Wonder exactly where Lithuania is? I guess somewhere in Europe. But Lithuania may be closer — at least symbolically — to Wisconsin, Ohio and other states than we might think.
In case you’ve been focused on the myriad problems involving Lindsay Lohan and Charlie Sheen and missed this, there is a European-style controversy brewing right here in the USA.
And it involves public employees, unions, government spending and state and local politics. Wow. A blogger’s wet dream come true. Oops. I digress.
Here’s from NPR, “Wisconsin is ground zero for battle over unions“:
Wisconsin’s effort to cut public workers’ benefits and bargaining rights has quickly turned into a high-stakes national issue involving President Obama, congressional Republicans and other states.
Wisconsin is the first in a long line of states under Republican control that will consider requiring government workers to pay more for pensions and health care while limiting the power of employee unions to negotiate contracts and work rules.
Ohio is next, likely to vote within weeks on an equally dramatic limit on public employee rights. Arizona, Florida, Indiana, Iowa, Michigan, New Hampshire, New Jersey and New Mexico are among the two dozen other states considering narrower but substantial changes in how government treats its workforce.
The moves are aimed at saving hundreds of millions of dollars and cutting the burden of pension and health care costs at a time when state and local government finances are weak.
An aside: In Wisconsin the situation apparently is so dicey that real leadership is required — so a number of Democratic lawmakers fled the state yesterday to prevent a vote. Wonder if those lawmakers are among those criticizing teachers who are calling in sick. Oops. I digress again.
Anyway, a similar protest although on a smaller scale took place yesterday in Ohio where supporters and opponents of a bill to restrict collective bargaining rights met toe-to-toe in Columbus.
So, what’s up with Lithuania?
Well, Lithuania, like many — most? — countries in Europe has promised way more to public employees and most everyone else than they can ever pay for now in terms of pensions, health care and so on. And cutting back is, well, a bitch — with people hitting the concrete in Lithuania, Greece, Spain, France, England and elsewhere.
Here’s from a NYT story, “From Lithuania, A View of Austerity’s Costs“:
VILNIUS, Lithuania — If leaders of the world’s many indebted countries want to see what austerity looks like, they might want to visit this Baltic nation of 3.3 million.
Faced with rising deficits that threatened to bankrupt the country, Lithuania cut public spending by 30 percent — including slashing public sector wages 20 to 30 percent and reducing pensions by as much as 11 percent. Even the prime minister, Andrius Kubilius, took a pay cut of 45 percent.
And the government didn’t stop there. It raised taxes on a wide variety of goods, like pharmaceutical products and alcohol. Corporate taxes rose to 20 percent, from 15 percent. The value-added tax rose to 21 percent, from 18 percent.
The net effect on this country’s finances was a savings equal to 9 percent of gross domestic product, the second-largest fiscal adjustment in a developed economy, after Latvia’s, since the credit crisis began.
But austerity has exacted its own price, in social and personal pain.
Pensioners, their benefits cut, swamped soup kitchens. Unemployment jumped to a high of 14 percent, from single digits — and an already wobbly economy shrank 15 percent last year.
Sweet Maria. Note to Ohio Gov John Kasich: If I end up having to go to a soup kitchen, could it at least serve a nice lobster bisque? Just askin’.
OK. The issue with state governments, government spending and public service employees and unions really speaks to a big and serious national problem — and we need some thoughtful leadership.
Some key, although I’m sure certainly not all, points:
- Most states are in deep doo-doo financially. And as best I can tell, unlike the federal government, piling one big budget deficit on top of another is not an alternative.
- Everybody wants state and local government services — police, fire, education and so on — but nobody really wants to pay, certainly not in the form of higher taxes.
- The Obama/Pelosi stimulus money — to the extent you can find where it went at all — went in large measure to maintain jobs of teachers and public service employees. Can’t imagine that under current conditions Inside the Beltway that a similar bailout will happen again.
- There used to be a social contract between local governments and public service employees — certainly with teachers. You would trade lower wages for job security, benefits and fixed pensions. Those days are over, or certainly about to change radically. And full disclosure: I believe teachers, particularly in public K-12 education, are pathetically underpaid.
- But the perception of those working in the private sector these days — those without employer-provided pensions and with little or no job security if they have a job at all — is that public service employees from the federal government on down have it much better. And it’s hard to argue with that. If you’re sitting there trying to figure out how to retire on your personal savings — now with little if any home equity — and a 401k account that treads water at best, well, good luck for the golden years.
So, we need to pay attention to what is happening in Wisconsin, Ohio and other states — and we need some leadership on these tough problems and issues soon.
Otherwise, we are going to end up understanding a lot more about Lithuania, and that’s a lesson we aren’t going to enjoy.