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Neither the policy nor political implications for public sector compensation and collective bargaining are as clear-cut as advocates on either side might have you believe. While proposed reforms to public-sector pensions may seem straightforward as a matter of economics, they are embedded in a morass of political questions, all being debated against the backdrop of the 2012 elections. In an event at AEI Wednesday morning, economists and public opinion experts came together to consider these complicated questions and their implications for policy.
Experts in the first panel were unanimous in calling for a move from defined-benefit to defined-contribution pensions for public-sector workers. Contrary to the claim that such a change would be mathematically difficult, Scott Beaulier suggested that states could finance pension reform through a one-time debt issuance, just as they do to finance major infrastructure projects. Eileen Norcross highlighted successful reforms in New Jersey and Rhode Island, and Beaulier pointed to Michigan and Utah as other models. Jason Richwine emphasized just how emotionally charged the issue is; his second grade teacher wrote him in response to a recent study Richwine co-authored with Andrew G. Biggs regarding teacher compensation to ask, “How do you sleep at night?”
The second panel highlighted a range of views on how public-sector politics will play out in 2012. Henry Olsen argued that the debates about public-employee collective bargaining and compensation fit into the larger discussion and narrative about fairness and earned success, and he cautioned Republicans against seeing the white working class as “neolibertarian.” Sean Trende pointed out that Governor John Kasich’s reform proposals in Ohio (what Ruy Teixeira called a “political miscalculation”) were defeated by opponents’ making the battle about all-encompassing “universalist messages,” not collective bargaining. Ultimately, Teixiera concluded, for victory in this year’s elections, Republicans have to win the white working class by a substantial margin, and public-sector collective bargaining reform is an unattractive issue for them. In the medium term, Trende argued that unfunded pension liabilities are a political hot potato neither party really wants to address, and Teixeira suggested the GOP will ultimately have to take collective bargaining reform off the table, as it’s not technically necessary for addressing state budget deficits.
About this Event
In states around the country, 2011 was marked by substantial and sometimes acrimonious debate over reforms to public-sector employees' compensation, especially pensions and fringe benefits. States including Massachusetts, Michigan, New Jersey and Rhode Island enacted a variety of reforms designed to shore up ailing state finances and reduce future liabilities. In Wisconsin, the debate over reform virtually paralyzed the state government for weeks. And in Ohio, a vote to eliminate public-sector collective bargaining and trim benefits was roundly rejected by voters.
What does 2012 hold, both in terms of policy and politics, for the developing relationship between public-sector workers and taxpayers? What does a proactive reform agenda for 2012 look like? Is a pro-reform platform a winning issue for reformers or their opponents? This event will address these and other questions in two panel discussions: the first looking at the state of public employee pensions and potential future reforms, and the second examining the politics surrounding public employee compensation reform, including who won and lost politically in 2011 and what these state-level skirmishes can tell us about the 2012 elections.
Panel I: Public Employee Pensions and Benefits: What Reforms Have Taken Place? What Still Needs to Be Done?
Scott Beaulier, Troy University and Mercatus Center at George Mason University
Andrew G. Biggs, AEI
Jason Richwine, Heritage Foundation
Eileen C. Norcross, Mercatus Center at George Mason University
James C. Musser, Mercatus Center at George Mason University
Panel II: Political Implications of Reforms: Who Wins and Who Loses in 2012?
Henry Olsen, AEI
Ruy Teixeira, Center for American Progress
Sean Trende, RealClearPolitics.com
Karlyn Bowman, AEI
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Scott Beaulier is the Adams-Bibby Chair of Free Enterprise and associate professor of economics at Troy University. He is also the the executive director of Troy University's Manuel H. Johnson Center for Political Economy. Previously, he was assistant professor of economics and chair of the Economics Department in Mercer University's Stetson School of Business and Economics. Most of his work focuses on applied microeconomics, development economics and political economy.
Andrew G. Biggs is a resident scholar at the American Enterprise Institute in Washington, DC. Prior to joining AEI, he was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA's policy research efforts and led the agency's participation in the Social Security Trustees working group. Mr. Biggs’s work at AEI focuses on Social Security reform, state and local government pensions, and comparisons of public and private sector compensation. His work has appeared in academic publications as well as outlets such as the Wall Street Journal, New York Times and Washington Post, and he has testified before Congress on numerous occasions.
Karlyn Bowman compiles and analyzes American public opinion using available polling data on a variety of subjects, including the economy, taxes, the state of workers in America, environment and global warming, attitudes about homosexuality and gay marriage, NAFTA and free trade, the war in Iraq, and women's attitudes. In addition, Ms. Bowman has studied and spoken about the evolution of American politics because of key demographic and geographic changes. She has often lectured on the role of think tanks in the United States.
James C. Musser is director of economic education at the Mercatus Center at George Mason University. Mr. Musser is responsible for leading the federal and state outreach team to disseminate the latest scholarship to policymakers. When he was senior staff counsel to Senator Jim Bunning (R-Ky.), he provided advice and counsel regarding tax, budget and legal issues. He also served as Sen. Bunning’s representative on conference committees between the U.S. House of Representatives and Senate.
Eileen Norcross is a senior research fellow with the Mercatus Center at George Mason University. As lead researcher on the Mercatus Center's State and Local Policy Project, she focuses on the questions of how societies sustain prosperity and what role civil society plays in supporting economic resiliency. Her primary research interests include fiscal federalism and institutions, state and local governments and economic development. Before joining the Mercatus Center, Ms. Norcross was the 2001–2002 Warren Brookes Fellow in Journalism at the Competitive Enterprise Institute in Washington, DC. She has also worked for KPMG as a consultant with their transfer pricing division and as a research analyst with Thompson Financial Securities Data.
Henry Olsen, a lawyer by training, is the director of AEI's National Research Initiative. In that capacity, he identifies leading academics and public intellectuals who work in an aspect of domestic public policy and recruits them to visit or write for AEI. Mr. Olsen studies and writes about the policy and political implications of long-term trends in social, economic and political thought. He previously served as the vice president for programs and executive director of the Center for Civic Innovation at the Manhattan Institute.
Jason Richwine is the Heritage Foundation’s senior policy analyst in empirical studies. He conducts quantitative analyses on a wide variety of social policy issues, among them immigration, education, welfare and family structure. Richwine’s analysis and articles have appeared in major newspapers such as and and in political journals such as and . Before joining Heritage in March 2010, Richwine worked at the American Enterprise Institute on a dissertation fellowship.
Ruy Teixeira is a senior fellow at both the Century Foundation (TCF) and Center for American Progress (CAP). He is also a guest scholar at the Brookings Institution, where he recently co-directed a joint Brookings-American Enterprise Institute project on political demography and geography, “The Future of Red, Blue and, Purple America,” and wrote a series of reports with William Frey on the political geography of battleground states in the 2008 election. He is the author or co-author of six books, as well as hundreds of articles, both scholarly and popular. He also writes “Public Opinion Snapshot,” a weekly feature featured on the CAP and TCF websites.
Sean Trende is the senior elections analyst for RealClearPolitics.com and author of the recently released “The Lost Majority: Why the Future of Government is Up for Grabs—and Who Will Take It.” His work is regularly cited by such politicos as Rush Limbaugh, David Brooks, Michael Barone and Nate Silver, and he is a regular guest on Fox News, Fox News Radio, CNN Radio and NPR’s “All Things Considered.” Prior to his work for RealClearPolitics, he served as an associate at various law firms for seven years.