Us taxpayers (bad Inglish intended) may get the last laugh, or as Karl Marx said, “History repeats itself, first as tragedy, then as farce.” This time around, the Great Depression II is indeed looking a lot like farce (see D.C., Washington; bailout, Paulsen and Gaithner; Detroit, UAW and Big Three; everywhere, public employee unions).
Unionized government workers have always felt, “They can’t touch me,” and laughed at the rest of us mere mortals who, in times of recession, would get laid off instead of enjoying six weeks’ vacation and a 5-percent pay raise.
Cities, counties and states are now watching with bated checkbooks as legal drama unfolds in the courthouse and City Hall of Vallejo, Calif., which ran out of money and filed Chapter 9 bankruptcy. One big problem for the city: What to do with bloated and impossible-to-pay public employee contracts?
Chapter 9 is used so rarely that no one knew for sure if it allowed government entities to void employee contracts. Union lawyers argued that their contracts were protected under California labor laws, but Judge Michael S. McManus curtly informed them that state law is trumped by federal law in bankruptcy proceedings. He gave the city the power to tear up the contracts.
The unions and the city are now negotiating, but what really matters is what the rest of the nation is doing, or going to do, in light of governments’ newfound power to evade and rewrite employee contracts.
The “gotcha” smirk now moves from the unions to the cities and states.