The battle has begun between fiscal conservatism and America’s public sector unions. Only one side can win.

Tim Montgomerie

On one side of the battle are Wisconsin’s public sector unions. 60,000 of them have been protesting in sub-zero temperatures. Teachers have walked out of classrooms. Doctors have abandoned their surgeries.

On the other side is the new Republican Governor, Scott Walker. He wants to cut pay, entitlements and end collective bargaining. Obama has sided with the unions. America’s Republicans have sided with Walker.

Here's your guide to what's at stake.

MITCH DANIELS, GOVERNOR OF INDIANA: DEBT REDUCTION IS THIS GENERATION'S CHALLENGE

"No enterprise, small or large, public or private, can remain self-governing, let alone successful, so deeply in hock to others as we are about to be." If a foreign army invaded, we would set aside all secondary disputes and run to the ramparts. We must bring that air of urgency to the spending crisis. It is "our generational assignment… Forgive the pun when I call it our 'raison debt.'" (Quoted by Peggy Noonan in the Wall Street Journal).

WASHINGTON IS FAILING TO BALANCE THE FEDERAL BUDGET BUT STATES ARE REQUIRED TO BALANCE THE BOOKS

The Economist: “Elections, Barack Obama once said, have consequences. The Republicans’ triumph in last year’s mid-terms was seen by many as an instruction from the electorate to hack away at America’s sprawling government. In Washington, DC, that debate has gone nowhere. Both Mr Obama and his foes have produced fantastical budgets, full of illusory savings and ignoring the huge entitlement programmes. A government shutdown is looming. But look beyond the Beltway and something rather more promising is under way... Unlike the federal government, which can borrow money to plug its budgetary gap, almost all the states are required to balance their budgets. Their revenues have been slashed by the recession; the stimulus funds that saw them through 2009 and 2010 have expired; medical costs are soaring. Tax rises remain unpopular, and so are deep cuts to important state-provided services like schools and the police. So governors are finally confronting the privileges that public-sector employees have managed to negotiate for themselves in recent decades.”

SCOTT WALKER IS URGING STATE WORKERS TO PAY FOR THEIR GENEROUS BENEFITS

San Francisco Chronicle: “GOP Gov. Scott Walker has inherited a budget shortfall that is expected to grow to $3.6 billion over the next two-year budget. He has presented a budget-repair plan that would require most public employees to pay 5.8% of their salaries toward their (very generous by private standards) pensions and pay 12.6% of their health care premiums. The state is broke, Walker argues, and by essentially cutting workers' compensation by 7%, he hopes to avoid layoffs.”

BUT THERE'S MORE AT STAKE THAN BENEFITS. THE UNIONS HAVE COME TO RUN SCHOOLS AND OTHER PUBLIC SERVICES FOR THEIR MEMBERS' BENEFIT.

FT (£): “Unions also traded wages for control. In many US school systems, bargaining rights have expanded to the point where unions are in charge. They have their say not just on basic pay and benefits, but on seniority rules, hirings and firings, school hours, you name it. In many states, schools are run like the British printing industry before Rupert Murdoch, with similarly unimpressive results.”

Karl Rove: “Union insistence on "Last In, First Out" often means the best and brightest teachers are let go when districts downsize or schools close.”

IT'S  NOT ABOUT ATTACKING THE PUBLIC SECTOR BUT ASKING THE PUBLIC SECTOR TO SHARE THE PAIN ALREADY SUFFERED BY THE PRIVATE SECTOR

Karl Rove: “The [Bureau of Labor Statistics] reports the average annual wage for a state-government employee is now $48,742, but $45,155 for a worker in the private sector. What's more, the Bureau says the cost of benefits for state and local government workers has risen 50% more than those for private-sector employees since 2001.”

The Wall Street Journal on the situation in Michigan where similar issues are brewing: “Folks here earn less than they did 10 years ago, with per capita income declining to $34,812 from $37,195 (in 2009 dollars)… Certainly the Michigan teachers, corrections officers, firemen and other government workers standing here outside their state capital face some real pain: a future of layoffs, greater payments for their health insurance and pensions, and paychecks more tethered to the health of the Michigan economy. It's true too that they see the 16.5% of the work force that is unionized as allies.”

UNIONISM IN AMERICA HAS BECOME A PUBLIC SECTOR PHENOMENON...

