Former Illinois Gov. Rod Blagojevich was sentenced this week to 14 years in prison, but the real sentence is the one taxpayers will serve many years after. He mastered the art of pairing populist rhetoric with expensive new programs directed toward his core constituencies.

To pursue his highly visible programs and agendas, Blagojevich needed money. He found it by diverting billions from the state’s pension system. By taking “holidays” from required pension system contributions and by nearly doubling Illinois’s debt, he burdened future generations to support favored groups in the present.

Perhaps worst of all, as CEO of Illinois, Blagojevich institutionalized a culture of deficit spending. He accomplished this so effectively that Blagojevich’s successor, Gov. Pat Quinn, and today’s lawmakers feel comfortable perpetuating the ruinous habits of spending and borrowing more than the state can afford. Fiscal ineptitude is the new norm.

The Illinois Policy Institute has a new report out that details Blagojevich’s lasting effect on Illinois’ fiscal condition. Read it at www.illinoispolicy.org/blago. Here’s the “top ten” list:

No. 1: Disregarded obligations to state pensioners

Policy: Blagojevich diverted billions of dollars from the pension funds of future government retirees to pay for his own spending priorities.
Problem: Blagojevich ballooned existing spending programs, ignoring his responsibility to ensure the health of the state’s pension systems. Retirees and taxpayers are on the hook for his political expediency.
Program cost: Excess of $3 billion for future taxpayers

No. 2: A culture of deficits

Policy: Grow spending to appease Blagojevich’s core constituencies.
Problem: While Blagojevich was creating and expanding unaffordable programs, the state’s financial position deteriorated year after year.
Program cost: Worst rating of net assets in the nation.

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Yesterday on Third Base Politics, we shared with you how the anti-Issue 2 group “We Are Ohio” is made up of organizations that have given their full endorsement to a movement that seeks to overthrow the entire American economy, by violent means, if necessary.  In fact, 74% of the money behind We Are Ohio comes from the unions who have publicly praised a movement that consists of radical Marxists.

Occupy Wall Street and its various offshoots in other cities seems not to be satisfied until the society that has produced the most mass prosperity, the most advancements in technology and freedom, in human history, is replaced by the model more like the failed and deadly Soviet model.  And We Are Ohio is fully on board with that!

But not only do they support the socialists behind the Occupy movement, they even employ one.

Meet Will Klatt. He is a self-described “community organizer” and claims on his Facebook page to be the “Statewide Youth Outreach Coordinator” for We Are Ohio.

Since it appears often on his Facebook wall, and he is officially the Youth Outreach Coordinator, he is presumably the brains behind the Facebook group “We Are Ohio Students.” So, how is young Will reaching out to Ohio’s youth? By organizing and attending “Occupy” protests around Ohio, of course! Here is a part of his wall highlighting that We Are Ohio Students is directly endorsing, attending and organizing the Occupy Columbus protests.

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With the ‘Occupy Wall Street’ protests starting the catch on in the media after the arrests at the Brooklyn Bridge and protests in Los Angeles and San Francisco, the Occupy Whatever meme is coming to a city near you. Occupy Dallas! is coming to my town October 6th and I’ll head down there to interview  people because that’s what I do. While I was looking up info about the event, I came across a Facebook page that really sums up what is really going on here.

This isn’t a protest against the government.

Not really. The is the guise that it’s under. It’s using the iconography of protest to actually SUPPORT the government status quo – specifically public employees. See, they can’t get a lot of support if they come out and say “Protest to keep out cushy pensions!” because who is going to show up for THAT, right?

Look who is holding the event on civil disobedience.. it’s the North Texas Association of Public Employees – -a group connected to the Steelworkers.

Public Employees are going to be showing people how to protest effectively against other public employees, like the police? This is a puppet show Play a little Rage Against The Machine for a soundtrack and the kids won’t notice that they are actually protesting to support the government bureaucrats.

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Many local governments in the “Sunshine State” embrace transparency, according to Sunshine Review, a nonprofit organization dedicated to government transparency. And, then there is Miami-Dade County.

