We’re going to need more leaders to make ‘tough decisions’

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

Find me on Facebook or follow me on Twitter

319 comments Add your comment

dougmo2

June 7th, 2012
5:35 am

Wisconsin is in play now. Next is is Ohio and Pennsylvania. The democrats better realize this or they are doomed.

dougmo2

June 7th, 2012
5:36 am

Skip

June 7th, 2012
5:56 am

Kyle, how long have you hated America?

Just Curious

June 7th, 2012
6:13 am

1. Where was the Walker “courage?” The union had already agreed with all of the cuts, before Walker pushed through the busting tactics. 2. The reason that civil servants got gold-plated benefits was because the pay was, and still is, very-very low when compared to the private sector. 3. Just wait until you have the private sector doing public sector work and see what the compensations to the executives look like.

Thomas Heyward Jr.

June 7th, 2012
6:23 am

Well, I’m just sooooooooooooooooo sure that Mitt “John Kerry Jr” Romney will repeal that healthcare law and control spending…He said so.
From Cato———————–

Given Romney’s rather spotty history on the health-care issue, Leavitt’s appointment lead his presidential transition is not a great sign.

As George W. Bush’s Secretary of HHS, Leavitt was a principle architect of the Medicare prescription-drug benefit, which created the first new federal entitlement program since the Great Society. And Leavitt continues to call the program “a success,” despite the fact that it will add as much as $17 trillion to Medicare’s unfunded liabilities.

As governor, Leavitt was a tax-and-spend liberal. During his ten years in office, real spending per capita rose by nearly a third. Leavitt pushed for higher taxes on Internet sales, gasoline, and cigarettes. And, as head of the National Governors Association, he lobbied for a federal law to allow states to tax out-of-state Internet companies. He also blocked several attempts by the Utah legislature to cut taxes, including a $25 million state income tax cut in 2001. Between 1996 and 2002, Leavitt never received a grade higher than “C” on Cato’s Fiscal Report Card, and twice earned a failing grade. In 2000, he ranked below Vermont’s Howard Dean, and, in 2002, he scored lower than 7 of 16 Democratic governors.

Of even greater concern, Leavitt has spent the last two years lobbying on behalf of Obamacare. Leavitt’s company, a Utah-based consultancy called Leavitt Partners, has raked in huge profits helping states set up exchanges under the law. In fact, Leavitt’s firm has doubled in size over the two years since the health care law was signed. And, Leavitt hasn’t just made money from Obamacare grant money, he has used his influence to urge state lawmakers to set up exchanges. He has publicly said that he opposes repeal of at least this portion of the new health-care law. Given Romney’s rather spotty history on the health-care issue — to be charitable — Leavitt’s appointment is not a great sign.
.
Baaaaaaaaaaaaaaaaaaaaaaaaa

DeborahinAthens

June 7th, 2012
6:27 am

There are no “leaders” in our state or national legislatures. We have greedy, power hungry politicians who are sucking in more money than any of us can imagine from corporate welfare recipients. For some reason, the Republicans love the idea of privatizing everything from schools to prisons, not caring about the ramifications. If I hear one ore time that raising taxes (something that has to be done) will “only” make a dent in the deficit, I will vomit. No one thing is going to make a difference, but many things taken together will. The beginning of this massive deficit came from lowering the tax rates, two unfunded wars and Medicare Part D. Republicans can screech about how it’s Obama’s problem, but we have to admit that the massive hole was started with policies that have been proven to be failures. Reconstitute all the Bush tax cuts, raise SS normal retirement to age 70 for those born after 1970, cut out Medicare Part D, and you will have a few big “dents” that will work to get this manageable. It will NEVER happen because our legislators are spineless, gutless, greedy bas&$%ds.

Jms

June 7th, 2012
6:37 am

Kyle, if tax revenues have averaged 18% of GDP historically, where are they currently?

BlahBlahBlah

June 7th, 2012
6:40 am

They’re currently a little below 15%.

Ayn Rant

June 7th, 2012
7:05 am

Era of gold-plated pay packages for civil servants is over? You missed the mark with that statement, Kyle! The era of good paying jobs with retirement and medical benefits is over for everyone, except the rich.

Fair pay and reasonable benefits for civil servants did not wreck the economy; a rampant financial sector and a gridlocked federal government did it. Now, an oligarchy of Big Business, High Finance, Perverted Christianity, and the Ultra-Rich are spending billions of capital to avert blame for their evil deeds. The oligarchs want us to believe that fairly-compensated labor, fairly taxed income, uppity women, gay conspirators, and hard-working immigrants are the cause of our broken economy.

Looks like you’re in their thrall, Kyle.

