On Wednesday, June 6, the stock market staged its biggest rally of the year. The Dow soared 275 points the day after Gov. Scott Walker won a decisive victory in his Wisconsin recall election.
Coincidence? Well yeah, if you’re Charlie Rose of CBS News, who attributed the run up to “stimulus at home and bailouts abroad.” But there was nothing out of the ordinary that happened that day other than the Wisconsin election. Investor optimism fueled by the failed recall was at least part of the reason for the rally, but the mainstream media couldn’t bear to admit it.
Although both sides agreed beforehand it was a Big Deal, the media now want to downplay the whole thing. So while the results were decisive, the debate over what it means rages on.
On a partisan level, Republicans believe that Wisconsin now is “in play” for the presidential election, although no Republican since Ronald Reagan 28 years ago has carried the state. Democrats argue the results can’t be extrapolated because Walker outspent his opponent significantly and some people voted for him because they didn’t think the recall was appropriate. But Walker was able to raise his millions because his base was so enthused that both small and large contributions poured in.
Usually in politics, concentrated special interests, like public unions, prevail. This election was the exception but exit polls showed Obama, the unions’ darling, was still leading in presidential preference.
The Wisconsin election, combined with successful initiatives the same day to cut union benefits in San Diego and San Jose, was without question a severe setback for public unions. Americans hold teachers, firefighters and policemen in high esteem and deservedly so. We want them treated well. As a result, government unions over the past few decades have had an almost unbroken string of successes in winning more privileges and perks for themselves.
The newfound “right” to collective bargaining made it all too easy for government unions to negotiate with the very politicians whom they helped elect to office. But they’ve overplayed their hand. Compensation packages have grown well beyond what most Americans can hope to earn. Most taxpayers struggle to provide for their financial future at the same time some government retirees have six-figure incomes for life and retire so young that benefits packages must include health insurance until Medicare kicks in.
Even so, voters aren’t expressing resentment so much as the realization that such largesse is simply unaffordable. Cities and states are sinking into desperate financial straits around the country as retiree costs approach the outlays for the active workforce. The elections in Wisconsin and California showed voters now realize that public finances are dangerously out of balance.
To grasp the big picture, think about the consequences if Scott Walker had lost. Politicians of all stripes everywhere would have understood the take-home message: Don’t mess with unions under any circumstances, ever. If Walker couldn’t win, what chance would anyone else have?
After all, his reforms had already been implemented with good outcomes. School district finances had stabilized and jobs saved. Wisconsin state finances also had rebounded and property taxes lowered. The facts were so stacked against the union arguments that their candidate didn’t even campaign against the “assault on unions” that had sparked the recall.
We may someday look back at Wisconsin as the turning point, the time when the entitlement culture finally lost its allure. Since the 1930s, Americans have evolved the belief that the modern welfare state could provide almost everything for everyone. Women were entitled to have babies without consequences. The poor and the elderly were entitled to unlimited medical care. Banks and ball teams were entitled to socialize their losses but keep their gains. Government employees were entitled to above-market compensation and job security.
You name it. Housing, food, college loans, business subsidies – all came from the bottomless riches of government. But the string has played out. As in Europe, our national economy is cracking under the strain and the middle class – really, anybody not on the taking side of government handouts – can’t handle much more.
Now there’s a light at the end of the tunnel. We may avoid bankruptcy after all.
East Valley resident Tom Patterson (email@example.com) is a retired physician and former state senator.