• Salaries over $150K
• Benefits for people with salaries over $150K
• Overtime paid to retiring personnel 2008-2011
• Number of department-issued cell phones from January 1, 2008 to January 1, 2011
• Number of department-issued personal cars for take-home use

I keep hearing the narrative that somehow, as though it were written in stone, collective bargaining is a right for public sector unions. I would disagree entirely: collective bargaining is a privilege, not a right, for public sector unions. And you know what? About 50 years ago, the A.F.L.-C.I.O. agreed with me. The union’s Executive Council in 1959 said: “In terms of accepted collective bargaining procedures, government workers have no right beyond the authority to petition Congress — a right available to every citizen.”

And it is a privilege that has been badly abused for years; U.S. Bureau of Labor statistics show that public sector employees, many of them unionized, make nearly $40 an hour in combined wages and benefits versus roughly $27.50 for those in the private sector.

So I applaud what Scott Walker is doing in Wisconsin, but I actually feel he didn’t go far enough. All his Budget Repair Bill is doing is addressing the public sector unions’ right to collectively bargain over pensions and health care. I think it would have been nice to address the right to collectively bargain for wages, and here’s why: at the end of the day, the public sector unions are not collectively bargaining for a greater share of earnings, as do the private sector unions. They are bargaining to get a bigger slice of the pie of tax dollars, which the government has taken from the American taxpayer.

Now to be clear: paying a certain amount of taxes is a part of being involved in an organized civilization. If you want to make sure you have roads and national defense, you’re going to have to pay taxes. But that being said, taxes are removed through a threat of force from the taxpayers by the government (yes, I mean force. Try not paying property or income taxes and see what happens). So the government is run off of money earned in the private sector. Government does not create jobs; when there are reports of more jobs, but they’re all government jobs, the government is not creating anything: it is merely funding even more government jobs off the backs of the private sector. Which compounds the problem because by taking capital from the private sector to create government jobs, you’re not creating jobs that create more capital, as private sector jobs do.

So, public sector unions, unlike their private sector union counterparts, are not creating more capital. Do they provide services for the public good? Absolutely. Are they creating capital? Absolutely not.

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You may remember President Obama’s recent call for civil discourse this past January.  Well, it appears that the Left is still very much struggling with the #newtone online.  Unless, of course, you consider a persistent stream of steady death threats against Wisconsin Governor Scott Walker a display of etiquette straight from the Emily Post Etipedia of manners.

Here’s but a small sampling from the #caring Tweeters:
(NOTE:  I prefer to view the video with music like this as accompaniment…)

Initially, I’d written a summary here of some of the details around Gov. Walker’s proposal, including some of the positive highlights, like granting employees the right to choose whether or not to contribute dues to a labor union.  But then I decided, “nahhhh….why bother?”  Agree or disagree with some, all or none of the Governor’s proposal, everyone has something to contribute to the conversation.  But death threats are NOT an acceptable part of ANY conversation.

I’d thought we’d learned that by now, after documenting the same exact behavior in January.  With all the Big-Brother Twitter monitoring the Soros flunkies are doing out there, you’d think they would have posted and condemned this by now.

So much for that #newtone.

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From Americans for Prosperity, video of a public sector union protest yesterday on Capitol Hill. After years of steady pay increases, enhanced pension and other benefits and titanium-strength job security, public employee unions are starting to worry that the economic downturn may start to affect them. Poor dears.

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A homeowner with a leaky roof may be better off than one whose kitchen is on fire. But he still has a serious problem.

That’s something public policymakers – and everyday citizens – may want to remember as they try to make sense of the emerging debate over pension reform in the state of Florida.

The AFL-CIO recently held a major press conference in Tallahassee designed to minimize the need for pension reform legislation. The union leaders argued – correctly – that Florida’s state pensions are in better shape than those in California, Illinois, New Jersey, and several other states in financial crisis.

But just because Florida’s state pension problems aren’t (yet) a three-alarm fire doesn’t mean that many cities in the Sunshine State can afford to ignore their extremely leaky roofs. Because a number of municipal pension plans in Florida are suffering from the very sorts of mismanagement that have plagued state plans elsewhere. And some city pensions are so seriously underfunded that they will go belly up unless public policymakers step in and take bold action.

According to economist Randall Holcombe of Florida State University, government pension programs get into financial trouble because politicians often make promises today that have to be paid for by taxpayers tomorrow.