GT

June 7th, 2012
7:05 am

Education has never been a religious cause to Republicans. Like dumb jocks usually couurage comes from a innate stupidity, which is increased by the GOP. In the long run the real problem here is mismanagement of resources, but if managed correctly the GOP would have lost this recall. An educated populace is an enemy of the GOP, education delivers truth that can figure out when they are being gamed by outside interest. The Republicans spoiled the populous with superficial rewards like easy credit, obesity and the deterioration of family despite lip service of tough love. They properly should be the ones having to take this away they were the ones that delivered the bad product in the first place. It is what they replace it with that will be interesting. The real hard decisions have not been made yet or felt by the people of Wisconsin. Even the governor is feeling a need to not celebrate to loudly on this one.

xdog

June 7th, 2012
7:07 am

I haven’t heard any gopers advocating a revenue increase from the current 15+ percent of GDP to the historical norms of 20 percent. Their policy of tax cuts for the rich and a reduction in benefits for everyone else, all the while ginning up the Pentagon budget, seems to comprise their total economic thinking, as evidenced by new economic guru Paul Ryan’s laughable litany of cuts.

I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...

June 7th, 2012
7:08 am

It’s “hokey” to think of others more than you think of yourself?

Really, Kyle?

get out much?

June 7th, 2012
7:26 am

Ah yes, those “gold-plated pay packages for civil servants”, that must explain why more than half of new teachers leave the profession within the first five years. I am sure Kyle can explain how gutting their pay and benefits is not only going to improve their retention rate but convince more of our best and brightest to go into the teaching profession.

historydawg

June 7th, 2012
7:27 am

Do you think firemen, police officers, and teachers choose those professions because they indeed think more of others (everyone’s children) than themselves? Is the GOP really going to war against these people? Kyle, do you really think gold describes anything related to these folks’ compensation? Really? This might be the best straw man in a while. Can we simply assume that the mission now is to impose the naked self-interest of Smith on everyone, even those who put others first? If this is “courageous,” I’ll choose cowardice.

historydawg

June 7th, 2012
7:32 am

Please also note that teachers, police, etc. have never had the rights and privileges that the Wisconsin folks lost. None are allowed to unionize in our state, bargain for pay, etc. Please don’t wage a rhetorical war on a problem that does not exist in order to trick folks. Clearly whatever the public-school-destroying GOP wants to do in Georgia, they can. Please balance the budget on the backs of everyone ELSE’s children and call that “courage,” Kyle.

Liz

June 7th, 2012
7:33 am

Do you mean closing “loopholes”, like eliminating the mortgage interest deduction, to fund the extension of the Bush tax cuts? Or maybe just eliminating the middle class, altogether?

I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...

June 7th, 2012
7:36 am

The American Enterprise Institute calculates that even after Act 10, the source of so many accusations of oppression, the average state worker receives wages and benefits of $81,637, versus $67,068 for a similarly skilled private sector worker. X minus Y equals (gulp) $14,569.

And they are hosing our children to lavish upon themselves.

This is “compassion” for others?

Really?

June 7th, 2012
7:42 am

Courage is walking into an underpaid, underappreciated job as a teacher in a high school classroom every day not knowing which of your students is carrying a gun or knife. No, I’m not a high school teacher. As noted above, no unions in this state for state workers… come on Kyle, do some real journalism and earn your pay.

Curious George

June 7th, 2012
7:51 am

Is choosing to cheat on your wife Michelle with Larry Sinclair counted as a “tough decision?”

How about choosing as the winner North Carolina in your NCAA Basketball Tournament brackets while the U.S. Economy goes down the drown? Was that a tough call, too?

ByteMe

June 7th, 2012
7:56 am

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.

That’s not quite what they said. What they said was IF you make the Bush era tax cuts permanent, then the national debt will grow until it is double our GDP. However, making them permanent would be a change to CURRENT LAW. If they are allowed to expire — which is what the CURRENT LAW says they will do at the end of the year — then revenues rise and the debt falls.

I’m all for the current law.

dc

June 7th, 2012
7:59 am

I suspect that this (voters finally standing up to long term fiscal commitments that will bankrupt our local govt and our country) is the real reason for the stock market surge yesterday. A ray of hope in a very bleak tidal wave of incredible debt that has been being put on the shoulders of our next generation.

AU Liberal in ATL

June 7th, 2012
8:00 am

Pandering to your base is not leadership and it certainly doesn’t require making tough decisions. I strongly suspect that it will be quite easy for Walker and those like him to gut the pay and benefits of average workers while keeping their own cushy benefits totally intact. No tough decisions or leadership required. Maybe what you define as leadership is actually nothing more than blatant hypocrisy. I’ll give you this, Wingnut, you consistently fail to surprise me.

Tiberius - Banned from Bookman's and proud of it!

June 7th, 2012
8:07 am

Kyle, while I agree with the overall premise of your piece that we need courageous leaders to fix our nation’s problems, I’m not so sure the electorate is ready to vote them in at the national level.

