Tuesday, February 22, 2011

The Problem is Collective Cowardice, not Collective Bargaining

In a report issued last year, the Pew center determined that there was a $1 trillion gap "at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises." Since then that gap has only grown and is estimated to now be closer to $2 trillion.

The report continued "In 2000, just over half the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four—Florida, New York, Washington and Wisconsin—could make that claim. In eight states—Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia—more than one-third of the total pension liability was unfunded. Two states—Illinois and Kansas—had less than 60 percent of the necessary assets on hand."

In Connecticut, the state government has $9.35 billion in assets in its pension fund, but $21.1 billion in obligations. In Maryland, the state pension and retiree health health benefit system is underfunded to the tune of $35 billion. In New Jersey, the state's pensions are underfunded to the tune of $54 billion.

The impact of these pension obligations have come to head recently in Wisconsin where Governor Scott Walker has introduced legislation to increase state employee contributions to their health care and pension programs. In Maryland, Governor O'Malley has proposed changes to the state's pension system as well - essentially telling state employees that they can either pay more to receive current benefit levels, or pay current amounts and receive less. New employees would simply face greater costs to fund their beneifits, and receive less than under the current system.

Indiana, New Jersey, New York and myriad other states are attempting to deal with these unfunded obligations - but in Wisconsin, Governor Walker has gone a step farther. In addition proposing that public employees contribute more toward their benefits, he is proposing to eliminate the right of public employees to engage in collective bargaining for non-wage benefits. He argues that this must be done to allow the state and local governments restore fiscal order.

The idea that the budget troubles in states like WI, NJ, NY and CA (or, well, everywhere) are the result of public sector unions and collective bargaining is ridiculous. Certainly states face tremendous deficits owing to the legacy costs of retiree pensions and health - but the fault does not lie with the unions, it rest solely with the governments that made the deals then chose to not fund them (or that chose to invest them, ignoring the risks of a down market).

States agreed to the retiree benefits, wages, and health benefits, states agreed to wage increases, states made promises to their workers and then chose to not fund those promises. Doing so during tight times would have meant tax increases, program cuts, or both. Instead state goverments, governors and legislators, promised the moon and stars to everyone - great benefits for state employees, low taxes and public services for the taxpayers.

Now, the bills are coming due. States are facing the harsh reality of their unfunded obligations and realizing they have run out of options. And the magnitude of the problem has grown to the point where there are no easy solutions. Increasing taxes to close the gaps would require significant tax increases, cutting programs or benefits would require dramatic cuts - the only real option is a combination of tax increases and spending cuts. Promised benefits will need to be curtailed, Americans who have enjoyed the services provided by government will now have to start paying off the debt incurred by habitually underfunding them.

But even if pensions and benefits are cut, even if taxes need to be raised - curtailing or eliminating collective bargaining rights accomplishes little. We have not come to this point because unions demanded too much, we're here because policymakers made promises they never paid for.

At the federal level we see the same issue with the looming funding crises for Social Security and Medicare, the problems stem from promises made that we chose to not fund. The Social Security unfunded liability, in other words, what government has promised compared to what we have committed to fund, is projected to be $17.5 trillion. For Medicare, the unfunded obligation is greater than $80 trillion. Social Security will begin to pay out in benefits more than it takes in this year. Medicare faces a solvency crisis in about 6 years.
The unfunded liabilities of Social Security and Medicare are no more the fault of workers and retirees than are the unfunded state pensions - they simply reflect promises made that have not been funded. It's a situation not unlike the decision to authorize wars in Iraq and Afghanistan at an annual cost of $200 billion while simultaneously reducing government revenue via tax reductions.
States face $2 trillion in unfunded obligations, the federal government tens of trillions, our current federal deficit is $1.6 trillion in a $3.7 trillion budget, our accumulated national debt stands at $14 trillion, and our interest payments on that debt are set to soar.
We cannot tax our way out of debt, we cannot cut our way out of debt, we cannot grow our way out of debt - the magnitude of the problem demands a combination of painful cuts and tax increases in the near term, coupled with reforms and ultimately reductions in entitlement programs (or, at the state level, retiree benefits) long term. Had we been more proactive and begun to deal with these problems sooner, it would have been less painful. Had we promised less, or actually funded the promises we made we would not be where we are... but we didn't, and we are.

