The other is voters will support elected leaders who act to fix fiscal crises. There could be no better signal sent to politicians everywhere in this election year.
In San Jose, a ballot measure limiting pension benefits for new city hires, as well as those for current workers going forward, got 70 percent of the vote. In San Diego, a similar initiative won by a 2-to-1 margin.
And in Wisconsin, 2012’s most intense state contest saw Gov. Scott Walker, who pushed through public-sector union reforms last year, resoundingly beat back a recall attempt backed by Big Labor. His 7-point win represented a larger share of a larger turnout than in 2010.
None of these locales is a hotbed of conservatism: In 2008, Barack Obama won all three by double digits. Yet, their voters Tuesday made clear that public workers, those traditional liberal allies, will no longer receive richer benefits than the public they serve. The model may have worked at one time, but it is no longer affordable.
For a nation facing more challenges to old deals, Walker summarized the day’s significance in a victory speech: “Tonight we tell Wisconsin, we tell our country … that voters really do want leaders who stand up and make the tough decisions.”
Let’s hope he is right, because Tuesday was also the day our national challenges about entitlements and other spending — and the tough decisions they’ll require — were made even clearer.
The Congressional Budget Office, in its latest “Long-Term Budget Outlook,” warned current law would lead the national debt to grow until it is double our gross domestic product, or GDP. This, within just 25 years.
In the worst case, the debt would grow so quickly that forecasters would not predict its effects on the economy. Here’s a hint: They wouldn’t be good effects.
The best way to understand our spending challenges, though, is to look at CBO revenue forecasts. At worst, the agency says, tax revenues will level off at 18.5 percent of GDP. The historical average is 18 percent, which has held even as tax rates have risen and fallen, and loopholes have been closed and opened. In other words, even the worst case might be unrealistically high.
The CBO also suggests a rosier scenario in which revenues only go up, up, up — to 24 percent of GDP and counting. There is a word for this kind of thinking: fantasy. Washington has never taken in as much as 21 percent of GDP.
Now, again, all this talk about revenues is prelude to the main event, which is spending.
Revenues at 18.5 percent of GDP — again, slightly higher than history tells us is realistic — would cover only Social Security, Medicare, Medicaid, Obamacare and interest payments on the debt by 2037. Nothing else. And that’s the CBO’s slow-growth picture for spending.
Even under the rainbows-and-unicorns scenario, with tax revenues rising without end, spending on all other items would have to be cut by more than half relative to today to balance the budget.
A responsible plan from Washington would assume revenues stick to the historical average, and use any surplus to pay down debt faster. That means cutting the “other” category of spending in the near term while phasing in changes to the big-ticket items, particularly Social Security and Medicare.
And that means electing leaders who, as Scott Walker put it, will “stand up and make the tough decisions.”
There’s a part of his speech I was going to leave out because I thought it sounded hokey: “What has made our country unbelievable, what has made the United States of America exceptional … is that in times of crisis, be they economic or fiscal, be they military or spiritual … there have been men and women of courage who stood up and decided it was more important to look out for the future of their children and their grandchildren than their own political futures.”
Then I read that France’s new Socialist president, Francois Hollande, reversed one of his predecessor’s few courageous reforms and lowered the retirement age to 60. For such an indebted country, this is madness.
So, maybe political courage is part of what makes America exceptional. But if that’s still true, we need to prove it.
– By Kyle Wingfield