Last week, when WPRI released our report detailing the massive amount of unfunded liabilities local governments are carrying for their retirees, I honestly didn’t expect much of a counter-argument. How could there be? The facts are indisputable. In fact, the best shot a local official took at an explanation was the Superintendent of Waukesha Schools, who unbelievably argued that their financial system is sound because it’s like a mortgage. It’s difficult to think of a worse comparison, given the fact that mortgage lending is currently sending our economy down the tubes. He actually would have been better off saying something like, “our financial system is as safe as the Green Bay Packers with the indestructible Aaron Rodgers at the helm.”
Yet lo and behold, on the very day the report was released, the liberal Citizen Action of Wisconsin attempted to respond to the facts in the report. And needless to say, I remain unconvinced that there is a rational response to the argument we made in the study.
Citizen Action said the “ultraconservative” WPRI report missed the mark because it failed to discuss the fact that health care costs are rising so quickly. (Personally, I would have preferred “mega-conservative,” as it sounds more like we can crush cars with our bare hands, like Optimus Prime.) In fact, one of the reasons the report didn’t go into detail about increasing health costs is because we just released a 20-page paper on that exact topic.
But the main problem with local government retiree health insurance isn’t that the costs are going up too quickly – it’s that the benefits exist at all, and that their existence are going to swamp local budgets in the very near future. If local governments hadn’t attempted to pad their employees’ pockets with this previously publicly undisclosed benefit, they wouldn’t be in the position of having the taxpayers bail them out – which almost certainly will happen. And the rising cost of health care has absolutely nothing to do with the fact that these governments chose to spend billions of dollars on ex-employees that no longer work for the people, instead of spending the funds on existing services.
In fact, Citizen Action’s complaints about the rising cost of health care actually strengthens the immediacy of the WPRI report. We focused on the fact that local governments owe $6 billion in future unfunded liabilities – the fact is, that number is going to increase rapidly over the next few years, both because governments are underfunding their liabilities and because costs are going up.
The truly ironic fact is that Citizen Action is continuing to push their dead-in-the-water “Healthy Wisconsin” single-payer government run health plan. That would be the plan passed by the Wisconsin Senate that all the new Democratic state senate candidates are avoiding as if it were a pair of garage sale underwear. They actually believe that their plan, which would have government completely take over health care in Wisconsin and cost taxpayers $15.2 billion, would actually solve this problem of increasing health care costs. In fact, it would do nothing to slow health costs – it would merely change who pays for them.
A perfect example of how health care costs explode when government takes them over was evident last week, when the state announced that the new BadgerCare Plus program would be $25 million over budget in its first year of existence. The BadgerCare program itself was the same story – in Fiscal Year 2001, the first full year of BadgerCare’s operation, the Legislature spent $129 million in all-funds revenue. By Fiscal Year 2004, merely three years later, that number had nearly doubled to $205.6 million. Consider the retiree health costs that are now being reported, and it’s absurd to argue that somehow costs drop when the government gets involved.
So, it appears Citizen Action’s response to increasing health care costs is to exacerbate the problem by making taxpayers foot the bill. While we’re at it, maybe we can solve the economic crisis by guaranteeing more bad housing loans and asking the taxpayers to pay for it. Wait… we’re doing that?
Finally, Citizen Action criticizes WPRI for supposedly “singling out” government employers for their budget mismanagement. In fact, our report discusses postemployment benefits for private businesses, and how they began to address their liabilities in 1990, to the point that they are now manageable. Furthermore, a previous WPRI study demonstrated that public sector postemployment benefits far exceed those of the private sector. Plus, businesses generally don’t have the taxpayers there to bail them out when they mismanage their liabilities, as governments most certainly will.
It’s hard to fault Citizen Action of Wisconsin for not reading the whole report, though – they’re busy during election season trying to elect Democrats to the Wisconsin Legislature and using state funds to do it.