A couple days ago Gov. Walker told Sean Hannity the following (I won't give Sean the dignity of a link, Google it yourself):
Now, I give you one good example. Over the years, most of the school districts in our state have had to get, because of collective bargaining contracts, they are required to get their health care insurance plans from WH Trust (ph), that the state teachers union health care plan, because it is under collective bargaining. If we pass our bill, ultimately, they could go into the state employee health care plan and save $68 million. That's money on top of those pitching in health care savings.
Most of the emphasis lately has been on the collective bargaining part of the bold phrase above. I want to look at the word contract and a phrase that came to mind the "sanctity of contracts". Time to fire up the wayback machine, Sherman, to the year 2009.
Remember the AIG bonus scandal? Here was a NY Times article on it from the time:
Do we really have to foot the bill for those bonuses at the American International Group?
It sure does sting. A staggering $165 million — for employees of a company that nearly took down the financial system. And heck, we, the taxpayers, own nearly 80 percent of A.I.G.
It doesn’t seem fair.
So here is a sobering thought: Maybe we have to swallow hard and pay up, partly for our own good. I can hear the howls already, so let me explain.
Everyone from President Obama down seems outraged by this. The president suggested on Monday that we just tear up those bonus contracts. He told the Treasury secretary, Timothy F. Geithner, to use every legal means to recoup taxpayers’ money. Hard to argue there.
“This isn’t just a matter of dollars and cents,” he said. “It’s about our fundamental values.”
On that last issue, lawyers, Wall Street types and compensation consultants agree with the president. But from their point of view, the “fundamental value” in question here is the sanctity of contracts.
That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.
Yeah, imagine what it would look like if the government would start abrogating $165 million worth of contracts. Hmm. It would produce -- cue the scary music -- uncertainty. And you should really feel sorry for those guys:
“The jobs are terrible,” said Robert M. Sedgwick, an executive compensation lawyer at Morrison Cohen who represents a number of employees of banks that have taken government money. “You have to read about yourself in the paper every day. These people are leaving as soon as they can.”
More apocalyptic language:
If government officials were to break the contracts, they would be “breaking a bond,” Ms. Meyer says. “They are raising a whole new question about the trust and commitment organizations have to their employees.” (The auto industry unions are facing a similar issue — but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.)
We wouldn't want to unilaterally tear up contracts, would we? Until now. It's breaking a bond if it's to Wall Street, business as usual if it's to Main Street.