Yes, Scott Walker’s recall win is a boon to other governors looking to curb the excesses of government unions and their stranglehold on taxpayers. Locally, those elections at the state and community level are going to favor a strong leader willing to take on the most unpopular of unions, that being public sector unions. With the old adage “All politics is local” in mind, leaders willing to reign in those union abuses will do well.

However, I don’t think that translates to the national level from a political or electoral standpoint as much. Yeah, it will play into it somewhat with many people, but the specific target (above) of voter’s angst at the local level doesn’t exist at the national level. While I might (and would) firmly support someone who would take on the entitlement aspect of government budgetary excess, there is a corresponding individual who would balk at that same effort for every one holding my beliefs.

JohnnyReb

June 7th, 2012
8:15 am

It seems all the Left has is hate and envy for those more prosperous than themselves.

When the job they have does not warrant more pay, they have used threats only given unions to get more pay and benefits than warranted.

It has ruined government employment and education. It was way past time for it to stop.

Willis

June 7th, 2012
8:16 am

When I see elected officials reigning in their own pay and benefits, then the legitimacy of going after other public employess will improve. U.S. Senators and Congresspersons live lives of luxury, tended to by coteries of pampering staff and then champion their own “austerity” by claiming to return unspent money to the U.S. Treasury. The taxpayer pays for their own self-promoting “town hall” meetings, public mailings, and everything else.

They should cut their own pay and benefits, lay off excessive staff, serve term limits, and THEN, cut the pay and benefits of those public employees who do real work, like teachers, police officers, firemen, and others.

jconservative

June 7th, 2012
8:18 am

“The model may have worked at one time, but it is no longer affordable.”

This applies across the board. Across the complete board! No exceptions!

Thomas Heyward Jr.

June 7th, 2012
8:24 am

Concerning the 7:08———————-

“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.”.
.
I too…am perplexed.
.
We’ve lost Kyle………………..he’s been morally ORomneyBained.

Thomas Heyward Jr.

June 7th, 2012
8:25 am

It happens quite frequently…………..@ the AJC.

Producer

June 7th, 2012
8:31 am

Our country is dying. Enough of the mamby-pamby talk of budget cuts! Cut the federal budget 10% now across the board. No sacred cows. Everything gets the haircut. Pensions, Medicare and Caid, SS!! Then raise the retirement age to 70 in the next five years, one year at a time. None of the 2080 BS. The American labor unions have priced American labor out of the market.

carlosgvv

June 7th, 2012
8:37 am

Political leaders in Greece and France made tough decisions and faced enraged people who voted them out of office. Our political leaders, never ones for tough decisions in the first place, will take this into account and kick these problems down the road for as long as possible.

Lil' Barry Bailout (Revised Downward)

June 7th, 2012
8:37 am

And to help our Obozo receptacle friends along, there’s a big difference between a community organizer and a real leader.

kayaker 71

June 7th, 2012
8:39 am

So, we are to believe that Walker is some kind of political pariah for doing his job and doing what he said he would do in his campaign. He has taken a 3.5M dollar shortfall and turned it into a 140M dollar surplus. He has lowered property taxes or at best, kept them the same as they were the previous year. He has eliminated the crony medical insurance company that the unions used as a no bid, non competitive corporation and gone to a best bid, best care system for union employees saving gazillions of dollars. Despite death threats, threats on his family, recall elections, capital building protests, petitions, etc, etc, etc. he has not only prevailed, but has soundly been given the approval of the majority of the electorate to continue to keep the state solvent. And he is a Republican governor in a solidly liberal state. I cannot recall a liberal governor who has even come close to accomplishing what Walker has done…… and in only 18mos.

saywhat?

June 7th, 2012
8:42 am

So when are your Republican leaders going to make the “tough decision” to raise taxes?

JDW

June 7th, 2012
8:44 am

@Kyle…”Historical tax receipts”…as usual a self serving worthless number. You are averaging failure rather than seeking success.

In the last 50 years this country managed to balance the budget only in the 5 years between 1997-2001 and in 1969 In those six years tax receipts averaged 19.8% of GDP with the lowest number being 19.5%.

It seem kind of obvious that a balanced budget, based on 50 years of history, requires tax receipts approaching 20%. A leader that could make “tought decisions” would seek to replicate the 6 years of success rather than the 45 of failure?

ByteMe

June 7th, 2012
9:12 am

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

And we’re way below 18 percent now, right, Kyle?

You’ve heard of the concept “revert to mean”, right? It means that to get back to mean after being below or above mean, you end up overshooting a bit in the opposite direction. That’s how an average gets to stay average.

So when you say that “Revenues at 18.5 percent of GDP — again, slightly higher than history tells us is realistic “, you are using “realistic” incorrectly. History tells us that 18% is the average, so sometimes it’s higher and sometimes it’s lower, but BOTH (higher and lower) are how you realistically create an average.