“There is always a temptation on the part of government officials to promise increased compensation in the form of unfunded pension benefits, because by doing so they can push the present cost of government into the future,” Dr. Holcombe notes in a new report of The James Madison Institute. “Generous pension benefits promised a decade or more ago are now placing significant burdens on government budgets.”

Or, as they say in Marianna, the chickens are coming home to roost.

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The one good thing about sitting through the painful lies and propaganda of Obama’s State Of The Union address was seeing the new Speaker of the House, John Boehner, in Nancy Pelosi’s seat. Seriously, you know it was killing her. I am sure they had to pry the gavel from her stone cold hands.

As for Obama’s speech, don’t make me laugh. That was not a State Of The Union Address as much as it was a campaign speech. Obama will do what he needs to do to get elected and that’s it. Period. Listening to this collectivist laud individualism was insulting. He was stealing my material, which is more than OK, but in deed, my good man. In deed. Do it.

His solution for the incomprehensible 14-trillion-dollar debt is more debt. More stimulus. More enslavement of free men. And, of course, the political fraud of more environ-mentalism, aka “clean” energy. It is insanity to create massive unemployment, destroy whole industries, make rich annihilationist jihad nations and bankrupt America in pursuit of a hoax. All these nature lovers should move out of technologically advanced nations and start their own society in nature. There are plenty of unpolluted places; let these self-made savages move there.

Foreign policy is a disaster. Look around; the world is descending into chaos. Ambassador John Bolton tweeted, “With no foreign policy victory of his own & many failures, bizarre that Obama would take credit for restoring America’s leadership in world.”

Bizarre and worse than bizarre.

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Finally; it seems we may have a Congress that takes seriously the urgent need to rein in the unsustainable deficits and the accumulation of public debt that so threaten the future well being of the nation.  Thank goodness for the most energized electorate in recent memory.  Its collective ire translated into large Republican gains in the Congress . . . gains that were largely attributable to the fact that the GOP made this subject the centerpiece of the 2010 campaign.  Woe is the politician who forgets why he or she was sent to Washington.  President Obama seems also to have gotten the message because he too talks the talk of fiscal prudence.

In addition, at the state level, Republicans had a net gain of six governorships and 19 state legislature changes in which they gained 650 legislative seats.  Clearly, most of the several states now have political leaders who heard, loud and clear, a message, and an expectation, that they must begin reducing the cost of government.  In 2010 and 2011, forty‑four states, that’s 88% of state treasuries, face budget shortfalls.  The combined budget gap for 2010 and 2011 is astronomical, estimated by several economic studies to exceed $350 billion.  California, with one of the nation’s highest sales tax (at 6.25%) and a top income tax rate of 10.56% (highest in the nation) according to the Wall Street Journal faces a budget shortfall of $42 billion in 2011 with a like amount projected in 2012, a whopping 22.2 percent of its total budget.  Bloomberg Businessweek projects $20 billion plus deficits through 2015.

As if this was not enough, California faces a $500 billion shortfall in public employee pensions with which elected officials have saddled their tax-paying constituents.   The once “Golden State” is not alone in its fiscal woes.  Illinois faces a budget gap of $13 billion in 2011.  On January 11 the Illinois legislature at the urging of Governor Pat Quinn passed a “temporary” 67% increase in the state’s personal income tax and hiked the corporate tax rate from 4.89% to 7%, prompting newly elected Wisconsin governor, Scott Walker, to invite businesses located in Illinois to come across the state line to relocate in Wisconsin.  Moreover, even after these enormous increases, the state still faces a $7 billion shortfall, probably to be covered by more borrowing, assuming there are those willing to lend the state money.  Another fiscal basket case is New York, which according to U.S. News Politics is staring at a projected $8.2 billion shortfall for fiscal 2011, as well as substantial unfunded pension obligations.

Let’s turn the spotlight, again, to California, a state whose citizens seem to be in denial about their plight.

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We’re now 25 billion dollars in the red in California.  The governor along with his Democrat controlled legislature will never do the right thing. They’re the same folks who brought you this mess.  When Governor Brown was previously the governor he signed the Dills Act in 1978 that gave civil servants the right to collective bargaining.  He did this on his very first day in office as governor.  This revolutionary enactment was the beginning of the end or our state. Now, with the power of government labor unions unchecked, state employees, now the largest unionized force of any state, have controlled the legislative agenda for the past 30 years.  Their sweetheart pension plans are a marvel to their political strength and are unmatched anywhere in the private sector.  This is why although state workers’ pensions are the single largest problem in this budget crisis, Brown has not even mentioned it in his new “reform” proposals.   He has however mentioned tax increases, or as he calls them tax “extensions”. A two-thirds margin of Californians overwhelmingly opposes tax increases as a solution.

