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Mostrando postagens com marcador falencia do Estado. Mostrar todas as postagens
Mostrando postagens com marcador falencia do Estado. Mostrar todas as postagens

segunda-feira, 18 de fevereiro de 2013

Constituicao "cidada" de 1988: a conta esta' chegando...

Em 1987 e 1988, a sociedade brasileira, embalada nos discursos demagógicos da maioria dos constituintes, achava que tinha descoberto a chave do Tesouro: se colocaria na Constituição todas as benesses, bondades, direitos e privilégios que os cidadãos se achavam no direito de gozar, sempre as custas daquilo que Bastiat chamava de a grande mentira: o Estado, um ente coletivo, através do qual todos esperam viver às custas dos demais.
Assim, foram inseridos dezenas e dezenas de direitos sequer sonhados nos países mais ricos, como se o Brasil fosse um oasis maravilhoso de riqueza e produtividade (aliás, um conceito que não aparece na CF, ao lado de setenta e tantos direitos).
Os mais evidentes, saúde e educação, estão sempre garantidos gratuitamente pelo Estado: "A saúde (ou a educação) é um direito do cidadão e um dever do Estado...", e por aí vai.
Na ilusão de que tudo possa ser fornecido pelo Estado, a CF não assegurou que o mercado também pudesse fazê-lo. O que ocorreu, como sabem os economistas, foi um "overuse"  desses serviços, e assim a sociedade tem de pagar cada vez mais para que o Estado possa fornece-los. Como o Estado não prima pela eficiência, boa parte dos recursos acabam na própria burocracia, são desviados pelo sobre-faturamento ou simplesmente pela corrupção, ou simplemente não alcança a demanda potencial. Ocorrem então o não provimento de serviços essenciais à população, os atrasos, calotes, ou o pagamento insuficiente desses serviços, e a consequência, para os pobres, é racionamento, filas, delongas, não atendimento, etc. 
Na ilusão de que tudo isso pode e deve ser fornecido pelo Estado, o que vai ocorrer é uma extração fiscal cada vez mais rigorosa e crescente da sociedade, e uma perda paralela desses recursos em todos esses desvios apontados. 
Provavelmente, a sociedade brasileira estaria melhor servida com um provimento via mercado, deixando-se apenas para os mais pobres os serviços via Estado. 
Não parece que estejamos perto de chegar nesse tipo de solução.
Preparem-se, pois, para pagar mais e não usar serviços públicos nesses setores...
Paulo Roberto de Almeida 

Santas Casas asfixiadas

18 de fevereiro de 2013
EditoriO Estado de S.Paulo

A despeito do imenso problema social que causará e do caos que provocará no Sistema Único de Saúde (SUS), um eventual colapso das Santas Casas e dos hospitais filantrópicos decorrente de dificuldades financeiras crescentes não surpreenderá quem acompanha a situação da saúde pública no País. Trata-se de um problema antigo, de causas perfeitamente diagnosticadas, e que se agrava a cada dia, mas para o qual as autoridades responsáveis - em boa parte por comodismo - não deram e continuam a não dar a atenção que merece. O preço que o País terá de pagar, caso os problemas se agravem a ponto de a situação se tornar insustentável num futuro próximo, certamente será maior do que o custo de uma solução racional, que ainda é possível adotar.

A Constituição estabeleceu que a saúde é um direito fundamental do cidadão e, para garanti-lo, sem dispor de estrutura própria suficiente para isso, o Estado brasileiro estabeleceu o que deveria ser uma parceria com as instituições filantrópicas. Estas responderam bem à proposta de parceria e, por isso, sua presença nas operações do SUS é cada vez maior.
Em 2004, por exemplo, os hospitais públicos respondiam por 41,4% das internações pelo SUS, os hospitais privados sem fins lucrativos (Santas Casas e instituições filantrópicas), por 39,9% e os privados lucrativos, por 18,7%. Por causa da remuneração inadequada dos serviços, os hospitais particulares reduziram sua participação para 10,2% do total das internações em 2011, de acordo com dados do Ministério da Saúde utilizados no relatório da subcomissão especial da Comissão de Seguridade Social e Família da Câmara dos Deputados, que discutiu o problema. Em contrapartida, aumentou a participação dos hospitais públicos e dos privados não lucrativos, para, respectivamente, 45,0% e 44,8%.
Hoje, as Santas Casas e os hospitais filantrópicos têm a mesma importância dos hospitais públicos no atendimento aos pacientes do SUS. Os dados recentes mostram também o que poderia acontecer no sistema público de saúde caso as Santas Casas deixassem de operar por absoluta incapacidade financeira.
A crise nas finanças das Santas Casas é conhecida há vários anos, e, sem medidas adequadas por parte dos responsáveis pelos programas de saúde pública, só piora. Em 2005, a dívida dessas instituições era estimada em R$ 1,8 bilhão, em 2009 saltou para R$ 5,9 bilhões e, em 2011, alcançou R$ 11,2 bilhões, de acordo com o relatório da subcomissão formada na Câmara dos Deputados. Mantido o ritmo de crescimento anual desse período, de cerca de 35% ao ano em valores nominais, deve ter alcançado R$ 15 bilhões no fim do ano passado (os dados consolidados ainda não foram divulgados).
O simples exame dos custos dos serviços prestados pelas entidades filantrópicas ao SUS em 2011 e da receita com os serviços prestados não deixa dúvidas quanto à causa do crescimento da dívida. Em 2011, essas entidades gastaram R$ 14,7 bilhões com os serviços, mas sua remuneração, pelo SUS, ficou em R$ 9,6 bilhões. Isso quer dizer que o pagamento do SUS cobre apenas 65% dos gastos desses hospitais. Só em 2011 (não há dados para 2012), o déficit foi de R$ 5,1 bilhões. A defasagem é maior para procedimentos considerados de média complexidade.
Reportagem do jornal O Globo (10/2) mostra que, sem recursos financeiros, hospitais têm adiado cirurgias, enfrentam ameaças de greve, carecem de materiais e chegam a suspender suas operações.
Essenciais para o SUS, as Santas Casas são insubstituíveis em muitas comunidades. Do total de 2,1 mil estabelecimentos hospitalares sem fins lucrativos, 56% estão em cidades com até 30 mil habitantes e são o único hospital em quase mil cidades.
Evitar o agravamento de sua crise exige o reajuste imediato da tabela de pagamento do SUS para cerca de 100 procedimentos, mas, até agora, não há previsão do governo para a correção desses valores, reconheceu o secretário de Atenção à Saúde, Helvécio Magalhães. O governo abriu uma linha de crédito no BNDES para esses hospitais, mas, já muito endividados, eles temem contrair novas dívidas. Sua saúde financeira aproxima-se do ponto crítico.

