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By Root 6747 0

unions have remained a bulwark for Democrats this fall … according to a Wall Street Journal analysis of Federal Election Commission data. Unions have long bankrolled Democratic campaigns, but some of the biggest public unions are spending more this fall than they did during the prior midtermcampaign cycle in 2006. The National Education Association, the largest U.S. teachers union, has independently spent more than $3.4 million that must be disclosed, including ad buys and direct-mail campaigns, for the key electioneering period from September 1 to October 14. The NEA spent $444,000 during the same stretch in 2006. The American Federation of State, County and Municipal Employees has nearly matched its 2006 midterm outlays. It has spent $2.1 million on electioneering since the beginning of last month, according to FEC filings for two campaign committees associated with the union. That is just shy of the $2.2 million spent for that period in 2006.

This explains why the Republican governors of Wisconsin and Ohio moved to curb collective-bargaining rights by their state public-employee unions early in 2011. They could achieve two goals at once: save money and hurt one of the Democratic Party’s key funding sources.

As at the federal level, spending patterns for state and local governments will have to change. John Hood, the president of the John Locke Foundation, a state-policy think tank based in North Carolina, explained it this way in a report he wrote about on this issue, The States in Crisis: “When tax revenues declined precipitously as a result of the 2008 financial crisis, state officials’ optimistic budgeting crashed into cold, hard reality.” The gaps between promised salaries, pensions, and services and tax revenues are now very large indeed. “State tax revenues,” notes Hood, “were 8.4 percent lower in 2009 than in 2008, and a further 3.1 percent lower in 2010.” States such as California, Texas, New Jersey, and Illinois face the prospect of huge deficits, amounting to 25 percent and more of their entire budgets, in the immediate future.

At the heart of the states’ fiscal problems, explains Hood,

lies the fact that government pension plans do not function the way most private retirement plans do. Americans with jobs in the private sector are likely most familiar with “defined contribution” retirement programs—like 401(k) accounts—which involve a set contribution (generally some percentage of one’s pay). This contribution, made over the course of a person’s working years, is channeled into a savings account that accrues interest; upon retirement, that account begins to pay out benefits … Such a retirement plan cannot be underfunded, since it pays out in benefits only what one contributes over the course of one’s working life. Most government pension plans, by contrast, are “defined benefit” programs. These plans, as the name suggests, guarantee a particular annual benefit to each retiree (generally based on the income he earned while he was working, the number of years he worked, and some cost-of-living adjustment). Instead of disbursing payments based on the amount of money collected over time in a savings account, defined-benefit programs work backwards: They first determine the benefits they will provide, and then try to calculate how to collect enough money to meet those obligations.

The accuracy of the calculation depends on the accuracy of the predictions about how well the stock or bond market will do over time. “If a defined-benefit plan promises excessively generous payouts, or fails to collect enough money to meet its financial pledges to retirees,” said Hood, “the result will be a massive accumulation of debt as large numbers of workers begin to retire.”

According to a recent report from the Pew Center on the States, which Hood cited, state governments

face an unfunded liability of $1 trillion for retirement benefits promised to public employees. This figure, which remains the most accurate available assessment of the problem, is based on FY 2008 data—that is, before the financial markets