How likely are we to make the tough decisions that are now required? At the federal level a very reasonable proposal from the National Commission on Fiscal Responsibility has already been rejected by Congress and the President that created the commission. Instead, Congress and the President agreed to extend the Bush era tax rates at a cost of $550 billion.

In the states, Republican governors like Chris Christie in New Jersey or Scott Walker in Wisconsin speak of fiscal discipline and budget cuts, all while cutting taxes and decreasing revenue. In Illinois, a Democratic legislature and governor raised income taxes by 66% to close a budget gap, but on the spending side merely restricted spending growth to 2% - a rate greater than the inflation rate. My award for political courage and common sense goes to Connecticut governor Daniel Malloy who has proposed solving his state's budget crisis with $1.8 billion in spending cuts and $1.5 billion in tax increases - neither Democrats nor Republicans are happy with his plan, which means it must be a pretty responsible and balanced plan. In Maryland, Governor O'Malley signed tax increases into law in 2007 and since then has submitted budget cuts totaling $6.6 billion, and has begun pension reform - other states need to follow the lead of Malloy and O'Malley.
In the end, the problem is not collective bargaining, the problem is a collective cowardice on the part of those who made easy promises and avoided tough decisions - and ultimately the collective willingness of the American public to believe that no bill would ever come due for all that we've enjoyed.

Sunday, February 13, 2011

For Maryland, a Chance to Lead on Same Sex Marriage

Update 2: The Baltimore Sun is reporting "Sen. Katherine Klausmeier said today that she has decided to vote in favor of same-sex marriage..." Sen. Joan Carter Conway, Baltimore Democrat has  emerged as the crucial 24th vote.

Update: Democrat Sen. Edward Kasemeyer (Baltimore and Howard counties) is now a yes. According to the Washington Post "With Kasemeyer's support, 22 senators have now pledged to vote for the same-sex marriage bill, which needs 24 votes for passage. A 23rd senator, Joan Carter Conway (D-Baltimore), has said she will vote for the bill if she believes it will pass."

Same-sex marriage proponents appeared poised to score a significant victory in Maryland as the state Senate inches closer to approving a bill, SB 116, that would redefine marriage as being between two individuals as opposed to being between one man and one woman. The bill needs 24 votes in the state Senate and presently enjoys 22 committed supporters and 5 Senators who are considering supporting the measure.  

In the landmark Loving v Virginia case, which overturned interracial marriage bans, the Supreme Court ruled "Marriage is one of the "basic civil rights of man," fundamental to our very existence and survival.... To deny this fundamental freedom on so unsupportable a basis as the racial classifications embodied in these statutes, classifications so directly subversive of the principle of equality at the heart of the Fourteenth Amendment, is surely to deprive all the State's citizens of liberty without due process of law"

The federal government and most states are well behind the curve on this issue - Maryland has a chance to lead on protecting this "basic civil right.".

Here is the list of Supporters and Opponents and Undecideds:   

No public position/Undecided   
Sen. John Astle, Anne Arundel County Democrat
Sen. Joan Carter Conway, Baltimore Democrat
Sen. Ulysses Currie, Prince George's County Democrat
Sen. Katherine Klausmeier, Baltimore County Democrat
Sen. James Rosapepe, Prince George's County Democrat