sábado, 7 de agosto de 2010

Enfrentando os mandarins do servico publico americano...

A tragédia, talvez, é que nem se trata de mandarins -- ao contrário dos nossos -- mas de simples pensionistas governamentais. Eles até não ganham muito -- ao contrário dos nossos, especialmente juizes -- mas simplesmente enfrentam a calamidade do pior desequilibrio nas contas públicas de estados e municipalidades americanas.
A favor dos EUA, se pode dizer que pelo menos existem políticos corajosos que enfrentam o problema, e se dispõem a cortar na carne, na sua própria e na dos outros.
Aqui, nem isso se pode dizer...
Paulo Roberto de Almeida

Your Money
Battle Looms Over Huge Costs of Public Pensions
By RON LIEBER
The New York Times, August 6, 2010

Pension Pain
The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.

The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.

At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.

The figure comes from a study by the Pew Center on the States that came out in February. Pew estimated a $1 trillion gap as of fiscal 2008 between what states had promised workers in the way of retiree pension, health care and other benefits and the money they currently had to pay for it all. And some economists say that Pew is too conservative and the problem is two or three times as large.

So a question of extraordinary financial, political, legal and moral complexity emerges, something that every one of us will be taking into town meetings and voting booths for years to come: Given how wrong past pension projections were, who should pay to fill the 13-figure financing gap?

Consider what’s going on in Colorado — and what is likely to unfold in other states and municipalities around the country.

Earlier this year, in an act of rare political courage, a bipartisan coalition of state legislators passed a pension overhaul bill. Among other things, the bill reduced the raise that people who are already retired get in their pension checks each year.

This sort of thing just isn’t done. States have asked current workers to contribute more, tweaked the formula for future hires or banned them from the pension plan altogether. But this was apparently the first time that state legislators had forced current retirees to share the pain.

Sharing the burden seems to be the obvious solution so we don’t continue to kick the problem into the future. “We have to take this on, if there is any way of bringing fiscal sanity to our children,” said former Gov. Richard Lamm of Colorado, a Democrat. “The New Deal is demographically obsolete. You can’t fund the dream of the 1960s on the economy of 2010.”

But in Colorado, some retirees and those eligible to retire still want to live that dream. So they sued the state to keep all of the annual cost-of-living increases they thought they would be getting in perpetuity.

The state’s case turns, in part, on whether it is an “actuarial necessity” for the Legislature to make a change. To Meredith Williams, executive director of the Public Employees’ Retirement Association, the state’s pension fund, the answer is pretty simple. “If something didn’t change, we would have run out of money in the foreseeable future,” he said. “So no one would have been paid anything.”

Meanwhile, Gary R. Justus, a former teacher who is one of the lead plaintiffs in the case against the state, asks taxpayers in Colorado and elsewhere to consider an ethical question: Why is the state so quick to break its promises?

After all, he and others like him served their neighbors dutifully for decades. And along the way, state employees made big decisions (and built lifelong financial plans) based on retiring with a full pension that was promised to them in a contract that they say has the force of the state and federal constitutions standing behind it. To them it is deferred compensation, and taking it away is akin to not paying a contractor for paving state highways.

And actuarial necessity or not, Mr. Justus said he didn’t believe he should be responsible for past pension underfunding and the foolish risks that pension managers made with his money long after he retired in 2003.

The changes the Legislature made don’t seem like much: there’s currently a 2 percent cap in retirees’ cost-of-living adjustment for their pension checks instead of the 3.5 percent raise that many of them received before.

But Stephen Pincus, a lawyer for the retirees who have filed suit, estimates that the change will cost pensioners with 30 years of service an average of $165,000 each over the next 20 years.

Mr. Justus, 62, who taught math for 29 years in the Denver public schools, says he thinks it could cost him half a million dollars if he lives another 30 years. He also notes that just about all state workers in Colorado do not (and cannot) pay into Social Security, so the pension is all retirees have to live on unless they have other savings.

