States, unions and budgets

Now that the fuss and bother over Wisconsin's trades union legislation has begun to die down, it's a good time to remind ourselves that the situation there is no more than a harbinger of what's coming for most of the other 49 states in the union.

I know that many Americans with moderate and progressive political views believe that Republican administrations are using fiscal conditions to mount an 'assault' on unions nationwide. This is an overly simplistic interpretation of events - and ignores the reality that many Democratic State administrations are also trying to cut back union influence and benefits. The simple truth is that a fiscal nightmare has developed over many years, fueled by both Republican and Democratic politicians - and the bill's just come due. The liberal/progressive Center on Budget and Policy Priorities (and with endorsements from the likes of Vice-President Biden, Steven Pearlstein and Paul Krugman, you'd better believe it's anything but a conservative voice!) made this clear in a report last week.

A survey of state fiscal conditions suggests that:

* The upcoming fiscal year (FY2012) is shaping up as one of states’ most difficult budget years on record. Thus far, some 44 states and the District of Columbia are projecting budget shortfalls totaling $112 billion for fiscal year 2012. One reason these gaps are so daunting is that states’ options for addressing them are fewer and more difficult. Federal assistance for states, which has been enormously helpful in allowing states to avert some of the most harmful potential budget cuts, will be largely gone by the end of fiscal year 2011, the current fiscal year. Most of the nation’s governors have now released their budget proposals for fiscal year 2012, and their proposals reflect this grim fiscal reality. A number of these proposals contain deep cuts to state services on top of the substantial cuts that states have already made since the start of the recession.

. . .

* Despite modest signs of improvement, states still face a long road to recovery. Already, some 26 states are projecting shortfalls totaling $75 billion for FY 2013 (the year that begins 16 months from now). Once all states have prepared estimates, this total is likely to grow. Thus, significant state shortfalls are expected to persist into the future.

The shortfalls that states are projecting for fiscal years 2012 and 2013 are in addition to the over $430 billion in shortfalls that states have already closed for fiscal years 2009, 2010, and 2011 combined.

There's more at the link. Bold print is my emphasis.

Back in December last year, analyst Meredith Whitney explained the situation very clearly indeed. I strongly urge you to watch the video report below in its entirety. It's that important.

If that report wasn't convincing enough, try this one from Reason TV and the Heritage Foundation (a right-wing source, to balance the left-wing CBPP quoted above):

There you have it. Objective analyses from both the left and the right wing of US politics and economics agree: the financial situation of US States is dire. Those who allege that attempts to curb union influence, and claw back some of the (extremely expensive) benefits they've won for their members in the past, are some sort of right-wing plot, simply don't get it. This isn't about union-busting: it's about fiscal reality. Even the liberal/progressive New York Times can understand that, in describing its own home state!

By refusing to recognize fiscal reality, and obstructing fiscal common sense, the unions are dooming themselves to political irrelevance, exclusion from the budgetary negotiating process, and ultimately to extinction.

Peter