Sen. James Brochin, Baltimore County Democrat
Sen. Bill Ferguson, Baltimore Democrat (sponsor)
Sen. Jennie Forehand, Montgomery County Democrat (sponsor)
Sen. Brian Frosh, Montgomery County Democrat (sponsor)
Sen. Rob Garagiola, Montgomery County Democrat (sponsor)
Sen. Lisa Gladden, Baltimore Democrat (sponsor)
Sen. Verna Jones, Baltimore Democrat (sponsor)
Sen. Edward Kasemeyer, Baltimore and Howard counties Democrat
Sen. Delores Kelley, Baltimore County Democrat (sponsor)
Sen. Nancy King, Montgomery County Democrat (sponsor)
Sen. Allan H. Kittleman, Howard County Republican
Sen. Katherine Klausmeier, Baltimore County Democrat
Sen. Richard Madaleno, Montgomery County Democrat (sponsor)
Sen. Roger Manno, Montgomery County Democrat (sponsor)
Sen. Nathaniel McFadden, Baltimore Democrat (sponsor)
Sen. Karen Montgomery, Montgomery County Democrat (sponsor)
Sen. Paul Pinsky, Prince George's County Democrat (sponsor)
Sen. Catherine E. Pugh, Baltimore Democrat (sponsor)
Sen. Victor Ramirez, Prince George's County Democrat (sponsor)
Sen. Jamie Raskin, Montgomery County Democrat (sponsor)
Sen. James Robey, Howard County Democrat
Sen. Ronald Young, Frederick County Democrat (sponsor)
Sen. Bobby Zirkin, Baltimore County Democrat (sponsor)

Sen. Joanne Benson, Prince George's County Democrat
Sen. David Brinkley, Carroll and Frederick counties Republican
Sen. Richard Colburn, Eastern Shore Republican
Sen. James DeGrange, Anne Arundel County Democrat
Sen. Roy Dyson, Southern Maryland Democrat
Sen. George Edwards, Western Maryland Republican
Sen. Joseph Getty, Baltimore and Carroll counties Republican
Sen. Barry Glassman, Harford County Republican
Sen. Nancy Jacobs, Harford and Cecil counties Republican
Sen. J.B. Jennings, Baltimore and Harford counties Republican
Sen. James Mathias, Eastern Shore Democrat
Sen. Thomas Middleton, Charles County Democrat
Sen. Thomas V. Mike Miller, Prince George's and Calvert counties Democrat
Sen. C. Anthony Muse, Prince George's County Democrat
Sen. Douglas J.J. Peters, Prince George's County Democrat
Sen. E.J. Pipkin, Eastern Shore Republican
Sen. Edward Reilly, Anne Arundel County Republican
Sen. Christopher Shank, Washington County Republican
Sen. Bryan Simonaire, Anne Arundel County Republican
Sen. Norman Stone, Baltimore County Democrat

At present, only five states and the District of Columbia allow same-sex marriages to be performed within their states. Three other states, Maryland included, recognize same-sex marriages legally performed in other jurisdiction. Vermont, New Hampshire, Connecticutt, and DC are the only jurisdictions to have legalized
same sex marriage via legislation. In Iowa and Massachusetts state courts ordered the legalization of same sex marriage. 

In 31 states, legalization has been put to the voters via referendum and in each state, the voters have rejected it. 

It's an historical coincidence that by 1940, 31 out of 48 states had banned interracial marriage in some form. Gradually, as attitudes began to change 15 of the states overturned their laws - including Maryland, but Maryland waited until 1967, the same year that the Supreme Court would eventually declare bans on  interracial marriage.
Maryland has a chance to make a statement, Maryland has a chance to lead - voters have a chance to tell their representatives that equality knows no caveats. 

Friday, February 11, 2011

New Census Data Should be a Wake-up Call to Maryland GOP

Want to better understand Martin O'Malley's 14 point victory margin over Republican and former Governor Bob Ehrlich in Maryland? Look no farther than the just release Census data for Maryland - all of Maryland's population growth over the past decade has been among racial and ethnic minorities. In 2000, non-Hispanic whites were 65% of the state's population. In 2010, that has fallen to below 55%. All told, that state has welcomed 477,000 new residents, a 9% increase in the past decade. But the population of non-Hispanic whites has declined by 3.9% while the Hispanic population more than doubled, the Asian population increased by 51% and the African American population by 14%.
These numbers should serve as wake-up call for the Maryland Republican Party. Table One shows what the new numbers are likely to mean for the composition of Maryland voters based on national voter registration and turnout rates.
In November 2010, Bob Ehrlich, a former governor elected by a 3 point margin in 2002, defeated by 6 points in 2006, was trounced by a 14 point margin. Ehrlich's 14 point margin of loss was first forecast in a Washington Post poll released days before the election. In that poll, the Post found that O'Malley was leading among African American voters by a margin of 88% to 6%, Ehrlich led among whites 50% to 44% (When Ehrlich won the governorship in 2002 he received 64% of the white vote). I could not find any Maryland polls from 2006 of 2010 that reported support among Hispanic or Asian voters, but this is not surprising as each population composed less than 5% of the state's population. A review of national exit polls from 2010 shows that Democrats won Hispanic voters by a 60% to 38% margin and Asian voters by a similar 58% to 40%. Democratic and Republican support among African Americans was 89% and 9% respectively - essentially the same as in Maryland. Nationwide, Republicans fared better among white voters, 60% to 37%, than did Ehrlich in Maryland.