ChuckDoberman

June 7th, 2012
9:13 am

Ah yes, the courageous decision to accelerate the demise of the middle class. How brave that we desire to extend and increase the perks and benefits for the already-wealthy at the expense of a dwindling and reeling middle class and those who live below the poverty level. How noble that we insist on cuts for public sector labor yet refuse to consider matching those cuts for legislators, most of whom have failed at their job for the past 3 years. Our ability to denigrate and disparage the weak in this country is commendable, especially because any blood we can squeeze out of that stone is immediately passed upward to those whose lives and livlihoods do not depend on it. Yes, the golden age of GOP integrity – let us all bask in it’s greatness as we strive to gain the white house and continue and amplify GW Bush’s economic policy (since it has done so well for us in the past).

Jefferson

June 7th, 2012
9:17 am

You won’t see what you want on a national level without give and take.

kelly

June 7th, 2012
9:20 am

You are wrong about San Diego. It’s quite conservative for California.

Eubiful O'sheet

June 7th, 2012
9:24 am

“civil servants” !!??
I can’t remember the last time I encountered a government employee who was “civil”.
And you’ll also have a very hard time finding one who would consider themselves as a “servant” of the taxpayers who foot the bill for their paycheck and benefits package.

Review the videos of the taxpayer funded parties in Las Vegas before you liberals start with the “policemen, firemen teachers” mantra. Those are ALWAYS the first cuts proposed by politicians who don’t want to make any cuts. Never do they propose cuts in their own staff, or their own pay.

td

June 7th, 2012
9:32 am

“So when are your Republican leaders going to make the “tough decision” to raise taxes?”

I think they will take a look two years after the spending cuts go into effect. The Republicans and the American people have been burned two times within the past twenty years by democrats that promised spending cuts in the out years for immediate tax increases. Those cuts never came. I will vote against any Republican that raises taxes on anyone before spending cuts are implemented and we see what happens for at least two years.

Kyle Wingfield

June 7th, 2012
9:34 am

BlahBlahBlah @ 6:40: Wrong. They’re estimated to come in at 15.8% this year. They haven’t been below 15% since 1950. See here, the same source linked in the OP.

And why are they so low? Because unemployment remains so high. Tax receipts after the Bush tax cuts rose as high as 18.5% of GDP in 2007.

Kyle Wingfield

June 7th, 2012
9:35 am

xdog @ 7:07: Tax revenues of 20% of GDP are not “historical norms,” but historical aberrations. The data on this, linked in the OP and my earlier comment, are crystal clear and not in dispute.

Dirty Dawg

June 7th, 2012
9:35 am

Yeah Wingfield, we’re really in need of those ‘leaders’ capable of making those tough decisions…only thing is its ultimate ‘tough’ decision can become known as their ‘final solution’. It’s the same mindset dammit. How about a little ‘Golden Rule’ thinking?

Jefferson

June 7th, 2012
9:36 am

Face it tax increases are going to happen, spending reductions are going to happen if the problem is to be solved. The GOP will do great harm to get back into power.

Kyle Wingfield

June 7th, 2012
9:36 am

I Report @ 7:08: No, what I thought was hokey was to link “American exceptionalism” to “whatever just happened.” I think it’s much broader than that.

jms

June 7th, 2012
9:37 am

If tax receipts are at 15% of GDP now, moving to18.5% or 20% sounds reasonable. Let’s do it. But huge spending cuts will have to be a part of the solution too.

ABC News said the Wisconsin cuts meant a teacher making $74,000 would have to pay $200/month more for their health coverage. That certainly stinks for the teacher but it’s hardly outrageous.

Kyle Wingfield

June 7th, 2012
9:39 am

Really? @ 7:42: It’s funny how “real journalism” always equals whatever you wish I would write.

Now, as for the question of unions in Georgia: Where in this column did I say there were any? In fact, there are public-sector unions for workers at the local level, but that’s beside the point since I didn’t even link unions to this state.

Tiberius - Banned from Bookman's and proud of it!

June 7th, 2012
9:39 am

One of the best articles debunking the notion that Scott Walker’s reforms aren’t working and aren’t helping the very people the left says are being negatively affected by them.

http://www.city-journal.org/2012/22_1_scott-walker.html

clyde

June 7th, 2012
9:41 am

Someone back there mentioned the best and brightest going into the teaching profession.Really????

Tough decisions are being made everyday across this country.By average citizens.It’s high time a few leaders joined us.

Kyle Wingfield

June 7th, 2012
9:41 am

ByteMe @ 7:56: I meant the law as it’s now applied — which not only includes the current tax rates, but assuming Congress will continue to apply the “doc fix” to Medicare, among other things. But “current policy” — i.e., the status quo, as opposed to how current law dictates that policy change when the calendar does — would have been the better way to phrase it.