In my
last column, I documented how California’s pro-union Attorney
General Kamala Harris provided an unfair and dishonest title and
summary to a pair of pension reform initiatives submitted to her
office, thus effectively killing the measures. Last week the unions
tried—and almost succeeded—with an even nastier stunt designed to
undermine democracy.

In San Diego, unions are fearful of a new pension reform measure
referred to by supporters as Comprehensive Pension Reform, or CPR,
that has qualified for the June 2012 ballot. Instead of simply
gearing up to fight this political battle, the unions petitioned
one of those ridiculous commissions that most Californians have
never even heard of, the Public Employment Relations Board, which
is unfriendly turf for taxpayers. The union said placing the
initiative on the ballot amounted to an unfair labor practice, and
PERB called for an injunction to stop the election until it could
complete its sham proceedings.

In essence, the unions and this unelected board insist that the
people of San Diego have no right to vote on pension reform. This
is just the latest reminder of the totalitarian ethics of a
public-sector union movement that doesn’t care about anything other
than protecting its benefits.

“Never in the history of this state … has there ever been a
requirement to meet and confer over a citizens’ initiative placed
on the ballot by voter signatures,” wrote city attorney Jan
Goldsmith in a toughly worded letter to PERB. Pension reform
advocate Carl DeMaio, a councilman and mayoral candidate,
criticized PERB’s assault on Californians’ constitutional rights.
Fortunately, a judge agreed with the city, but expect the unions to
head back to court if their campaign against CPR fails.

The unions that dominate Sacramento are not about to let any
serious reform take place given that real reform—especially in
light of frightening new unfunded pension liability numbers—means
that the days of millionaires’ pensions (one would need millions in
the bank to receive the amounts commonly received by recent
California government retirees) eventually have to end. Unions
don’t mind undermining the public’s right to vote. They don’t care
if our taxes go through the roof and businesses flee the state.
They don’t care if services are slashed. They want their money.

Even Gov. Jerry Brown’s modest pension reform
proposals are going nowhere in a Democratic-controlled Legislature
that continues to promote expanded benefits for public employees,
including a recently introduced Public Employees Bill of Rights.
That leaves few other choices than a continuing gallop toward the
brink.

While other liberal states such as Rhode Island are addressing
their pension problems, and some Midwestern states such as
Wisconsin, Ohio, and Indiana are fighting battles over union power,
California does basically nothing. I appreciate the governor’s
pension proposals, but he continues to view hefty tax increases as
the only real solution to the state’s budget problems. The deficit
has shrunk a bit, and Standard Poor’s pushed up the state’s
credit rating a tad, but the fundamentals have not improved here
very much.

Where does that leave us?

Economist Allan Meltzer once quipped that “Capitalism without
failure is like religion without sin. It doesn’t work.” Americans
have been witnessing this axiom on a broad scale, as government
efforts to prop up industries, bail out the financial sector, and
protect select private businesses from failure have only caused a
prolonged financial crisis. Without failure, there is no day of
reckoning and no effort by the failed party to make the fundamental
changes needed to avert future crisis.

The problem in the public sector is that government never is
allowed to fail. There never is a day of reckoning no matter how
poorly a government agency may provide its so-called services.
Often, the worst agencies are rewarded for their failure by being
granted additional public dollars. California governments have
continually ramped up pension promises, but governments can’t go
out of business, so they just keep piling up the debt.

When there’s no money left, officials play games with the
numbers or—as Gov. Brown continues to do—make it their main
objective to raise taxes.

Since reform can’t take place because of union control, some
have proposed wider use of the bankruptcy option so municipalities
can reorganize their debt. The main critics of the bankruptcy
option are the unions. They know that bankruptcy would enable
governments to abrogate these unaffordable contracts. The
public-employee unions championed a bill, signed into law by Brown
in October that makes municipal bankruptcy more cumbersome by
forcing localities to get approval for such actions by additional
committees.

Some even see the bankruptcy option as something that should be
allowed for states. In January 2011 GOP pols Jeb Bush and Newt
Gingrich ignited this debate with a Los Angeles Times
op-ed titled, “Better Off Bankrupt” that argued that an organized
bankruptcy process might help states overcome staggering budget
deficits. But other conservatives, concerned about the impact of
bankruptcy on bond markets, have been campaigning against this
idea. They note that the highly publicized Vallejo bankruptcy
ultimately did little to reform that city’s super-sized pensions
for public employees.

I’m not advocating for bankruptcy per se, but what happens when
all other reform options are taken off the table? What happens when
the politics of a state won’t allow the reforms necessary to save
that state? In other words, what happens when failure is not an
option? If the likes of Harris and PERB and the unions continue to
get their way, we very well may get to see the answer here in
California.

Steven Greenhut is vice president of the Franklin Center for
Government and Public Integrity. He is based in
Sacramento.