Governor's ultimatum to Wisconsin unions tests Republican power

The showdown between Wisconsin's Republican governor and his Democratic and public employee opponents has grown only fiercer in a state budget battle that has turned into the biggest national controversy over unions and their rights since Ronald Reagan sacked striking federal air-traffic controllers in 1981.

With no end to the two-week deadlock over his bid to slash the collective bargaining rights of teachers, police and other unions, Governor Scott Walker said a first round of 1,500 lay-offs of public employees could start next week – unless his political opponents caved in to allow his swingeing budget-repair Bill to pass today.

But the 14 Democrat lawmakers who have fled Wisconsin to neighbouring Illinois to deny the state legislature a quorum to pass Mr Walker's budget, reiterated yesterday that they would not return until the governor dropped his demand – and claimed at least one of their Republican colleagues was ready to switch sides and join them.

On Sunday, the unions scored one success when the authorities allowed protesters to continue their sit-in inside the parliament building in the state capital, Madison. A fortnight of turmoil culminated on Saturday with some 70,000 demonstrators protesting against the governor's plans.

Wisconsin, though, is now but one front in a spreading war. A similar confrontation is under way in Indiana, which Republican legislators are seeking to turn into a "right-to-work" state, by banning any requirement for private-sector workers to pay union dues. In Ohio and New Jersey too, Republican governors are taking on public unions, while in Tennessee the state teachers' union is in a desperate fight to block a law that would take away its collective bargaining rights.

All these showdowns have a common denominator: the dire situation of state finances exacerbated by the recession.

Mr Walker is dealing with a 2011-12 budget shortfall of $3.6bn. Like Chris Christie and Mitch Daniels, in New Jersey and Indiana, he insists that without cutting over-generous pension and healthcare rights for public employees, or imposing big tax increases, their states are headed for bankruptcy.

To an extent, the public-sector unions accept this argument; indeed, some unions in Wisconsin have offered concessions barely imaginable even a month ago. But they accuse Republicans of using a budget crisis as a pretext to cripple the unions, which are key financial and political backers of Democrats at state and national level.

Publicly, Republican leaders deny this hidden agenda. Privately, they calculate that public sympathy will ultimately shift to them, as it did with Mr Reagan.

Once public employees were the poor relations in a booming, ever more prosperous America. Today they often enjoy much better healthcare and pension rights than private-sector workers, where unions are weaker and firms have slashed benefits to stay competitive.

The battle over spending cuts and union rights in the states now looks set to feature large in the 2012 presidential campaign, as politicians in Washington grapple with virtually identical problems at a national level.

For the time being, the risk of a federal government shutdown has receded as both Republicans and Democrats on Capitol Hill signal support for yet another stop-gap measure, extending provisional budget funding for a fortnight, along with $4bn of cuts in spending in areas already targeted by the Obama administration.

But the argument could flare up again when that reprieve period expires if the Republicans who control the House continue to demand much deeper cuts, and the Democratic majority in the Senate insist such action would merely derail the fragile economic recovery.

Yesterday, at his annual White House meeting with state governors – who include several potential Republican candidates for 2012 – President Obama was firmly on the unions' side, declaring that "it does no one any good when public employees are denigrated".

The country needed a debate about pensions and the cost of public healthcare programmes such as Medicare, he acknowledged, but "shared sacrifice must prevail".

Last night, Republican lawmakers in Wisconsin were trying to push ahead with the Bill to curtail union bargaining rights. Even if they fail, the impending presidential race will keep the issue alive.

Governors past and present are likely to dominate the Republican party's 2012 field. New Jersey's Mr Christie, with perhaps the strongest grassroots following among them, insists he will not stand. But Mr Daniels, a former White House budget director, is mulling a run, as is Mississippi's Haley Barbour. Former governors Tim Pawlenty of Minnesota and Mitt Romney of Massachusetts are near certain to join the race.

US budget cuts in numbers

24 The number of hours that Wisconsin's Governor, Scott Walker, gave Democratic Party senators to return to the State Capitol in Madison to vote through his measures cutting costs and reducing the powers of trades unions, before he began slashing public-sector jobs.

$165m The amount Governor Walker claims his measures will save Wisconsin's taxpayers.

$1bn The amount he is hoping to cut from the state budget, including grants to schools and local government.

1,500 Number of state workers he is proposing to make redundant if his proposals are not voted through.

12 The percentage of Americans who favour cuts to either Medicare or social security budgets, according to a poll conducted last month by the Pew Research Centre, which also found that only a fifth of registered Republicans backed the cuts.

49 The number of US states whose debt levels have increased by at least 40 per cent since 2004. Indiana, by contrast, has paid down more than 40 per cent of its debt and has a top debt rating of triple-A.

9-2 The odds of Indiana's Governor, Mitch Daniels, securing the Republican nomination for a 2012 presidential run.

2 The number of years that Mr Daniels served as President George W Bush's director at the Office of Management and Budget, during which he cut state spending and federal taxes.

1996 The last time the US federal government system shut down after lawmakers could not agree a new budget.