Belmont Club


Chris Cillizza at the Washington Post quotes Democratic party sources who insist that, contrary to the polls, the administration’s party is not about to lose Ohio. “The Q poll showed former Rep. John Kasich (R) leading Gov. Ted Strickland (D) by 17 points and former Rep. Rob Portman (R) ahead of Lt. Gov. Lee Fisher (D) by 20.”  They claim the stats are overblown and all will be right in November. However, Cillizza adds that “there is no debate regarding the centrality of Ohio to Democrats’ chances in the fall election.”  If Ohio is an indicator state, the arrow is pointing straight down to electoral Hades. One major reason for the trouble are the unemployment numbers. Things are so bad the New York Times says the Democrats are losing support from the unions.

It is a measure of the dread among Democrats and their labor allies that several unions are no longer threatening to withhold endorsements from some conservative or moderate Democrats, like Representative Zack Space of Ohio, because they had bucked labor on health care legislation or other issues. …

But Charlie Cook, a nonpartisan political handicapper, questioned how successful labor’s push will be. “The question is, how effective can labor be when so many of their people are unemployed or underemployed and just not happy campers?”

How effective can labor be when past policies have driven a wedge between the private sector workers and the public sector ones?  Cuhayoga Falls Mayor Don Robart told an audience in February that 30 years ago there were twice as many private sector union members as there were in the public sector. Today, the public sector union membership is in the majority and government is increasingly hard pressed to pay them.

As recently as 1980, there were more than twice as many private sector union members than there were public sectors. Today 51.4% of Americans 15.4 million workers are employed by the government. This is the first time in American history that there are more public sector union members than there are private.

Robart added that “with payrolls being essentially locked –in, due to mandatory collective bargaining, at 3% and health care cost rising between 12 and 15%, it was only a matter of time before the economic bubble would burst.”  Getting more money to keep the bubble up was not an option. On the supply side taxes were drying up; the air was running out. That meant that even public sector employees were beginning to hurt and some were being asked to accept unpaid furlough during the year.

…on the income tax side, historically, the city would expect growth of 1-2% per year. In 2009, we saw our income tax decline by $504,000 over 2008. A third source of income for most cities is the interest on our reserve funds. Once again, we are seeing a significant drop in revenue. In the year 2000 for example, we realized over $2.2 million dollars in interest, and now due to significant lower interest rates, we saw the interest on our reserve drop to $547,000.

In response to these significant drops in revenue, we mandated that the nonbargaining employees accept a wage freeze along with six furlough days.

Although Paul Krugman continues to portray tax cuts as being for the rich and constituting a “racket” foisted by conservatives on credulous voter, the practical question in places like Ohio is what difference a tax increase would make? The hole is digging itself deeper, day by day. Pouring tax money into it is like trying to bail out the ocean. The terrible fix into which politicians have got themselves is depicted clearly by the Buckeye Institute’s interface to the Ohio’s salary database. Readers should click on the link and select the salary range of 100,000+ to 100,000+ and hover their mouse over the pension calculator. The lifetime pension liabilities are mostly over the $1.5 million number. Interest charges are dragging down the Ship of State faster than the taxpayers can bail. Whatever Krugman says, it will be a real challenge to meet these liabilities with so many people out of a job and not paying taxes.

The Wall Street Journal writes that Ohio is not alone in facing this problem. It writes that “the electorate may also be turning away from public unions because of their relentless campaigning for higher taxes. … The prospect of ever-higher taxes has Democrats distancing themselves from labor.” It would be ironical in the extreme if at a time when the Democrats were seeking more support from the unions they were also trying to lay the rap on them. Higher taxes in exchange for union support was the Faustian bargain the Democrats and the public sector unions struck with each other. Now that Mephistopheles has appeared to claim their souls both sides are racing to get the other to take the fall.

Unions used their considerable clout in 2006 to help Democrats gain control of Congress and again in 2008 to elect President Obama. But the union movement, which spent 96% of its money supporting Democrats in 2008, is faltering this year in its efforts to help the party retain control of Congress and win key governors’ races around the country. …

The backlash against public unions has gone beyond heavily unionized states like California and New Jersey. One illustration is the finding of a July 7 national Rasmussen poll: Only 19% of Americans said that they would be willing to pay higher taxes to keep government workers from being laid off. Even in public safety, where Americans are sometimes reluctant to see cutbacks, the poll found only 34% endorsed higher taxes to preserve police and fire jobs.

The electorate may also be turning away from public unions because of their relentless campaigning for higher taxes. Mr. Christie has estimated that New Jersey’s public unions spent some $4 million throughout the spring on ads advocating higher taxes and railing against his budget. In California, the teachers union has kicked in $500,000 as part of a campaign to rescind business tax breaks to keep jobs in the state. Last year in Michigan, a coalition of unions engineered a campaign called “A Better Michigan Future” that advocated hundreds of millions in new taxes, which the state legislature rejected.

Bob Shrum argues that the Republican Party has made a deal with the devil by treating with the Tea Party. “From the day this president was inaugurated, the GOP has fed off the forces that coalesced into the angry astringency of the Tea Party movement. … Shrunken and narrowed, the GOP is increasingly dominated by a far-right rump.” But in reality the Tea Party is a creature of the status quo’s own creation. Both sides, but largely the Democrats, have traded the fate of future generations for a handful of votes today. The anti-tax movement would never have emerged or gotten the traction it has without the goad of trillion of dollars in tax increases and unfunded public liabilities. What happens next is anybody’s guess. But the general rule is that if something can’t continue then it won’t.

Here is a video of what happens when unholy incantations are read from the Tax Code and the necessary consequences follow.

[youtube 7TCfNFckx6Q?fs=1&hl=en_US]