Walker, Burke quiet on Act 10, health costs

Have you noticed the strange silence on Act 10 in the nascent gubernatorial race?

3933e56149b1af1e44b7f845b658f569There has been a lot of early sparring between Gov. Scott Walker and his presumptive opponent, businesswoman Mary Burke, over job creation, economic development and tax policy, and, given the lackluster job growth in the state over the last decade and a half, that’s where the debate ought to be centered.

Burke has compiled an impressive white paper on job creation, the best I’ve ever seen from a Wisconsin candidate. Her position paper draws deeply from “Be Bold – The Wisconsin Prosperity Strategy” fashioned in 2010 by 30 of the state’s major stakeholders.

Of course, a document is only that, a document, and voters will have to assess whether Burke would do better at getting the job done on job creation than Walker did in his first four years. Strategy is 90% about implementation. Her tenure as commerce secretary was too short to constitute a track record. Her business education and career are her long suits.

Gov. Walker will talk up his tax cuts the 100,000 jobs that have come on stream since 2010, and Burke will point out loudly and often that he fell short of his goal of 250,000.

That goal helped to get Walker elected in 2010, so he can have few regrets about laying out that big number. Besides, it was an achievable goal. In Tommy Thompson’s first term, the state added more jobs than that. And by 2010 the economy was recovering, albeit slowly, so Walker had a breeze, if not a wind, at his back.

1273209_1403745726523070_2084336443_oBurke can’t nail Walker too hard on the jobs issue, because almost all economists agree that, to a large degree, states go as the national economy goes, and the commander-in-chief of the national economy is a member of her party.

Further it’s just not accurate to lay all the credit or blame for a state’s prosperity on a governor, even a president. They do have considerable leverage as they create an environment either friendly or unfriendly to business. But they don’t hold all the high cards.

The amoral bankers of Wall Street bear at least as much blame for the Great Recession as political leaders of both parties.

Leaders in business, education, the non-profit world, foundations, trade associations and the media have major roles in the prosperity agenda. Their experience must tell them that nothing works very well in a society without good jobs.

Yet, despite all those qualifiers, job creation will still be front and center in the next six months of the Walker-Burke campaigns.

Politicians want to touch every base, alight on every flower, so, by their nature, they have a hard time being strategic about the economy. Strategy means making choices. For instance, every politician extols the virtue of small business. There are lots of votes there.

But a strategic distinction needs to be made. Small businesses do not do well if the local economy isn’t doing well, if the bigger companies that export outside the community aren’t doing well. If a major exporter closes down, the nearby bars and restaurants shut their doors, too.

The small business startups that matter most on a strategic level are those with high growth potential. They rise to the top of the supply chains that small firms sell into. They are the strategic drivers. Think of former startups like Epic, Schneider International, Fiserv and Manpower, to name a few. They make local economies hum.

You won’t hear that distinction on the campaign trail.

Nor will you hear anything about a Wisconsin right-to-work law, though that could come up in 2015 if the Republicans keep both houses of the legislature and the governorship.

Deeper reform of health care economics at the state level also will be a muted issue. Gov. Walker burned a lot of chips in pushing Act 10 through a gauntlet of political and legal hurdles. Walker won’t want to stir those embers again with more health care reform. Nor will Burke, because ObamaCare, which her party authored, is a political quagmire.

If reelected, Gov. Walker has signaled interest in self-insurance for state employees. That move makes pragmatic sense. Most large and medium private sector employers have already made that decision, including health insurers and providers for their own workforces.

Another iceberg issue that will get little comment is the crushing financial burden of Medicaid on the state budget. That is the single biggest fiscal challenge in the state. So far in the campaign: no comment on managing its out-of-control costs.

Burke will pay homage to the union base of the Democratic Party and will call on occasion for the rollback of Act 10. The union base is a lot smaller than it used to be, so she’ll have to weigh in how vocal and strident to be on repeal.

And full or partial repeal would raise major budget issues for the state. There is no getting away from the reality that stripping the unions of bargaining powers on benefits under Act 10 allowed for the balancing of state and local budgets.

A good number of units of local government have moved, for instance, to consumer-driven health plans that lower costs 20% to 30% while improving workforce health. No one wants to go back to fiscal instability.

In short, both candidates may duck Act 10 and its aftermath. Their reticence on the issue would square with the likelihood that the GOP keeps at least one house of the legislature, so repeal would not be possible any way.

So far, the campaign has been pretty tepid. Will it heat up on strategic state challenges? Let’s hope so.

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