The Corner

Walker’s Reforms: Good Policy, Good Politics

Republicans are cautiously optimistic and Democrats are increasingly gloomy about the outcome of Wisconsin’s June 5 recall election for governor. The most recent polls show GOP governor Scott Walker ahead by between four and nine points. National Democrats aren’t pouring their resources into the contest, leaving unions and Badger State Democrats with all the heavy lifting. The Milwaukee Journal Sentinel, the newspaper covering the home area of Democratic candidate Tom Barrett, has come out forcefully against the recall.

The key reasons for Walker’s superior position include a clumsy campaign against him, revelations about union pension and pay excesses that undercut labor’s argument against Walker’s ending of collective bargaining for most public-sector workers, and a Wisconsin economy that is improving more quickly than that of many states.

One reason for the brightening economic picture in Wisconsin is that county and city governments, along with school boards, have been able to take advantage of the collective-bargaining reforms and cost-cutting tools that Walker’s reforms handed them.

Take Milwaukee, where Barrett is the mayor. Even he has acknowledged that the reforms in Act 10, Walker’s early 2011 budget-repair bill, enabled his city government to balance its budget. Walker’s cuts in state aid to the city cost it $14 million, but it was able to come up with $30 million in savings, of which two-thirds came from the budget-repair law. The law required employees to pay a larger share of their insurance premiums, and it also made it easier for the city of Milwaukee to switch to more cost-efficient health-insurance plans.

#more#As public-employee union contracts come up for renewal around the state, the savings will keep adding up, relieving local pressure to raise property taxes or cut back basic services. Indeed, this past year property taxes statewide actually declined for the first time in a dozen years.

Now a new study by the Beacon Hill Institute, a public-policy think tank based at Boston’s Suffolk University, has quantified just what the savings have meant for the economy. Its economic simulation found that Act 10 has reduced the tax burden Wisconsin residents would have had to pay by nearly a billion dollars. The ability to avoid those tax increases had positive economic effects. “The Act has saved between 15,400 and 20,500 public and private jobs that would otherwise have been lost,” the report concluded. “[It also saved] between $185 million and $350 million annually in private investment and between $760 and $1.030 billion in real disposable income.”

Obviously, the results of Walker’s budget reforms are preliminary — the law has been in effect for barely a year. But already the cost savings it has generated have blocked what looked like inevitable tax increases that would have damaged the economy. It also allowed state and local officials to adopt more flexible and rational responses to the current budget crunch, avoiding layoffs of school teachers and other public employees.

“Other states should pay heed to Wisconsin’s early evidence of success,” the Beacon Hill study concludes. If Governor Walker survives his recall, elected officials elsewhere should also realize that the sound policies he has implemented also make for good politics. If the unions and left-wingers who set the recall in motion lose after all they have spent on it, few think they will be able to mount an effective campaign to oust Walker or the Republican majorities in the state legislature when the next regular elections come up this November and in 2014.

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