No one disputes these figures. Instead, they apologize. “All I can say is that I am sorry,” said Brandon Shaffer, a Democrat, the president of the Colorado State Senate, who helped lead the bipartisan coalition that pushed through the changes. (He also had to break the news to his mom, a retired teacher.) “I am tremendously sympathetic. But as a steward of the public trust, this is what we had to do to preserve the retirement fund.”

Taxpayers, whose payments are also helping to restock Colorado’s pension fund, may not be as sympathetic, though. The average retiree in the fund stopped working at the sprightly age of 58 and deposits a check for $2,883 each month. Many of them also got a 3.5 percent annual raise, no matter what inflation was, until the rules changed this year.

Private sector retirees who want their own monthly $2,883 check for life, complete with inflation adjustments, would need an immediate fixed annuity if they don’t have a pension. A 58-year-old male shopping for one from an A-rated insurance company would have to hand over a minimum of $860,000, according to Craig Hemke of Buyapension.com. A woman would need at least $928,000, because of her longer life expectancy.

Who among aspiring retirees has a nest egg that size, let alone people with the same moderate earning history as many state employees? And who wants to pay to top off someone else’s pile of money via increased income taxes or a radical decline in state services?

If you find the argument of Colorado’s retirees wanting, let your local legislator know that you don’t want to be responsible for every last dollar necessary to cover pension guarantees gone horribly awry. After all, many government employee unions will be taking contrary positions and doing so rather loudly.

If you work for a state or local government, start saving money outside of the pension plan if you haven’t already, because that plan may not last for as long as you need it.

And if you’re a government retiree or getting close to the end of your career? Consider what it means to be a citizen in a community. And what it means to be civil instead of litigious, coming to the table and making a compromise before politicians shove it down your throat and you feel compelled to challenge them to a courthouse brawl.

“We have to do what unions call givebacks,” said Mr. Lamm, the former Colorado governor. “That’s the only way to sanity. Any other alternative, therein lies dragons.”

quarta-feira, 30 de junho de 2010

A falencia do Estado (supostamente) de bem-estar - Ubiratan Iorio

Desafio qualquer ser vivente neste "nosso planetinha", como diria um cidadão que já imaginou um dia que a Terra pudesse não ser redonda, a contestar um milímetro do diagnóstico oferecido aqui pelo professor Ubiratan Iório.
Paulo Roberto de Almeida

A FALÊNCIA DO WELFARE STATE"...
Ubiratan Iório, 30/06/2010

A Wikipedia – o “pai dos burros” da era cibernética – define o Estado de bem-estar social ou Estado-providência como “a organização política e econômica que coloca o Estado como agente da promoção (protetor e defensor) social e organizador da economia. Nesta orientação, o Estado é o agente regulamentador de toda vida e saúde social, política e econômica do país em parceria com sindicatos e empresas privadas, em níveis diferentes, de acordo com a nação em questão. Cabe ao Estado do bem-estar social garantir serviços públicos e proteção à população.
Pois bem, os fatos estão sobejamente a mostrar que essa concepção de Estado está falida. Na Europa, foram seis décadas em que os estados gastaram acima de suas possibilidades. O resultado não podia ser outro: dívidas públicas astronômicas (que estão, ne média da Europa, em cerca de 90% do PIB), ameaça de inflação, desemprego e um legado moral de gastança que cairá sobre os ombros inocentes das futuras gerações. A Europa, enfim, acordou e hoje vemos diversos países tentando adotar medidas duras para a correção do problema das imensas necessidades de financiamento do setor público. Os governos asiáticos também sinalizam estar despertando, embora preguiçosamente. O governo de Obama ainda não acordou. Parece dormir ainda um sono profundo, povoado por falsos sonhos em que os gastos públicos são capazes de gerar o bem estar de todos...
Na América Latina e no Brasil, os governos (com as honrosas exceções do Chile, da Colômbia e do Peru), permanecem em sono pesado, como indica a manchete principal do jornal O Globo de hoje: "gastos levam contas públicas ao pior resultado em 18 anos”. Ainda é possível encobrir a gravidade do problema, porque o crescimento do PIB e a elevação da arrecadação tributária podem, durante algum tempo, fazer isso. Mas a hora do ajuste de contas não tardará e nem falhará...
A bomba vai estourar nas mãos do próximo presidente, seja ele quem for. Quem viver verá.

=============

Addendum PRA:
De fato, a herança (esta sim, maldita) a ser deixada por este governo será uma bomba-relógio fiscal, que vai estourar no colo do próximo presidente, que será assim obrigado a corrigir (pelo menos parcialmente) o festival de gastança em que o Brasil incorreu pelas mãos (e pés, sobretudo) do Estado nos últimos oito anos...

terça-feira, 4 de maio de 2010

Por que a California vai a falencia...

pelas razões abaixo e várias outras mais.
Ainda bem que o Brasil pratica políticas completamente diferentes...

Freakish Frisco
PETE PETERSON
The City Journal, May 4 2010

Where one-third of city workers make $100,000 and Willie Brown is a budget hawk
San Francisco, a city accustomed to earthquakes, has recently been experiencing political tremors that may wind up reshaping its landscape. They started in January, when Willie Brown—the city’s former mayor, longtime speaker of the State Assembly, and now Democratic éminence grise—penned a startling mea culpa in the San Francisco Chronicle. “The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life,” Brown wrote. “But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers.” Brown’s essay was immediately picked up by Republican state legislators and conservative talk-radio hosts, who held it aloft, in an unusual demonstration of bipartisanship, to illustrate the causes of the state’s fiscal crisis.