FT (£): “Just 7% of private-sector workers are union members, down from 30% in the 1960s. But in state and local government the average is 39%, and in some states far higher: 73% in New York, for example, 66% in New Jersey, 58% in California.”

...AND THE PUBLIC SECTOR UNIONS ARE MASSIVE FUNDERS OF THE DEMOCRATS

"Unions, most of whose members are public employees, gave Democrats some $400 million in the 2008 election cycle. The American Federation of State, County and Municipal Employees, the biggest public employee union, gave Democrats $90 million in the 2010 cycle."

THE UNION'S PROTESTS AGAINST WALKER ARE ANGRY AND IRRESPONSIBLE

Karl Rove: “During the past eight days, thousands of Wisconsin teachers walked out of classrooms, shutting down schools. Tens of thousands of public employees staged an apparent wildcat strike, flooding Wisconsin's state capital in a round-the-clock protest. And Democratic legislators engaged in a most undemocratic action, fleeing Wisconsin to deny the state Senate the supermajority required for a quorum.”

David Brooks: “Walker’s critics are amusingly Orwellian. They liken the crowd in Madison to the ones in Tunisia and claim to be fighting for democracy. Whatever you might say about Walker, he and the Republican majorities in Wisconsin were elected, and they are doing exactly what they told voters they would do. It’s the Democratic minority that is thwarting the majority will by fleeing to Illinois. It’s the left that has suddenly embraced extralegal obstructionism.”

WHERE IS PUBLIC OPINION?

The Washington Examiner suggests public opinion is on Walker's side: “Public opinion seems to be with the Republicans. Pollster Scott Rasmussen reports that 48 percent of voters support Walker while only 38 percent support the unions. This seems to be a sharp reversal of opinion over the past five years. Back in 2005 California Gov. Arnold Schwarzenegger sponsored a series of ballot propositions that would have reduced the power of the state's public employee unions. The unions spent something like $100 million -- all of it derived from taxpayers -- on TV ads, and all the propositions were defeated. Now hard economic times have left voters wondering why public employees pay practically zero toward their health insurance and pensions when they have to pay plenty themselves.”

Other polls suggest sympathy may lie with the unions but Karl Rove says it's not the short-term that matters: “Fortunately for Mr. Walker and others contemplating his course, there's a lesson in the experience of Indiana Gov. Mitch Daniels. Upon entering office in 2005, Mr. Daniels signed an executive order ending collective bargaining for state workers. This and other controversial actions caused his approval ratings to fall into the 30% range. But by re-election time, Mr. Daniels's decisions had paid off. The state's finances were in good shape and Indiana's economy was doing better than its neighbors'. While Mr. Obama was carrying the state in 2008, Mr. Daniels won a second term with 58%, proving that the right policies are often the right politics.”

THE ECONOMIST AND LEADING AMERICAN CONSERVATIVES ARE QUESTIONING OBAMA’S JUDGMENT OVER WISCONSIN

The Economist: “Does America really want to retain a chief executive who appears to have so little interest in making the public sector work more efficiently?”

George Will: “Obama's "move to the center" is fictitious.”

REPUBLICANS ARE PRESENTING THEMSELVES AS THE TRUTH-TELLERS IN THIS DEBATE AND CHRIS CHRISTIE, NEW JERSEY'S GOVERNOR, HAS BEEN LEADING THE WAY. HE DESERVES THE FINAL SAY...

“Mr. Christie had proposed raising their retirement age, eliminating the cost-of-living adjustment, increasing employee pension contributions, and rolling back a 9% pay increase approved years before "by a Republican governor and a Republican Legislature." As Mr. Chrisie recounted it: "You can imagine how that was received by 7,500 firefighters. As I walked into the room and was introduced. I was booed lustily. I made my way up to the stage, they booed some more. . . . So I said, 'Come on, you can do better than that,' and they did!" He crumpled up his prepared remarks and threw them on the floor. He told them, "Here's the deal: I understand you're angry, and I understand you're frustrated, and I understand you feel deceived and betrayed." And, he said, they were right: "For 20 years, governors have come into this room and lied to you, promised you benefits that they had no way of paying for, making promises they knew they couldn't keep, and just hoping that they wouldn't be the man or women left holding the bag. I understand why you feel angry and betrayed and deceived by those people. Here's what I don't understand. Why are you booing the first guy who came in here and told you the truth?" (Quoted in the Wall Street Journal).