Last month, the Legislative Analyst Office predicted a budget shortfall for Californias next fiscal year so large it shocked even seasoned observers. The projected $20 billion shortfall is larger than the entire state budgets of all but a handful of other states. The LAO also excoriated the continued use of budget gimmicks, including unrealistic assumptions of new revenue and accounting tricks employed to effectively borrow from future years.
But it is not as though we didnt see this coming. Try as they might, our state political leaders simply cannot reduce spending to a level equal with revenue. Instead, with the help of a few Republicans, last February the state enacted the largest tax increase ever imposed by any statehouse in the history of America. The results were predictable: Like the tax increase of 1991, California plunged deeper into recession and produced less revenue.
The inability of politicians to restrain their spending of taxpayer dollars is the direct result of the forceful application of political power. And, in California, there are no greater political influences than the public employee unions. Between the most powerful unions reflected in the alphabet soup of acronyms CTA, SEIU, CCPOA & AFSCME they are able to force the legislators whom they placed into power (many union leaders themselves) to maintain a high level of government largess. Even liberal Democratic leader Bill Lockyer, now state Treasurer, publicly scolded a legislative committee saying they were incapable of reforms because of who put them in power.
It is in this context that Steven Greenhut has just released his book, aptly titled Plunder! How Public Employee Unions Are Raiding Treasuries Controlling Our Lives and Bankrupting the Nation. Readers who have high blood pressure are advised to take a double dose of medication before opening this book. For the vast majority of ordinary citizens who toil in the private sector, this book will produce more than outrage it is likely to spur many to take up the cause of stopping these corrupting influences on our systems of governance.
The real outrage will kick in at Chapter Two, entitled Unbelievable Pay and Benefits. It is here that Greenhut catalogs the shocking abuses of public employee compensation. While the book is national in scope, much of it focuses on California because it is in the aptly named Golden State that produces great treasures for those on the public payroll.
Public employee pensions, Greenhut explains, are fundamentally different from the retirement plans in the private sector. Unlike 401(k) accounts, the public sector offers defined benefit retirement meaning that the amount of the retirement benefit is guaranteed (by the taxpayers, of course) even if the retirement account itself is too small to cover the obligations. Thus, we poor saps who may have a 401(k) or a modest IRA have the privilege of seeing our own retirement benefits shrink with the recession but, at the same time, must shell out larger amounts of taxpayer dollars to ensure that public employees are given their gold plated retirements.
Greenhut also dedicates a full chapter to discussing our dysfunctional public education system. While most Americans take public education as a given, Greenhut asks some pointed questions about our assumptions. Why should we, for example, hand societys most important function the education of our children over to a monolithic and monopolistic institution? Indeed, is it not because schools have no competition that is the source of much of the dysfunction? Why is it that private schools frequently educate our young more effectively and cheaper than the public schools? Again, the resistance to any competition, meaning charter schools and especially against school vouchers, is driven not by the interests of the students, but by the interests of the powerful teachers unions.
In sum, Plunder! is a powerful indictment against the most corrupting influences on our political system. The unions are expert at gaming this system and, unless those of us on the private side of the ledger wake up and realize the extent of these distortions, we will never be masters of our own fate. Quoting Bess Myerson, Greenhut states the accomplice to the crime of corruption is frequently our own indifference.
To make a difference, lovers of liberty ought not only to buy Greenhuts book, but buy several copies to distribute to friends and family. To win the battle, we have to educate voters and Plunder! will not only educate, it will enrage. And in this case, a little rage is a good thing.