Read more...

==============

E não é só San Francisco: Los Angeles caminha para a falência, e com data anunciada, segundo o Wall Street Journal. Abaixo o começo de um artigo sobre sua decadência e falência em 2014, sendo que o resto só pode ser lido por quem assinar esse jornal perfeitamente capitalista (e sem vergonha de sê-lo):

Los Angeles on the Brink of Bankruptcy
BY RICHARD RIORDAN AND ALEXANDER RUBALCAVA
Opinion, Wall Street Hournal, May 5, 2010

What Mayor Villaraigosa must do to save the city.

Los Angeles is facing a terminal fiscal crisis: Between now and 2014 the city will likely declare bankruptcy. Yet Mayor Antonio Villaraigosa and the City Council have been either unable or unwilling to face this fact.

According to the city's own forecasts, in the next four years annual pension and post-retirement health-care costs will increase by about $2.5 billion if no action is taken by the city government. Even if Mr. Villaraigosa were to enact drastic pension reform today—which he shows no signs of doing—the city would only save a few hundred million per year.

Well, curiosos: subscribe...

domingo, 18 de abril de 2010

2037) Como afundar um Estado sem ter consciencia disso: uma Republica Sindical

Calma, calma, não é do Brasil que estou falando, e sim de um outro Estado, que aliás possui um PIB superior ao do Brasil, mas que corre o risco de se esfarelar em pensões de aposentados e salários do setor público sindicalizado.
A Califórnia enfrenta o risco real de ser declarada um "Failed State", um Estado falido. Ela é o exemplo típico de um estado "progressista", que deu direitos a todo mundo -- não tem problema: se você precisar fazer uma operação de mudança de sexo, a California também paga... -- e que se afunda progressivamente na dívida pública, na deterioração dos serviços coletivos, no estrangulamente gradual (e talvez final) do funcionamento do Estado, tal como o concebemos.
Esse é o fruto da prodigalidade (na verdade irresponsabilidade) e da tolerância com a chamada República Sindical.
O Brasil talvez não esteja longe de entrar em trajetória similar. Basta olhar...
A matéria abaixo, transcrita de um site americano voltado para a vida nas cidades, deveria servir de alerta.
Paulo Roberto de Almeida
(Lanzhou, 19.04.2010)

• • • • • • • • •

The Beholden State: How public-sector unions broke California
Steven Malanga
City Journal: A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
April 19, 2010

The camera focuses on an official of the Service Employees International Union (SEIU), California’s largest public-employee union, sitting in a legislative chamber and speaking into a microphone. “We helped to get you into office, and we got a good memory,” she says matter-of-factly to the elected officials outside the shot. “Come November, if you don’t back our program, we’ll get you out of office.’

Illustration by Sean Delonas.

The video has become a sensation among California taxpayer groups for its vivid depiction of the audacious power that public-sector unions wield in their state. The unions’ political triumphs have molded a California in which government workers thrive at the expense of a struggling private sector. The state’s public school teachers are the highest-paid in the nation. Its prison guards can easily earn six-figure salaries. State workers routinely retire at 55 with pensions higher than their base pay for most of their working life. Meanwhile, what was once the most prosperous state now suffers from an unemployment rate far steeper than the nation’s and a flood of firms and jobs escaping high taxes and stifling regulations. This toxic combination—high public-sector employee costs and sagging economic fortunes—has produced recurring budget crises in Sacramento and in virtually every municipality in the state.

How public employees became members of the elite class in a declining California offers a cautionary tale to the rest of the country, where the same process is happening in slower motion. The story starts half a century ago, when California public workers won bargaining rights and quickly learned how to elect their own bosses—that is, sympathetic politicians who would grant them outsize pay and benefits in exchange for their support. Over time, the unions have turned the state’s politics completely in their favor. The result: unaffordable benefits for civil servants; fiscal chaos in Sacramento and in cities and towns across the state; and angry taxpayers finally confronting the unionized masters of California’s unsustainable government.

California’s government workers took longer than many of their counterparts to win the right to bargain collectively. New York City mayor Robert Wagner started a national movement back in the late 1950s when he granted negotiating rights to government unions, hoping to enlist them as allies against the city’s Tammany Hall machine. The movement intensified in the early sixties, after President John F. Kennedy conferred the right to bargain on federal workers. In California, a more politically conservative environment at the time, public employees remained without negotiating power through most of the sixties, though they could join labor associations. In 1968, however, the state legislature passed the Meyers-Milias-Brown Act, extending bargaining rights to local government workers. Teachers and other state employees won the same rights in the seventies.

These legislative victories happened at a time of surging prosperity. California’s aerospace industry, fueled by the Cold War, was booming; investments in water supply and infrastructure nourished the state’s agribusiness; cheaper air travel and a famously temperate climate burnished tourism. The twin lures of an expanding job market and rising incomes pushed the state’s population higher, from about 16 million in 1960 to 23 million in 1980 and nearly 30 million by 1990. This expanding population in turn led to rapid growth in government jobs—from a mere 874,000 in 1960 to 1.76 million by 1980 and nearly 2.1 million in 1990—and to exploding public-union membership. In the late 1970s, the California teachers’ union boasted about 170,000 members; that number jumped to about 225,000 in the early 1990s and stands at 340,000 today.