If I take the nationwide numbers and apply them to voter numbers in Table One the result is a 56% to 44% Republican loss (Table Two) - not far from the 55.8% to 42.3% actual results (note that my population tallies do exclude a a few thousand state residents of mixed, or Native American heritage - exit polls often categorize these populations collectively as "other" and show that Democrats win them by a margin similar to that of Hispanic and Asian voters).

The new Census data is an alarm bell for Maryland Republicans and it's warning them that unless they can broaden their appeal beyond the state's shrinking share of white voters they will not be winning statewide office. But let's assume that Republicans in Maryland can regularly receive 60% - or even Ehrlich's 2002 level of 64% support among white voters - I show that in Table Three - the Republican still loses by 10 points.

Republicans cannot base a statewide electoral strategy on winning the white vote and losing all other racial and ethnic groups by wide margins. Table Four offers just one simulation of how Republicans would  have to perform among the non-white population just to receive 50% of the vote in Maryland.

Notice that it is a substantial change - a dramatic improvement among African Americans and considerable improvement among Hispanics. Critics of my quick analysis may well point out that turn-out among African American voters in Maryland is often lower than nationwide turn-out so I may be overstating Democratic performance a bit, but I would counter by pointing out that a strategy based on the hope that key voting groups stay home is no strategy - it's a gamble. I would add as well that Hispanic and Asian voters still have very low turn-out rates, but these rates have been rising and if turn-out among Hispanics eventually rises to that of African-American and white voters then Republicans will have no hope of winning statewide without becoming more competitive among non-whites.

The demographic changes taking place in Maryland are but a leading indicator of changes taking place throughout the United States. If Maryland Republicans can find a way to broaden their appeal and again become competitive in the Free State, they may well serve as an example for national Republicans to emulate. Republicans reclaimed the House of Representatives in November in victory fueled by support among white voters and lower turn-out by minority voters. In 2008, Barack Obama won election even though he lost white voters by a 12 point margin - his victory was driven by wide victories among racial and ethnic minorities - winning Hispanic and Asian voters by a nearly 2 to 1 margin. Just 4 years early, George W. Bush was much more competitive among these voters - but between 2004 and 2008 the GOP adopted a hard line on immigration reform and minority voters turned away from the party.

In Maryland, the GOP could begin by supporting measures such as the Maryland DREAM Act which would extend in-state college tuition benefits to undocumented immigrants who have attended state high schools. One may wonder what impact that would have on the votes of legal immigrants but consider just one example recently profiled in the Washington Post - Anngie Gutierrez is a High School senior at Bladensburg High, she is an undocumented resident and ineligible for in-state tuition (nor can she register to vote). When asked about the bill, Republican House Minority Leader Anthony O'Donnell said "Why would we offer in-state tuition to people who violated our laws to get here?"

Anngie, like most undocumented youths, was brought to the US illegally when she was a child. Her parents may have violated the law, but she did not. More significant with regard to political fallout, however, Anngie has three siblings who were born in the US. They are citizens and they will be able to vote when they're 18. Can anyone reasonably assume that they would consider voting for a party that sought to block their sister's access to an affordable education? Doubtful.

When asked about the doubling of the state's Hispanic population Republican Delegate Patrick McDonough reportedly replied  "This should be a warning bell to the state of Maryland that we have a serious illegal immigration problem." The fact that McDonough see Hispanic as synonymous with illegal immigrant is not a good sign that Republicans have a strategy to deal with the electoral significance of the state's changing demographics.

For Maryland Republicans, the phone is ringing - will they take the call?