MADISON, Wis. – Wisconsin has done what the nation has not.
Faced last year with a $3.6 billion deficit, Gov. Scott Walker, a Republican, bullied the budget into surplus – balancing it in part on the backs of state workers.
While federal workers are unlikely to face the same fate, either President Obama or Mitt Romney will have to join the next Congress to take some sort of tough action to cope with a growing federal debt that both parties agree must be tamed.
And so, as a razor-thin presidential election approaches, Wisconsin offers lessons to a nation poised, if nothing is done, to fall off a fiscal cliff.
Lesson No. 1, it seems, is: Fixing an out-of-control budget is going to hurt.
For proof, just listen to Katharine Kbale and Darlene Johnson.
“I was stripped of my rights,” said Kbale, 64, an epidemiologist for the state who lives in the liberal redoubt of Madison and volunteers time to work the phones for Obama.
Still stung by Walker’s elimination of collective bargaining for the state workforce, Kbale looks at Romney and sees Walker.
“They’re both slick,” Kbale said, while adding of Romney: “He says he’s for the 100 percent, but he doesn’t illustrate that in any of his demeanor.”
Sixty-two miles and a political world away in Waukesha, a conservative Milwaukee suburb, Johnson works the phones for Romney, much as she did to help Walker survive a recall election in June.
“The two situations almost seem parallel,” Johnson said. “When Scott Walker became governor, we had a lot of problems with a stagnant economy,” just as the nation does now.
Walker fixed those problems, and Romney can, too, Johnson said.
But Walker’s win came at a price. The state has a term, “Wisconsin Nice,” used to describe good weather, and it has always seemed to apply to its residents, too. But not always, not anymore.
Johnson learned that making calls on behalf of Walker.
“It was pretty intense,” she said. “You had people swearing at you, calling you the b-word ... the female b-word.”
Walker, a former Milwaukee County executive, faced a situation not unlike that facing Gov. Andrew Cuomo when both took office in January 2011.
But Walker’s approach to solving the problem differed radically from Cuomo’s. While the New York governor worked with both parties and unions to patch New York’s budget hole by limiting spending growth and trimming state worker benefits, Walker presented deep budget cuts and accompanying legislation called Act 10, which took aim at state workers. Not only would Wisconsin employees have to pay much more for health care and their pensions, they also lost most of their collective bargaining rights.
Walker’s plan produced massive protests that crowded the streets of Madison for weeks.
But to hear Walker tell it, his plan worked in the end. Earlier this month, he announced a $342 million surplus.
“Wisconsin is in much better shape,” Walker said in a statement. “Because of our actions, the next generation will not be buried under a mountain of economically crippling debt.”
Not everyone buys Walker’s argument. The state’s Legislative Fiscal Bureau said in September that the surplus stems not from Walker’s budget cuts, but from higher-than-expected tax collections.
What’s more, the future of Act 10 remains in question. A county judge recently issued a ruling overturning the bill’s repeal of collective bargaining rights for city, county and school district workers, though the repeal would remain in place for state employees.
And the law produced a backlash that culminated in the unsuccessful attempt to recall Walker and a bad taste in the mouths of residents statewide.
How divided is the state now? Just listen to Stuart Turner and Lyndsey Walz.
“To come in and turn over 100 years of U.S. labor law – all it did was outrage people and save a little money,” said Turner, 57, a Buffalo native and Madison physician.
Walz, 24, argues just the opposite.
“Scott Walker is my hero because he did exactly what he said he was going to do,” said Walz, 24, a bank employee from Sussex. “I really admire that. I feel like somebody had to make some very hard decisions to make things better in this state. He put the state’s well-being ahead of his image.”
Some hard decisions are due in Washington, too, no matter who is elected president.
On Jan. 1, the Bush-era tax cuts, as well as several more recent tax reductions, are set to expire. If nothing is done, the nation will be facing a one-year tax hike totalling $494 billion.
That’s also the day that $1.2 trillion in automatic spending cuts, split evenly between defense and domestic programs and spread over a decade, are set to take effect unless Congress devises a plan to replace them.
Combined, it’s a “fiscal cliff” that could, according to many economists, pull so much money out of the economy that the nation would sink back into recession. Federal Reserve Chairman Ben Bernanke, for example, projects that falling off the fiscal cliff could cost the nation 1.25 million jobs.
That possibility is expected to push Congress to act later this year – if only to push the problems into the next year, the next Congress and the next presidency.
