not enough money for basic services and roads. that is the case in san jose, california whose democratic mayor reid took office in 2007. what role did the public sector unions and their contracts really play in your fiscal crisis? most of our costs were driven by increasing salaries and pension benefit and those came out of the 90s in the go-go years when we had money. the average cost for a police officer and firefighters was $200,000. a year. what steps did you take to stop the bleeding. we cut everybody s pay by 10% starting with me all the way down to it all of the unions. everybody took a 10% pay cut. he cut city services, too. but that still left a $115 million deficit. it was time for a desperate measure. or as it became known, measure b. what exactly was that? measure b was a ballot when slur to lou the voters to decide whether or not we are
welcome back. as you have seen, cities with big dreams and big bills have come here to wall street for the cash to finance them. but even more towns are going broke not by issuing bonds is but by issuing promises to public employee unions. that story has a new york angle, too. fox business network s lou dobbs explains. but it is a good natured sort of labor battle. it was in 1935 that president franklin roosevelt made it easier for workers in the private sector to create unions. when signed the wagner act he see he meanted and deepened political ties between organized labor on the democratic party. it doesn t pool enthusiasm for picketing. even fdr didn t think public sector unions made any sense. collective bar gaining is different for public workers because their boss is really on
showing caught the attention of another democrat worried about reelection. president john f. kennedy. he sees how this carried wagner to victory and issues an executive order allowing for the unionization of federal employees. state and local governments picked this up as a cue and you have the rapid growth from there onf public sector unions across the country. historian fred siegel of the manhattan institute says the new unions almost invariably worked to elect democrats. pay increases and pension increases and healthcare increases. meanwhile the union takes some of the money it gets from the city and invests in local elections. so it continues to elect people who will give the unions what it wants. and they also became a political force unto themselves. you can t act without their cooperation. that is because when elected officials didn t cooperate the public sector unions that fdr
warned about declared those unthinkable strikes. the most memorable case, the summer of 1975 when new york was close to bankruptcy. sanitation workers let garbage pile up in the streets while laid off police marched and shut down the brook le brookly. public employee unions demonstrated nationally when they helped senator ted kennedy challenge to a sitting democratic president they didn t like, jimmy cart. the public sector unions become the get out the vote machine that the old democratic party machine once was. carter was renominated but lost to ronald reagan who had the is support of at least one public is sector union, the air traffic controllers. that wouldn t last. rejected a government contract offer they went on strike. but that was not allowed under
their side. lies extensively on the roots of america s economic problems. they don t want to pay the union mihms too much because it comes out of their own pockets at ford, but that is not true of the government. strikes by public employees would be quote the unthinkable and intolerable. but it was within a couple of decades that democratic heirs decided the political upside of public sector unions was worth the risk. the e eureka moment happened right here in new york city. municipal workers granted the right to bargain collectively. three years later those public unions organize today s reelect him. wagner s unexpectedly strong