Here’s the problem, notwithstanding a current state budget deficit of 25 billion dollars, the state has 700 billion dollars in unfunded pension liabilities.   This is ticking time bomb. No matter how much we cut and balance today’s budget, we will never catch up and meet the needs of the ridiculously high unfunded pensions.  This is the problem.   Brown’s budget may take away state workers’ cell phones and some social services dollars, but seriously, big deal.  This is just more smoke and mirrors. It just kicks the can down the road. This will not solve our major structural problem.

Legalizing online poker, taxing marijuana (both proposed) and taxing air (already passed through cap and trade) will not solve the budget problems.  The latter is a way of taxing the few manufacturing industries still dumb enough to be creating jobs in California.  If they hadn’t got the memo earlier, this bill should be a neon sign. Get out of Dodge.  We don’t see many folks clamoring for yet cleaner air, but we see millions looking for work.

Our legislature has been hallucinating for decades. They didn’t see the current budget crisis coming?

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From The Economist:

Politicians have repeatedly given in, usually sneakily—by swelling pensions, adding yet more holidays or dropping reforms, rather than by increasing pay. This time they have to fight because they are so short of money. But it is crucial that the war with the public-sector unions is won in the right way. For amid all the pain ahead sits a huge opportunity—to redesign government. That means focusing on productivity and improving services, not just cutting costs. (Indeed, in some cases it may entail paying good people more; one reason why Singapore has arguably the best civil service in the world is that it pays some of them more than $2m a year.)

The immediate battle will be over benefits, not pay. Here the issue is parity. Holidays are often absurdly generous, but the real issue is pensions. Too many state workers can retire in their mid-50s on close to full pay. America’s states have as much as $5 trillion in unfunded pension liabilities. Historic liabilities have to be honoured (and properly accounted for, rather than hidden off the government’s balance-sheet). But there is no excuse for continuing them. Sixty-five should be a minimum age for retirement for people who spend their lives in classrooms and offices; and new civil servants should be switched to defined-contribution pensions.

Another battleground will be the unions’ legal privileges.

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Or, how to turn a dynamic state economy into a basket case in just a few years. As you know, Illinois has raced past California to claim the mantle of most fiscally irresponsible state. Its bonds are just a tad above junk status and it has to patch up a $13 billion hole–half its general fund budget–within days, to pay a back-log of unpaid bills and cover a missed payment to the public employee pension fund. (Then they’ll have to do it all over again next year.)

Because the  state government is dominated by Democrats, the legislators in Illinois have decided to increase taxes. By a lot! Again, because they are Democrats, they plan to hike the income tax by 75% and increase cigarette taxes by $1 a pack. Business taxes would almost double.

Okay…so far, so same-old-same-old. They’re Democrats. Raising taxes is what they do.  Here is the part where Illinois’ budget gurus get into Apple Dumpling Gang territory:

The personal income-tax hike is expected to net the state roughly $6.2 billion, and a corresponding corporate income tax increase could raise an additional $1 billion…

[State Senate President] Cullerton said the state would use the income-tax hike to borrow $12.2 billion. Of that, $8.5 billion would pay overdue bills and $3.7 billion would cover a government worker pension payment lawmakers skipped when putting together the current budget

Brilliant!

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Sound familiar? Most everyone has heard it time and time again. It’s the way many TV sales pitches end after seeming to give the viewing audience something for nothing.  It’s a sucker’s pitch. It usually works like this: you are offered the gadget of the moment for the bargain price (typically) of $19.95, and you get an additional gadget for free.  Then comes the addendum (very quickly and often in a whisper) “just pay separate processing and handling.” The fee is never disclosed, but it’s always there (typically $9.95 for each gadget, or another $19.90 for both which brings the total to $39.85 exclusive of shipping charges) proving there are no free lunches.  This deceitful advertising used by television pitchman works so well that its equivalent has become the new Obama-Pelosi-Reid pitch to disguise the true cost of their programs.

