On Friday morning, I woke up to the images of thousands of protesters taking over the Capitol building in Madison, Wisconsin.
This was the response to Governor Scott Walker’s legislation to cut public-worker benefits and eliminate most collective bargaining rights.
Coming from a pro-union family where fathers, grandfathers, uncles, and cousins all worked for either Bethlehem Steel in the 1960s or McCormick Spice (NYSE: MKC) in the 1970s, I’ve heard my fair share of union stories…
So when the news broke last week, I was inundated with e-mails from my family.
Now I’m not going to sit here and sing the praises of unions. Nor am I going to trivialize the positive contributions unions have made in the past.
But there is absolutely no doubt that Governor Walker’s legislation is less about fiscal constraints and more about politics.
Surpluses are for suckers!
Just last month, we were told that the state of Wisconsin was on track to have a $121 million budget surplus this year.
We also know that since the governor took office, roughly $140 million has been ponied up in business tax breaks…
I don’t know the ins and outs of those tax breaks — and certainly I’m the last person to criticize a state government for offering incentives to the business community. It makes no sense to penalize companies that provide jobs in this economy.
That being said, you can’t shell out $140 million, and then turn around and blame the unions for a budgetary crisis.
It’s unethical, it’s irresponsible, and it stinks of politics.
Stripping collective bargaining rights doesn’t really have any kind of meaningful fiscal impact on the state. It saves no money, it cuts no spending, and it generates zero in revenue.
Also worth noting is the fact that local police, firefighters, and state troopers were not included in the governor’s legislation. Apparently, those were the three unions that actually supported the governor in the last election…
I’m not sure how much support came from those unions. It could be very minor, so there may not be much to that.
Although I would argue that if the governor had taken a swipe at police and fire, he pretty much would’ve ended his political career right there.
It’s pretty much the same old song and dance, no matter how you slice it: politics, politics, politics.
A long, hard fall
Now, it’s not just some republican governor facilitating this mess, using and abusing unions like pawns in a sick chess game of political power and ego.
Democrats wasted no time in jumping on this bandwagon. Organizing for America — which is connected to the Democratic National Committee — is now ramping up its support efforts in Wisconsin, and in Ohio and Indiana as well. And it’s taking full advantage of this opportunity to show union supporters that those on the left are not like the evil republicans who want to crush hard-working citizens with a corporate hammer…
(Or at least, that’s how they’ll frame the message.)
Regardless, there is a very good chance that these protests could now grow in size across the nation. And I have no doubt that it’s going to make the process of big budget cuts and fiscal restraint much more difficult.
Because at the end of the day, these politicians are not going to do what’s necessary to get us back on track; they’re only going to do what’s necessary to get re-elected — or pay back the special interests that got them elected in the first place.
Make no mistake: The longer it takes for us to get our fiscal house in order, the longer and harder the fall’s going to be when the proverbial poop hits the fan.
This is why I continue to scream from the rooftops — make as much money as you can now, before the hammer finally falls.
Load up on oil while it’s still cheap.
Pick up some solid energy storage plays, as that’s the key to big money in new energy technologies. My colleague Nick Hodge has found an excellent way to crack this market.
Don’t sleep on any commodity that we simply can’t live without, and don’t disregard the importance of local economies.
Today, they’re special interests stories. Tomorrow, they’ll be your only hope of surviving a global economic meltdown.
Editor, Energy and Capital