The swelling government payroll made many California taxpayers uneasy, eventually encouraging the 1978 passage of Proposition 13 (see page 30), the famous initiative that capped property-tax hikes and sought to slow the growth of local governments, which feed on property taxes. Government workers rightly saw Prop. 13 as a threat. “We’re not going to just lie back and take it,” a California labor leader told the Washington Post after the vote, adding that Prop. 13 had made the union “more militant.” The next several years proved him right. In 1980 alone, unionized employees of California local governments went on strike 40 times, even though doing so was illegal. And once the Supreme Court of California sanctioned state and local workers’ right to strike in 1985—something that their counterparts in most other states still lack—the unions quickly mastered confrontational techniques like the “rolling strike,” in which groups of workers walk off jobs at unannounced times, and the “blue flu,” in which public-safety workers call in sick en masse.

But in post–Proposition 13 California, strikes were far from the unions’ most fearsome weapons. Aware that Proposition 13 had shifted political action to the state capital, three major blocs—teachers’ unions, public-safety unions, and the Service Employees International Union, which now represents 350,000 assorted government workers—began amassing colossal power in Sacramento. Over the last 30 years, they have become elite political givers and the state’s most powerful lobbying factions, replacing traditional interest groups and changing the balance of power. Today, they vie for the title of mightiest political force in California.

Consider the California Teachers Association. Much of the CTA’s clout derives from the fact that, like all government unions, it can help elect the very politicians who negotiate and approve its members’ salaries and benefits. Soon after Proposition 13 became law, the union launched a coordinated statewide effort to support friendly candidates in school-board races, in which turnout is frequently low and special interests can have a disproportionate influence. In often bitter campaigns, union-backed candidates began sweeping out independent board members. By 1987, even conservative-leaning Orange County saw 83 percent of board seats up for grabs going to union-backed candidates. The resulting change in school-board composition made the boards close allies of the CTA.

But with union dues somewhere north of $1,000 per member and 340,000 members, the CTA can afford to be a player not just in local elections but in Sacramento, too (and in Washington, for that matter, where it’s the National Education Association’s most powerful affiliate). The CTA entered the big time in 1988, when it almost single-handedly led a statewide push to pass Proposition 98, an initiative—opposed by taxpayer groups and Governor George Deukmejian—that required 40 percent of the state’s budget to fund local education. To drum up sympathy, the CTA ran controversial ads featuring students; in one, a first-grader stares somberly into the camera and says, “Pay attention—today’s lesson is about the school funding initiative.” Victory brought local schools some $450 million a year in new funding, much of it discretionary. Unsurprisingly, the union-backed school boards often used the extra cash to fatten teachers’ salaries—one reason that California’s teachers are the country’s highest-paid, even though the state’s total spending per student is only slightly higher than the national average. “The problem is that there is no organized constituency for parents and students in California,” says Lanny Ebenstein, a former member of the Santa Barbara Board of Education and an economics professor at the University of California at Santa Barbara. “No one says to a board of education, ‘We want more of that money to go for classrooms, for equipment.’ ”

With its growing financial strength, the CTA gained the ability to shape public opinion. In 1996, for instance, the union—casting covetous eyes on surplus tax revenues from the state’s economic boom—spent $1 million on an ad campaign advocating smaller classes. Californians began seeing the state’s classrooms as overcrowded, according to polls. So Governor Pete Wilson earmarked some three-quarters of a billion dollars annually to cut class sizes in kindergarten through third grade. The move produced no discernible improvements in student performance, but it did require a hiring spree that inflated CTA rolls and produced a teacher shortage. (The union drew the line, however, when it faced the threat of increased accountability. Two years later, when Wilson offered funds to reduce class sizes even more but attached the money to new oversight mechanisms, the CTA spent $6 million to defeat the measure, living up to Wilson’s assessment of it as a “relentless political machine.”)

During this contentious period, the CTA and its local affiliates learned to play hardball, frequently shutting down classes with strikes. The state estimated that in 1989 alone, these strikes cost California students collectively some 7.2 million classroom days. Los Angeles teachers provoked outrage that year by reportedly urging their students to support them by skipping school. After journalist Debra Saunders noted in LA’s Daily News that the striking teachers were already well paid, the union published her home phone number in its newsletter and urged members to call her.

Four years later, the CTA reached new heights of thuggishness after a business-backed group began a petition to place a school-choice initiative on the state ballot. In a union-backed effort, teachers shadowed signature gatherers in shopping malls and aggressively dissuaded people from signing up. The tactic led to more than 40 confrontations and protests of harassment by signature gatherers. “They get in between the signer and the petition,” the head of the initiative said. “They scream at people. They threaten people.” CTA’s top official later justified the bullying: some ideas “are so evil that they should never even be presented to the voters,” he said.

The rise of the white-collar CTA provides a good example of a fundamental political shift that took place everywhere in the labor movement. In the aftermath of World War II, at the height of its influence, organized labor was dominated by private workers; as a result, union members were often culturally conservative and economically pro-growth. But as government workers have come to dominate the movement, it has moved left. By the mid-nineties, the CTA was supporting causes well beyond its purview as a collective bargaining agent for teachers. In 1994, for instance, it opposed an initiative that prohibited illegal immigrants from using state government programs and another that banned the state from recognizing gay marriages performed elsewhere. Some union members began to complain that their dues were helping to advance a political agenda that they disagreed with. “They take our money and spend it as they see fit,” says Larry Sand, founder of the California Teachers Empowerment Network, an organization of teachers and former teachers opposed to the CTA’s noneducational politicking.