And while this may not be a precise analogy for the way things are done in Washington, it’s close enough.  “Just pay processing and handling” is our metaphor for the entire panoply of Washington speak that produces programs, the costs of which are often orders of magnitude more than originally represented.  We are, almost daily it seems, pitched free lunches or  “benefits” by our government.  And while the seemingly irreversible debt we are currently piling on our children and grandchildren is truly unprecedented in American history, this administration did not invent the government “free lunch” shell game; they’ve simply refined and extended it with complete abandon.  As Ronald Reagan so aptly warned, “The nine most terrifying words in the English language are I’m from the government and I’m here to help.”

Let’s count a few of the ways American consumers and taxpayers have been sold a bill of goods whereby the bill for the goods is, or will be, much higher than the assurance given in the Obama-Pelosi-Reid sales pitch.

Everyone can recall the “deficit neutral” healthcare reform bill.  It wasn’t going to add a dime to the deficit “now or in the future.”  Then, no sooner than you could transfer a bill into an Act (a law) the essential quarter-of-a-trillion dollar “doc fix,” which had been yanked from the original healthcare reform bill to make it “deficit neutral,” was, a short time later, enacted separately blowing the deficit neutral promise to smithereens — just pay separate processing and handling.

The Pelosi-Reid-led Congress established new high-risk pools in the new legislation and allocated $5 billion to take care of the chronically ill and uninsured until the government-controlled insurance exchanges, which are to be set up under the new law, are up and running in 2014.  But no sooner, it seems, was the legislation signed into law than the Chief Actuary for Medicare estimated that the tax-payer funded high-risk pools would run dry in 2011 or 2012, “resulting in substantial premium increases to sustain the program” — another new, hidden and unexpected cost compliments of Obamacare.  Just pay separate processing and handling.

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With private sector jobs disappearing at an alarming rate, Assembly Republican Leader Martin Garrick, of Carlsbad, says in his weekly address that California must reduce the size of government to balance the budget. Here is the Assembly Republicans’ compilation of job statistics titled Real Facts: California Private Sector Job Loss vs. State Employee Job Cost.

California Unemployment Rate – 12.3%
Source: California Employment Development Department

Californians Currently Listed as Unemployed- 2.24 Million
Source: California Employment Development Department

Private Sector Jobs Lost in California Since 2005- 1,298,700
Source: California Employment Development Department

State Government Jobs Added Since 2005-  38,100
Source: California Employment Development Department

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Every successful revolutionary movement starts with an act of defiance – as ordinary people stand up against the tyrants who are ruling them. The Boston Tea Party of 1773 is an iconic example, as colonists dumped a shipload of tea into the harbor rather than acknowledge the right of the British Parliament to tax it. The tea party, of course, helped spark the American Revolution as its message of “no taxation without representation” gave voice to deeply held resentments throughout the American colonies.

The media have made much ado about the political Tea parties, started in 2009, that have had some level of success in protesting the government expansions under the Obama administration. Unfortunately, that movement – for all its many good points and despite the clarity of its Taxed Enough Already moniker – represents a mish-mash of ideas and has been plagued by factional disputes. The most successful mini-revolutions take place when the People are unified around a simple and clearly understood theme.

One of the best recent representations of that old defiant spirit can be found in the past couple of weeks in the Los Angeles suburb of Bell, a poor mostly Latino city of about 37,000, where about 2,000 city residents showed up and forced the resignation of worthless city officials after they learned about the way they had enriched themselves at the expense of city taxpayers. As one Bell resident said after a council member gave a self-serving justification of her $100,000 part-time salary (council members typically earn about $8,000 a year): “You were a crook yesterday, you’re a crook today, and you’ll be a crook tomorrow.”

That’s a simple idea most of us can rally around! The crooks are ripping us off.

The Bell situation garnered national attention because of the level of plundering. A city manager, Robert Rizzo, earned $787,000 a year from the impoverished burb – a place that has been cutting services and where 10 percent of the budget went to Rizzo, Police Chief Randy Adams ($457,000) and Assistant City Manager Angela Spaccia ($357,000).

Rizzo – who lives in fancy digs in Huntington Beach and has a horse farm in Washington state – boasted that he could have easily earned as much in the private sector, which is a load of nonsense and something that all city managers claim. Yet these managers, who typically make nearly $300,000 a year in California, manage basic city tasks in a bureaucratic monopoly environment. They do not run the equivalent of private, competitive firms.

