There is a Wisconsin talking point that will not die: Everything was fine until Scott Walker got some business-incentive tax cuts passed. I just heard it from Erica Williams of the Center for American Progress. Rachel Maddow has trafficked in this nonsense, as have some more respectable lefty types.
Help an English major out, here: How exactly do $137 million in tax cuts cause a $3.6 billion deficit in two years? I am dying to know.
Those tax cuts may or may not be a good idea; I am generally skeptical of using special tax breaks as a tool of economic development. (Low general taxes, a simple tax code, a sane regulatory environment, and a sane tort environment seem to me much better tools.) But getting a $3.6 billion deficit out of a $137 million tax cut is a pretty good rabbit-outta-the-hat trick.
Wisconsin, it should be noted, has one of the better-managed public-pension funds in the country, inasmuch as they’ve actually socked away the money they are supposed to sock away to pay their pensions. (Surprisingly enough, the other decently managed funds are New York — really — Florida, and Washington.) It’s the Sweden of the United States: a big, expensive welfare state with high taxes, run with relative efficiency. But even in comparatively well-run Wisconsin, pensioners already have seen reductions in their benefits, in the form of reduced “dividend” payments. Why? Because the pension-fund managers have been planning on making just under 8 percent a year on their investments, but over the past decade have made far less — about half, in fact.
Which is to say, Wisconsin’s fight is going to be one of the easier ones. What happens when it’s California and Illinois? If the recent news from Greece is any indicator, Wisconsin’s pension managers might want to put some tear-gas suppliers and riot-shield manufacturers in their portfolio, and see if they can’t get those returns up.
— Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, just published by Regnery. You can buy an autographed copy through National Review Online here.