Illustration by Sean Delonas.

Public-safety workers—from cops and sheriffs to prison guards and highway-patrol officers—are the second part of the public-union triumvirate ruling California. In a state that has embraced some of the toughest criminal laws in the country, police and prison guards’ unions own a precious currency: their political endorsements, which are highly sought after by candidates wanting to look tough on crime. But the qualification that the unions usually seek in candidates isn’t, in fact, toughness on crime; it’s willingness to back better pay and benefits for public-safety workers.

The pattern was set in 1972, when State Assemblyman E. Richard Barnes—an archconservative former Navy chaplain who had fought pension and fringe-benefit enhancements sought by government workers, including police officers and firefighters—ran for reelection. Barnes had one of the toughest records on crime of any state legislator. Yet cops and firefighters walked his district, telling voters that he was soft on criminals. He narrowly lost. As the Orange County Register observed years later, the election sent a message to all legislators that resonates even today: “Your career is at risk if you dare fiddle with police and fire” pay and benefits.

The state’s prison guards’ union has exploited a similar message. Back in 1980, when the California Correctional Peace Officers Association (CCPOA) won the right to represent prison guards in contract negotiations, it was a small fraternal organization of about 1,600 members. But as California’s inmate population surged and the state went on a prison-building spree—constructing 22 new institutions over 25 years—union membership expanded to 17,000 in 1988, 25,000 by 1997, and 31,000 today. Union resources rose correspondingly, with a budget soaring to $25 million or so, supporting a staff 70 deep, including 20 lawyers.

Deploying those resources, the union started to go after politicians who didn’t support higher salaries and benefits for its members and an ever-expanding prison system. In 2004, for example, the CCPOA spent $200,000—a whopping amount for a state assembly race—to unseat Republican Phil Wyman of Tehachapi. His sin: advocating the privatization of some state prisons in order to save money. “The amount of money that unions are pouring into local races is staggering,” says Joe Armendariz, executive director of the Santa Barbara County Taxpayers Association. A recent mayoral and city council election in Santa Barbara, with a population of just 90,000, cost more than $1 million, he observes.

The symbiotic relationship between the CCPOA and former governor Gray Davis provides a remarkable example of the union’s power. In 1998, when Davis first ran for governor, the union threw him its endorsement. Along with those much-needed law-and-order credentials, it also gave Davis $1.5 million in campaign contributions and another $1 million in independent ads supporting him. Four years later, as Davis geared up for reelection, he awarded the CCPOA a stunning 34 percent pay hike over five years, increasing the average base salary of a California prison guard from about $50,000 a year to $65,000—and this at a time when the unemployment rate in the state had been rising for nearly a year and a half and government revenues had been falling. The deal cost the state budget an additional $2 billion over the life of the contract. A union official described it admiringly as “the best labor contract in the history of California.” Eight weeks after the offer, the union donated $1 million to Davis’s reelection campaign.

Even cops who run for office have felt the wrath of public-safety unions. Allan Mansoor served 16 years as a deputy sheriff in Orange County but angered police unions by publicly backing an initiative that would have required them to gain their members’ permission to spend dues on political activities. When the conservative Mansoor ran successfully for city council several years back in Costa Mesa, local cops and firefighters poured resources into helping his more liberal opponents. “I didn’t like seeing my dues go to candidates like Davis, so I supported efforts to curb that,” Mansoor says. “Union leaders didn’t like it, so they endorsed my opponents by claiming they were tougher on crime than I was.”

Even more troubling are the activities of the California Organization of Police and Sheriffs (COPS), a lobbying and advocacy group that has raised tens of millions of dollars from controversial soliciting campaigns. In one, COPS fund-raisers reportedly called residents of heavily immigrant neighborhoods and threatened to cut off their 911 services unless they donated. In another, a COPS fund-raiser reportedly offered to shave points off Californians’ driving records in exchange for donations. The group has dunned politicians, too. In 1998, it began publishing a voter guide in which candidates paid to be included. Pols considered the money well spent because of the importance of a COPS endorsement—or at least the appearance of one. “We all use them [COPS] for cover, especially in years when law enforcement is a big issue in elections,” one state senator, Santa Clara’s John Vasconcellos, admitted to the Orange County Register. “It stopped the right wing from calling me soft on crime.”

The results of union pressure are clear. In most states, cops and other safety officers can typically retire at 50 with a pension of about half their final working salary; in California, they often receive 90 percent of their pay if they retire at the same age. The state’s munificent disability system lets public-safety workers retire with rich pay for a range of ailments that have nothing to do with their jobs, costing taxpayers hundreds of millions of dollars. California’s prison guards are the nation’s highest-paid, a big reason that spending on the state’s prison system has blasted from less than 4.3 percent of the budget in 1986 to more than 11 percent today.

California’s third big public-union player is the state wing of the SEIU, the nation’s fastest-growing union, whose chief, Andy Stern, earned notoriety by visiting the White House 22 times during the first six months of the Obama administration. Founded in 1921 as a janitors’ union, the SEIU slowly transformed itself into a labor group representing government and health-care workers—especially health-care workers paid by government medical programs like Medicaid. In 1984, the California State Employees Association, which represented many state workers, decided to affiliate with the SEIU. Today, the SEIU represents 700,000 California workers—more than a third of its nationwide membership. Of those, 350,000 are government employees: noninstructional workers in schools across the state; all non-public-safety workers in California’s burgeoning prisons; 2,000 doctors, mostly residents and interns, at state-run hospitals; and many others at the local, county, and state levels.