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California is facing nearly The Toughest of Times.  We face historically high unemployment, perennial budget crises and more.  Don’t think it could get any worse?  Think again.  If Jerry Brown is elected, in one short stroke, he could deal a potentially crippling blow to the California economy before it gets a chance to get back on its feet.

Even for a committed political observer, volunteer and commentator such as myself, it seems implausible – but true – that the stakes for elections grow with each successive election.  For California, the 2010 gubernatorial election unquestionably could be the most important election ever – and not necessarily for a good reason.  If Jerry Brown is elected, he and his fellow Democrats could deliver a devastating blow to California.

We well know that California’s unemployment rate is above 12%.  We also know that well over 100,000 people are leaving California on a yearly basis.  Beyond that, California faces an exodus of businesses – large and small alike.  So it can be no surprise that state revenues have declined nearly $40 billion over the last three years as a result of the declining taxpayer base.

We also well know why California is having a tougher time than many other states.  In recent years, California is consistently ranked near the bottom of states in which to do business.  According to Joseph Vranich, president of JV Executive Consulting Inc. in Irvine:  “It’s no mystery what causes companies to leave California: High taxes, undue regulation, workers’ comp costs, a legal environment stacked against businesses and lengthy and costly construction permitting requirements.”  Indeed, California finished tied for last in the Country in Forbes’ Overall Tax Burden survey measuring tax burdens and structure.

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Andrew Biggs and Jason Richwine in today’s Wall Street Journal:

Even using all the standard controls—including race and gender, full- or part-time work, firm size, marital status, region, residence in a city or suburb, and more—the federal wage premium does not disappear. It stubbornly hovers around 12%, meaning private employees must work 13½ months to earn what comparable federal workers make in 12.

Most academic studies dating back to the 1970s have found similar pay differences. In addition to the wage premium, federal workers enjoy more generous fringe benefits than do private workers. For instance, federal workers receive a defined benefit pension with benefit levels comparable to those from private 401(k) plans, except that federal workers contribute only 0.8% of pay and are not subject to any market risk. They also receive employer matches to the defined contribution Thrift Savings Plan that significantly exceed the typical private employer match.

If the overall generosity of federal benefits matches that of federal salaries (which seems quite likely), total compensation for federal workers may easily exceed $14,000 per year more than an otherwise similar private employee.

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That’s because when the entire country is hurting and the private sector continues to lose jobs, bureaucrats are being hired.

The following chart makes that case. Since the beginning of the recession (roughly January 2008), some 7.9 million jobs were lost in the private sector while 590,000 jobs were gained in the public one.  And since the passage of the stimulus bill (February 2009), over 2.6 million private jobs were lost, but the government workforce grew by 400,000.

Plus, as you know, according to the latest numbers from Bureau of Economic Analysis, the average federal civilian worker now earns double what private-sector workers earn when factoring in wages and benefits ($119,982 vs. $59,909). And the gap is increasing.  According to Chris Edwards of the Cato Institute, in 2000, the average federal worker earned 66 percent more in total compensation than the average private-sector worker. By 2008, that ratio had risen to 100 percent. That’s serious money.

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From today’s San Francisco Chronicle:

Despite record high membership and dues, and years of unparalleled clout in state capitols, public-sector unions find themselves on the defensive, desperately trying to hold onto past gains in the face of a skeptical press and angry voters. So far has the zeitgeist shifted against them that on one recent weekend, government employees were the butt of a “Saturday Night Live” skit, and the next day, a New York Times Magazine cover article proclaimed “The Teachers’ Unions’ Last Stand.”

Public unions’ traditional strength – the ability to finance their members’ rising pay and benefits through tax increases – has become a liability. Although private-sector unions always have had to worry that consumers will resist rising prices for their goods, public sector unions have benefited from the fact that taxpayers can’t choose – they are, in effect, “captive consumers.”

At some point, however, voters turn resentful as they sense that:

– They are underwriting, through their taxes, a level of salary and benefits for government employment that is better than what they and their families have.

– Government services, from schools to the Department of Motor Vehicles, are not good enough – not for the citizen individually nor the public generally – to justify the high and escalating cost.

We are at that point.

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