Teachers On The Picket Line
We are currently witnessing a rash of strikes by public school teachers. Why and why now? The answers to those questions may have some elements you haven’t considered.
Barack Obama’s presidency was not kind to the Democratic party. During his eight years in the White House, the Democrats lost over 1,000 seats in Congress, state legislatures and governors’ mansions. Not only did they lose a lot of legislative clout, they took a beating in the redistricting process that followed the 2010 census, which allowed Republicans to solidify their hold on legislative bodies. The Party, newly energized by a progressive wing and hatred of Donald Trump, is trying to reverse those losses.
The Republican governors and legislators have, for the most part, done a decent job of governing in the states they dominate. Taxes have not risen or been lowered. Job growth and the business climate have been good. The functions of government have improved a little. So, the Democrats had to look hard for a soft spot to attack.
The teachers’ unions are joined at the hip to the Democratic party. They provide the party’s foot soldiers and a great deal of its financial support. They have been mobilized to assist in the effort to turn things around. The ultimate burning desire is to get greater control of redistricting after the 2020 census (gerrymandering is a sin only when the other party is doing it). The proximate burning desire is to take over the Congress and impeach Trump. Striking teachers make the Republicans look like kid unfriendly scrooges. A soft spot has been found.
That said, teachers do have a bone to pick. Many of them haven’t had a raise in a long time. The legislatures are caving because they are faced with a very telegenic narrative.
The first problem the teachers have is that they have worn out their welcome with a lot of voters. Due to our graying demographic, a larger percentage of voters don’t have children in school. The teachers’ unions have told us — relentlessly — that the problem with state supported schools is a lack of money. When money has been provided, the results have been disappointing. Test results have gotten steadily worse in most cases. In international rankings, we are nowhere near the first tier, despite spending considerably more per pupil than the first tier systems. If you cry “wolf” once too many times, response becomes harder to get. The net result is that teachers have to rely on legislatures for a raise, because the voters are no longer voting for tax increases targeting education.
The second problem is even more serious. When teachers are granted a raise and an increased allocation to educational resources, the money has to come from somewhere. The three logical possibilities are higher taxes, cuts to other programs, or more debt.
Debt is getting to be a much harder sell. We currently have just under $4 trillion of muni debt, which comes near to saturating the market. The 80% haircut in Detroit, and the current default in Puerto Rico, have taken the shine off that investment vehicle. Investors are viewing Illinois, New Jersey, Connecticut, and the city of Chicago with a jaundiced eye. The new tax law renders the after tax return on muni bonds less attractive.
Taxes are always a hard sell, especially for Republican legislatures. Aside from ideology, there are reasons to be careful about tax increases. If additional taxes drive wealth and business from your state, a vicious cycle sets in. More broadly, taxes above a certain level have consistently resulted in slower economic growth. Over time, government can’t consume more wealth if the private sector doesn’t create the wealth.
The biggest problem is allocation. Education has received, relatively speaking, less funding from states because their budgets are being progressively more seriously stretched by Medicaid and payments to public sector pension plans, including those plans covering teachers. A concerted effort by the medico-industrial complex, well meaning bureaucrats, and Obamacare provisions have swelled the rolls of Medicaid. It is eating state budgets alive. Inadequate contribution levels and artificially low interest rates have left virtually all public sector pension plans well under water. Union clout produced state constitutions that put pension obligations high up in the capital stack. Shortfalls get the second crack at any revenues, right behind general obligation bonds. You, dear taxpayer, are on the hook to make up the shortfalls. State legislatures have been forced to divert money that might have gone to the schools into those two black holes.
So, my conclusion would be that the teachers deserve a raise, but we have our proverbial heads in the proverbial sand. Politics, and the economic realities that accompany the political process, are all about allocation of resources — who gets how much of the public purse, and out of whose hide does it come. We are failing to have that conversation. Our answer for the last 20+ years has been “all of the above” and a resort to the debt markets. We are running out of road down which to kick the can. We have made no provisions to support the elderhood of 80 million baby boomers. Time to get serious. Whatever your position on the political spectrum, a fact based dialogue about allocation of limited resources is in order. If we want to give teachers more money, we have to figure out where to get it.
