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Why voters rejected John Kasich's union crackdown
State governments have massive, unsustainable pension liabilities. But voters won't stand for slashing those benefits unless everyone sacrifices
David Frum
David Frum
T

he vote in Ohio settles nothing.

Sure, on Tuesday, Ohio voters resoundingly rejected Gov. John Kasich's tough-on-unions law. But it remains as true today as it was true yesterday that American states have made impossible commitments to their public sector retirees.

The Pew Foundation estimates the unfunded liabilities of the states at over $1.25 trillion.

Ohio, for example, has pension liabilities of $171 million and health-care liabilities of $43 million. The pension liabilities are only 66 percent funded; the health liabilities only 33 percent funded. The gaps gape bigger today than they did four years ago because state pension funds took a pounding in the 2008-2009 financial crisis.

That math has not been changed by Tuesday's vote.

But here is what has changed since Tuesday:

If leaders want to summon voters to sacrifice for the benefit of future generations, those sacrifices have to be seen as broadly shared.

Republicans have been looking to cuts in future retiree benefits as a way to avoid future tax increases. In the Republican imagination, it's either-or: Either we cut benefits — or else we face a future of ever-rising taxes. Republicans have chosen the benefits cuts. Governors like Wisconsin's Scott Walker, Ohio's John Kasich, Chris Christie of New Jersey, and Mitch Daniels of Indiana have tried to impose discipline on local contracts while struggling to hold the line on taxes.

Ohio should be a warning: This either-or approach is dangerous. If leaders want to summon voters to sacrifice for the benefit of future generations, those sacrifices have to be seen as broadly shared. If, however, leaders try to load all the sacrifices onto just a few voters — while exempting or even rewarding others — the targeted groups will resist. Sometimes that resistance will fail, as it did in Wisconsin. But it will succeed often enough to wreck the whole project.

At the national level, the unevenness of the sacrifice looks especially extreme.

Paul Ryan's budget roadmap won the votes of all but four House and four Senate Republicans with its ambitious vision of stringent cuts in Medicare benefits for people now under 55, combined with generous tax cuts for upper-income federal taxpayers. As yet, probably relatively few Americans have heard of the roadmap. But when they do hear of it — and President Obama's re-election fund is accumulating $1 billion with which to inform them — they're likely to react negatively.

Perhaps that negative reaction can be over-ridden. If Republicans win the presidency and the Senate in 2012, and if the CBO cooperates in allowing them to introduce the Ryan budget in a way that forbids a Democratic filibuster, then maybe they can muscle through a budget that ends the Medicare guarantee to finance a cut in the top tax rate from the current 35 percent to a future 25 percent. Maybe.

But that's not the end of the story. As an observer of Congress once quipped: "It's not over till it's over — and it's never over." The social consensus to sustain budget austerity over the years and decades ahead must rest on a broad social agreement that the austerity is both necessary and fair. Republican governors have done a good job selling the "necessary" bit. If they want to avoid more Tuesdays, they need to work on the "fair."

Everybody must contribute and must be seen to contribute. Once that's done, the majority will shame, pressure, and, if necessary, coerce even the most recalcitrant union. But if cuts in pensions and health care for the many are visibly joined to tax holidays for the few — then today's austerity will quickly yield to tomorrow's protests and the next day's election defeats.

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