State Budget Shortfalls Are No Accident: They Are the Result of the Public Pension Crisis, Which the Fed Engineered

As the stock market bubbled ever higher in the 1990s, managers of pension plans ratcheted up their expectations of future "permanent" growth, giving politicos the go-ahead to ramp up pension pay-outs. From 2002 to 2008, pension payments to retirees grew 56%, triple the inflation rate. In essence, pension plans, which were once constructed on the long-term expectation of 4-5% returns on capital, now based future earnings and pay-outs on the stock market's "average return" of 8% annually. As any reasonable person might have foreseen, the bubblicious stock market of the 1990s was not a "new permanent plateau" but, in fact, a bubble which imploded. Real returns in the past decade have been literally half what was anticipated and, as a result, state and local governments are having to make up the difference with cash out of general fund tax receipts. - Blame the Fed for the Pension Crisis, Seeking Alpha, May 24, 2010

Wisconsin Goes Recall Crazy - Recall Drives Could Make History

March 7, 2011

JSOnline.com - As improbable as the last three weeks have been in state politics, Wisconsin is about to embark on another wild ride into the political unknown -- a series of legislative recall campaigns on a scale the nation has rarely, if ever, seen.

"I don't think there's a precedent for what's going on in Wisconsin," said Gary Moncrief of Boise State University, an expert on legislative politics. "I don't think there's ever been a case where pretty much everyone has been subject to a recall attempt at one time on both sides. That's really amazing."

Formal recall campaigns have now been launched against 16 state senators -- eight Republicans and eight Democrats. That's everyone in the 33-member Wisconsin Senate who is legally eligible to be recalled this year.

Even though state law is designed to make recalls difficult and rare, some political insiders expect the petition drives now under way to succeed in forcing multiple lawmakers to face recall elections this summer.

Much like the ongoing budget fight, the recall battles could play out on a national stage. The two parties and groups across the political spectrum will be invested in the outcome, with Wisconsin now serving as the state testing ground in a broader struggle over government spending, unions and the public workforce in the run-up to the 2012 election.

"A lot of effort is going to be expended by both sides. You'll see national money. It's going to generate a lot of passion on both sides," said Mark Jefferson, executive director of the state GOP. "We're having a serious debate in this state about some very serious issues."

In the end, the success of this year's recall campaigns -- and possibly a second round next year -- will hinge on the depth and breadth of grass-roots anger and frustration in Wisconsin, feelings that polls suggest now run at feverish levels.

"You can't pull off a recall unless there is legitimate and real unrest," said state Democratic chair Mike Tate. "The barrier is too high. You can't manufacture it."

Should one or more state lawmakers be driven from office, the recall rage could alter the legislative calculus in Madison, influence similar policy fights in other states and leave more scars on the Wisconsin body politic.

"Recall is an extreme measure," typically spawned by "extreme circumstances," said University of Iowa professor Caroline Tolbert, an expert on the "direct democracy" reforms -- recall and initiative and referendum -- that grew out of the Progressive movement around the turn of the 20th century.

Scholars interviewed last week could cite only three times in American history when more than one state legislator has been recalled at roughly the same time over the same issue: two in Idaho in 1971 over a pay raise, two in Michigan in 1983 over a tax vote and two Republicans in California months apart in 1995 over their collaboration with Democrats.

Moncrief said the leading historical example of a broad-based, successful recall effort at the state level occurred 90 years ago in North Dakota, when the governor and two other statewide officials were driven from office.

What's happening in Wisconsin is uncharted territory, said Thad Kousser, a University of California, San Diego political scientist who has studied California's rich history with recalls.

California is the only state besides North Dakota to recall a governor. In 2003, Democrat Gray Davis was ousted in the recall election that put Arnold Schwarzenegger in office. Despite more liberal recall rules than Wisconsin, California has had only four state legislators successfully recalled in its entire history, Kousser said. But the threat of recalls has itself influenced the voting behavior of state lawmakers in some cases.

"It's certainly become a more common part of the California political parlance," Kousser said.

Wisconsin's most notable episode was the 2002 recall of seven Milwaukee County supervisors in the pension scandal that propelled Scott Walker into the county executive's office. But only two state lawmakers have been successfully recalled in Wisconsin.

Fewer than 20 states allow for the recall of state officials, and the barriers vary widely.

Wisconsin requires petitioners to gather enough signatures to equal 25% of the votes cast in the most recent race for governor in the district of the targeted legislator, a daunting number. That barrier is even higher in some states -- it's 40% in Kansas -- and lower in others -- 12% in California for governor, 20% for state legislators.

Wisconsin law also dictates that a year must pass after the election of the targeted official before he or she can be recalled. In some states, that period is only 90 days. That means that in the Wisconsin Senate, only the 16 members elected in 2008 are eligible to be recalled this year.

Recall drives have now been officially launched against every one, some by more than one committee, Kevin Kennedy, the state's top election official, said Sunday. The other 17, elected in 2010, could be targeted for recall next year, as could the governor. It would take more than 540,000 valid signatures to force a recall election against Walker in 2011.

The other hurdle in Wisconsin for recall organizers is that they have only 60 days once they formally organize to gather the needed signatures -- in some states that period is much longer. The signatures needed for the recall drives now under way range from 11,817 in Milwaukee Democrat Spencer Coggs' district to 20,973 in the district of New Berlin Republican Mary Lazich.

In interviews last week, some experts said Wisconsin's short window for petitions and the large number of signatures required means that recall efforts will need significant funding and paid canvassers.

On the other hand, social media offers today's activists a tool that didn't exist 10 or 20 years ago to rapidly mobilize and coordinate grass-roots political activity.

"I think this may actually become more common because of social media," Moncrief said.

Under the timetables in state law, the 60-day petition period that's under way in 16 Senate districts is followed by a 31-day period where signatures are challenged, defended and reviewed. That period can be extended by a court.

If enough signatures are declared valid, an election is scheduled for six weeks later. If more than one challenger in the same party files papers, then that election serves as the party primary, followed four weeks later by a general election.

The state's normal fundraising rules apply during the election phase. But during the petition phase, individuals can give unlimited amounts to either the incumbents or those trying to recall them. That money can be used only for or against the signature drive -- not in the ensuing election.

Wisconsin's recall fight will feature debates over the governor's effort to curtail collective bargaining for public employees, over the cost and size of government, over the role of unions, and over the decision of Democrats in the Senate to leave the state to prevent a vote on Gov. Walker's plan.

But it is also likely to spur debates over the use of the recall itself.

"To prevent civic life from descending into the exhaustion of never-ending campaigns and elections, the key is making the triggering of the recall option difficult, to discourage recalls from becoming part of the standard tool-kit of political conflict," University of Wisconsin-Madison political science chair John Coleman said in an e-mail.

"Once this story became such a national flash point and the first recall effort was launched, it increased the incentive for further recall efforts to be launched -- neither side wants to be outpaced by the other. That kind of perceptions battle can feed off itself and multiply, and the recall efforts themselves become part of the battle for public opinion, along with ad campaigns (and) rallies."

But Iowa scholar Tolbert said multiple recalls can be an appropriate response when "circumstances are fairly unprecedented," as they are in Wisconsin.

Whether Wisconsin's encounter with the recall this year marks a new kind of politics or part of a freakish chapter in the state's political history remains to be seen.

"We're all watching," Tolbert said. "Everybody's watching."