With so much budget trouble looming, it’s a front-of-mind issue among many Wisconsin voters.
Barbara Tzetzo Gosch, a 71-year-old Buffalo native now living in Eau Claire, worries that the Republican budget knife would be aimed at government-backed health care programs.
“Romney and the Republicans don’t seem to understand what it’s like to be disabled and poor,” said Tzetzo Gosch, who describes Romney as a “slippery” candidate who “changes his tune depending on the music that’s playing.”
Pete Buffington, a 38-year-old software engineer from Stoughton, focuses on budget issues, too, but he sees them differently. Looking at his 4-year-old daughter, he worries about the taxes she will have to pay if nothing is done to tame the federal debt now.
“Mitt Romney says he’s going to make some appropriate cuts that will be painful but necessary,” said Buffington, who’s also a pilot and the author of “Squawk 7700,” one of the first books to raise the issue of regional airline safety. “I think he’ll get us out of the debt hole.”
And a deep hole it is. The problem facing the nation is a long-term structural deficit soon to be made much worse by the aging of the Baby Boomers. With more of them eligible for Medicare every year, the Medicare trust fund is on target to go insolvent in 12 years.
It’s a situation that has Moody’s Investors Service warning of a possible downgrade of the nation’s credit rating, a move that would likely raise interest rates and further stymie the economic recovery.
That being the case, the chief executives of 16 of the nation’s largest financial companies recently sent a letter to the president and Congress saying: “Merely avoiding the fiscal cliff is not enough. We further urge you and your colleagues to enact legislation that truly restores the nation’s long-term fiscal soundness.”
Yet neither candidate has presented a full solution to the fiscal crisis.
Obama’s proposed 2013 budget would cut projected deficits by $3 trillion over a decade through higher taxes on upper-income wage earners and oil companies along with cuts in farm subsidies, pensions for federal workers and other programs. But Obama’s plan falls $1 billion short of the recommendations of his own fiscal commission and offers no long-term proposals to curb the growing costs of Social Security and Medicare.
Meanwhile, Romney wants to cut nondiscretionary federal spending across the board by 5 percent and repeal the Obama health care law. His plan reforms Medicare by converting it, in part, to a voucher system for future seniors, but it doesn’t touch Social Security, and it includes tax cuts that could boost federal debt by $5 trillion over a decade.
It’s a campaign standoff that leaves budget hawks deeply worried.
“So far, both presidential campaigns have also missed the mark with vague rhetoric and budget proposals that would raise the nation’s debt over the next ten years,” said Paul Hansen, Rocky Mountain regional director for the Concord Coalition, in a recent blog post.
Much of that vague rhetoric has been focused on a handful of traditional swing states such as Ohio, along with a new one: Wisconsin.
Safely in the hands of Democratic presidential candidates since 1988, a combination of trends – including Walker’s election and the selection of a Wisconsinite, Rep. Paul Ryan, as Romney’s running mate – has made the Badger State competitive. The latest RealClearPolitics.com poll average of the state shows Obama with only a 2.3 percentage point lead.
Still, the campaign seems even more intense here than in other swing states, thanks in large part to a stronger Republican turnout effort. The 25 “victory centers” set up to save Walker from recall are now Romney victory centers, where volunteers daily spend hours calling voters.
The state workers who pushed for the recall “did us a huge favor,” said Brian Schimming, vice chairman of the state Republican Party. “They helped us prop up our state campaign organization so that we’re ready for anything.”
On the other side, there was some disappointment that Obama did not take part in the effort to recall Walker, local labor leaders said. But on a recent Wednesday evening, the Madison Labor Temple was filled with volunteers making calls on behalf of the president.
“They see the bigger picture,” said Kevin Gundlach, who heads the Labor Temple.
At the same time, though, many Wisconsin voters seem worn out by politics. They recount the countless phone calls from the campaigns and countless conversations that turn nasty, all because of politics.
“It’s been tough to be a union person in this state,” said Justin Kern, 32, a Dunkirk native and Obama supporter now living in Milwaukee.
On the other side, Romney backer Gil Putt acknowledged that the Walker recall has worn people out.
“It was very divisive,” said Putt, 58, of Milwaukee. “That’s how Wisconsin has been lately, and it’s never been this way.”
The presidential campaign hasn’t made things any better, Putt added.
“I think we’ve all just about had enough,” he said.