A state known for its "progressive" politics rejected union bullying yesterday and, by re-electing Governor Scott Walker, cast a vote for fiscal sanity. Even in Wisconsin, government finances are still in serious peril. What Walker has done so far represents only a baby step toward getting Wisconsin's state financial house in order. They still have massive unfunded pension liabilities, both at the state level and at the local level. The size of these unfunded liabilities are several orders of magnitude worse than the $ 3.6 billion budget gap that Walker has closed in the last two years. But, still. It is a beginning and brings a glimmer of sunshine to a state that was careening off into disaster until Walker came along.
As in Europe, the situation in the various states in America is simply a question of numbers. This is not about politics. There is no political solution for Europe or for the American states. There is no set of circumstances that will enable them to pay their debts. So, it is time to acknowledge that their debts are unpayable. Once you do that, then there are solutions. But, there are no viable solutions if politicians continue to pretend that their are some grand solutions for the current problems. There are none.
Wisconsin will, sooner or later, have to change their retirement and health care deals for public employees. There is no set of taxes or rates of economic growth that will fund their current projected obligations. That is the same problem that is faced by California, Illinois, New York, New Jersey and, yes, even in Virginia. The sooner these liabilities are restructured, the less will be the pain for all.