The SEIU’s rise in California illustrates again how modern labor’s biggest victories take place in back rooms, not on picket lines. In the late 1980s, the SEIU began eyeing a big jackpot: tens of thousands of home health-care workers being paid by California’s county-run Medicaid programs. The SEIU initiated a long legal effort to have those workers, who were independent contractors, declared government employees. When the courts finally agreed, the union went about organizing them—an easy task because governments rarely contest organizing campaigns, not wanting to seem anti-worker. The SEIU’s biggest victory was winning representation for 74,000 home health-care workers in Los Angeles County, the largest single organizing drive since the United Auto Workers unionized General Motors in 1937. Taxpayers paid a steep price: home health-care costs became the fastest-growing part of the Los Angeles County budget after the SEIU bargained for higher wages and benefits for these new recruits. The SEIU also organized home health-care workers in several other counties, reaching a whopping statewide total of 130,000 new members.

The SEIU’s California numbers have given it extraordinary resources to pour into political campaigns. The union’s major locals contributed a hefty $20 million in 2005 to defeat a series of initiatives to cap government growth and rein in union power. The SEIU has also spent millions over the years on initiatives to increase taxes, sometimes failing but on other occasions succeeding, as with a 2004 measure to impose a millionaires’ tax to finance more mental-health spending. With an overflowing war chest and hundreds of thousands of foot soldiers, the SEIU has been instrumental in getting local governments to pass living-wage laws in several California cities, including Los Angeles and San Francisco. And the union has also used its muscle in campaigns largely out of the public eye, as in 2003, when it pressured the board of CalPERS, the giant California public-employee pension fund, to stop investing in companies that outsourced government jobs to private contractors.

Illustration by Sean Delonas.

Armed with knowledge about California’s three public-union heavyweights, one can start to understand how the state found itself in its nightmarish fiscal situation. The beginning of the end was the 1998 gubernatorial election, in which the unions bet their future—and millions of dollars in members’ dues—on Gray Davis. The candidate traveled to the SEIU’s headquarters to remind it of his support during earlier battles against GOP governors (“Nobody in this race has done anywhere near as much as I have for SEIU”); the union responded by pumping $600,000 into his campaign. Declaring himself the “education candidate” who would expand funding of public education, Davis received $1.2 million from the CTA. Added to this was Davis’s success in winning away from Republicans key public-safety endorsements—and millions in contributions—from the likes of the CCPOA.

Davis’s subsequent victory over Republican Dan Lungren afforded public-worker unions a unique opportunity to cash in the IOUs that they had accumulated, because Davis’s Democratic Party also controlled the state legislature. What followed was a series of breathtaking deals that left California state and municipal governments careening from one budget crisis to another for the next decade.

Perhaps the most costly was far-reaching 1999 legislation that wildly increased pension benefits for state employees. It included an unprecedented retroactive cost-of-living adjustment for the already retired and a phaseout of a cheaper pension plan that Governor Wilson had instituted in 1991. The deal also granted public-safety workers the right to retire at 50 with 90 percent of their salaries. To justify the incredible enhancements, Davis and the legislature turned to CalPERS, whose board was stocked with members who were either union reps or appointed by state officials who themselves were elected with union help. The CalPERS board, which had lobbied for the pension bill, issued a preposterous opinion that the state could provide the new benefits mostly out of the pension systems’ existing surplus and future stock-market gains. Most California municipalities soon followed the state enhancements for their own pension deals.

When the stock market slid in 2000, state and local governments got slammed with enormous bills for pension benefits. The state’s annual share, estimated by CalPERS back in 1999 to be only a few hundred million dollars, reached $3 billion by 2010. Counties and municipalities were no better off. Orange County’s retirement system saw its payouts to retirees jump to $410 million a year by 2009, from $140 million a decade ago. Many legislators who had voted for the pension legislation (including all but seven Republicans) later claimed that they’d had no idea that its fiscal impact would be so devastating. They had swallowed the rosy CalPERS projections even though they knew very well that the board was, as one county budget chief put it, “the fox in the henhouse.”

The second budget-busting deal of the Davis era was the work of the teachers’ union. In 2000, the CTA began lobbying to have a chunk of the state’s budget surplus devoted to education. In a massive rally in Sacramento, thousands of teachers gathered on the steps of the capitol, some chanting for TV cameras, “We want money! We want money!” Behind the scenes, Davis kept up running negotiations with the union over just how big the pot should be. “While you were on your way to Sacramento, I was driving there the evening of May 7, and the governor and I talked three times on my cell phone,” CTA president Wayne Johnson later boasted to members. “The first call was just general conversation. The second call, he had an offer of $1.2 billion. . . . On the third call, he upped the ante to $1.5 billion.” Finally, in meetings, both sides agreed on $1.84 billion. As Sacramento Bee columnist Dan Walters later observed, that deal didn’t merely help blow the state’s surplus; it also locked in higher baseline spending for education. The result: “When revenues returned to normal, the state faced a deficit that eventually not only cost Davis his governorship in 2003 but has plagued his successor, Arnold Schwarzenegger.”

