Sunday, March 13, 2011

Picking battles

By Bill Kraus

Now that the 1959 battle over public employee unions is mostly over, the trenches are being dug for the next, bigger fight which will include a rerun of the merger wars of 1941.

What we are in for is a war with more fronts than the island hopping of the early 1940s--a little policy and lots of money at stake.

The big battles will revolve around the five major parts of the state budget which eat up 80 percent of the money. At the state level this budget is about dispensing money to others; it’s benefit driven. One step down where the benefits are disbursed the spending is labor driven.

The big five are (1) aid to K-12 education, most for teachers’ salaries (2) shared revenues to local governments, a lot of which goes for fire fighters and police officers (3) University of Wisconsin, money for professors, tuition aids, and lots of other good stuff (4) prisons, and (5) medicaid, where the number of supplicants has gone from 200,000 to 800,000, the frugality destroyer.

The increases in costs all of the big five are facing are driven by something over which the state has little or no control: the cost of health care.

The failure to get a handle on health care costs can be attributed to factors including a long history of not facing up to this money eating monster. Universal health care was to be a part of the Roosevelt New Deal, but war came along and postponed this idea for almost a decade. When President Truman put health care back on the agenda, he ran into opposition from the American Medical Association and the U.S. Chamber of Commerce. The Chambers’ leaders didn’t get the message when General Motors told them that they were spending more on Blue Cross than for steel. Ideological deafness.

This didn’t matter much in the post-war world where ours was the only economic game in town. But in today’s flat world the fact that the U.S. hasn’t put a lid on things ranging from malpractice awards to technological marvels which extend life and improve treatment and diagnoses at a very high cost has damaged our ability to compete against first-world countries where health care costs less and produces better results.

Putting health care costs aside, which is about all the state government can do about them despite the indirect devastation they are wreaking on state government costs, the next few months are going to be about cutting spending, setting priorities, and getting deficit free by June 30.

Some of these cuts will be offset by increased spending in areas where the crucial infrastructure is in disrepair and where investments and tax cuts which are thought to be needed to rebuild the Wisconsin economy. The object of these initiatives is more jobs and increased tax revenues. Unfortunately neither are likely to be realized in the short term when the cost cutting and program eliminating pain is being dispensed.

It is not going to be pretty. Due to the concessions by public unions recently, their members are going to be important contributors to reducing costs in their several departments. Once those savings are banked, the balance of the revenue shortfall is going to have to be made up with cuts in some programs and elimination of others.

I will be surprised if the legislators’ choices are all lockstep, party line either. Geography will be in play as well as special interests and individual legislators' hidden agendas.

There may even be some bipartisanship on display in this unhappily polarized era where compromise is demonized instead of idolized.

Follow Bill Kraus on:
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Bill Kraus is the Co-Chair of Common Cause in Wisconsin's State Governing Board

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