Having wielded so much power effortlessly, the unions miscalculated the antitax, anti-Davis sentiment that erupted when, shortly after his autumn 2002 reelection, Davis announced that the state faced a massive deficit. The budget surprise spurred an enormous effort to recall Davis, which the unions worked to defeat, with the SEIU spending $2 million. At the same time, union leaders used their influence in the Democratic Party to try to save Davis, telling other Democrats that they would receive no union support if they abandoned the governor. “If you betray us, we won’t forget it,” the head of the 800,000-member Los Angeles County Federation of Labor proclaimed to Democrats. Only when it became apparent from polls that the recall would succeed did the unions shift their support to Lieutenant Governor Cruz Bustamante, who finished a distant second to Schwarzenegger. Taxpayer groups were euphoric.

But as they and Schwarzenegger soon discovered, most of California’s government machinery remained union-controlled—especially the Democratic state legislature, which blocked long-term reform. Frustrated, Schwarzenegger backed a series of 2005 initiatives sponsored by taxpayer groups to curb the unions and restrain government growth, including one that made it harder for public-employee unions to use members’ dues for political purposes. The controversial proposals sparked the most expensive statewide election in American history. Advocacy groups and businesses spent a staggering $300 million (some of it, however, coming from drug companies trying to head off an unrelated initiative). The spending spree included $57 million from the CTA, which mortgaged its Sacramento headquarters for the cause. All of the initiatives went down to defeat.

California taxpayers nevertheless received a brief respite, thanks to the mid-decade housing boom that drove the economy and tax collections higher and momentarily eased the state’s budget crisis. Predictably, state politicians forgot California’s Davis-era deficit woes and gobbled up the surpluses, increasing spending by 32 percent, or $34 billion, in four years. Then the housing market crashed in 2007, prompting a cascade of budget crises in Sacramento and around the state. Only too late have Californians recognized the true magnitude of their fiscal problems, including a $21 billion deficit by mid-2009 that forced the state to issue IOUs when it temporarily ran out of cash. In the municipal bond market, fears are rising that the Golden State could actually default on its debt.

Municipalities around the state are also buckling under massive labor costs. One city, Vallejo, has already filed for bankruptcy to get out from under onerous employee salaries and pension obligations. (To stop other cities from going this route, unions are promoting a new law to make it harder for municipalities to declare bankruptcy.) Other local California governments, big and small, are nearing disaster. The city of Orange, with a budget of just $88 million in 2009, spent $13 million of it on pensions and expects that figure to rise to $23 million in just three years. Contra Costa’s pension costs rose from $70 million in 2000 to $200 million by the end of the decade, producing a budget crisis. Los Angeles, where payroll constitutes nearly half the city’s $7 billion budget, faces budget shortfalls of hundreds of millions of dollars next year, projected to grow to $1 billion annually in several years. In October 2007, even as it was clear that the area’s housing economy was crashing, city officials had handed out 23 percent raises over a five-year period to workers. (See the sidebars on pages 22 and 26.)

In the past, California could always rely on a rebounding economy to save it from its budgetary excesses. But these days, few view the state as the land of opportunity. Throughout the national recession that began in December 2008 and carried through 2009, California’s unemployment rate consistently ran several points higher than the national rate. Major California companies like Google and Intel have chosen to expand elsewhere, not in their home state. Put off by the high taxes and cumbersome regulatory regime that the public-sector cartel has led the way in foisting on the state, executives now view California as a noxious business environment. In a 2008 survey by a consulting group, Development Counsellors International, business executives rated California the state where they were least likely to locate new operations.

More and more California taxpayers are realizing how stacked the system is against them, and the first stirrings of revolt are breaking out. Voters defeated a series of ballot initiatives last May that would have allowed politicians to solve the state budget crisis temporarily through a series of questionable gimmicks, including one to let the state borrow against future lottery receipts and another to let it plug budget holes with money diverted from a mental-health services fund. In a clear message from voters, the only proposition to gain approval last May banned pay raises for legislators during periods of budget deficit.

With anger rising, taxpayer advocates now plan to revive older initiatives to cut the power of public-sector unions. Mark Bucher, head of the Citizens Power Campaign, is pushing for an initiative that’s similar to propositions that failed in 1998 and in 2005—but their prospects may be brighter today, he argues, because the woes of municipalities like Vallejo have made citizens more aware of union power and more supportive of reform. “The mood has clearly shifted in California,” Bucher says. “You can see that in the rise of local Tea Party antitax groups around the state. People are fed up.”

Another initiative that could mend California’s broken politics is a 2008 vote that took the power to delineate electoral districts away from the state legislature—which had used it to make it difficult to defeat incumbents—and gave it to a nonpartisan commission. If this commission succeeds in making legislative races more competitive and incumbents more responsive to voter sentiment, the legislature would almost certainly become less beholden to narrow union interests, and a whole series of reforms would be possible: a new, cheaper pension plan for state employees; fewer restrictions on charter schools, which often educate kids more effectively and less expensively than public schools do; and regulatory reforms that would reduce the estimated $493 billion cost that regulations impose on California businesses each year.

It will take an enormous effort to roll back decades of political and economic gains by government unions. But the status quo is unsustainable. And at long last, Californians are beginning to understand the connection between that status quo and the corruption at the heart of their politics.

Steven Malanga is the senior editor of City Journal and a senior fellow at the Manhattan Institute. He is the author of The New New Left. Research for his article was supported by the Arthur N. Rupe Foundation.