The rationale that several Republican governors are using to justify their attempts to strip public employees of their collective bargaining rights is that the state can’t afford growing pay and benefits for public employees. “Our state cannot grow if our people are weighed down paying for a larger and larger government — a government that pays its workers unsustainable benefits that are out of line with the private sector,” said Gov. Scott Walker (R-WI). “If you were paying attention, the problems here that are created on the state budget — sure we have a deficit problem that was helped by the economic downturn, but what we also have are benefits and costs that are out of control,” claimed Gov. Chris Christie (R-NJ)

These Republican governors would have you believe that growing public sector pay has outstripped that of the private sector and crippled their states’ finances. The first claim, as many independent analyses have found, is simply not true. Public workers, once you control for education and look at comparable jobs, make less than their private sector counterparts.

As for the second claim, CAP’s David Madland and Nick Bunker found that over the last 20 years, far from spiraling out of control, public employee costs have fallen as a percentage of state budgets:

We find that in fiscal year 2009, the most recent year where data are available, average state spending on compensation as a share of total expenditures was 19.6 percent, below the 1992–2009 average of 20.7 percent…If state government employee compensation had suddenly overwhelmed state budgets, then a jump in compensation as a share of total expenditures would be apparent. Instead, the trend is relatively flat and declined over time. In 1992, compensation averaged 23 percent of total expenditures. That figure was 19.6 percent in 2009.

Over this period, neither compensation nor total expenditures grew at a rapid pace. In fact, measured in 2005 dollars, average total expenditures increased by 3.13 percent annually and total compensation increased by 2.19 percent annually, which is roughly in line with growth rate of the economy.

As the Roosevelt’s Institute’s Mike Konczal found, the housing bubble and negative home equity are better predictors of a state’s budget problems than public sector union membership. And as the Center for Economic and Policy Research found, the shortfalls in state pension funds are largely a result of “the plunge in the stock market following the collapse of the housing bubble.”

In the wake of the “robo-signing” scandal — which involved the nation’s biggest banks approving foreclosures without ensuring due process for homeowners or even having the proper documentation — 50 state attorneys general, along with federal bank regulators and the Department of Justice, developed a settlement under which the banks would use tens of billions of dollars to modify mortgages, instead of having to litigate. The banks, predictably, are pushing back on the notion that they should have to pay anything for their mortgage malfeasance.

Bank of America CEO Brian Moynihan publicly whined that the settlement might involve his bank helping underwater homeowners, while other bank executives told Politico (anonymously, of course) that the settlement amounted to a “naked shakedown by regulators.” “How can [the Obama administration] be business-friendly and sign-off on something like this?” an executive asked.

House Majority Leader Eric Cantor (R-VA) this week criticized “fraudulent mortgage actors,” but instead of following his lead, other Republicans are parroting the banks’ rhetoric and standing in opposition to the settlement:

Sen. Richard Shelby (R-AL): Shelby called the proposed settlement “nothing less than a regulatory shakedown.” “Setting aside for a moment the attempt to end-run Congress, I question whether removing $30 billion in capital through a backdoor bank tax is the best way to jump-start lending,” Shelby added.

House Republicans: House Financial Services Committee Chairman Spencer Bachus (R-AL), along with four other members of his party, wrote a letter to Treasury Secretary Geithner that said “the breadth and scope of the draft settlement proposes raise significant concerns that the Administration and state agencies are attempting to legislate through litigation.”

As Credit Slips’ Adam Levitan pointed out, the Republicans are fundamentally mischaracterizing the settlement, particularly when they say that it is some backdoor form of regulation. “The banks have to decide if they would prefer to buy peace with the AGs or litigate. That’s the banks’ choice. And that means that claims that this is sub rosa regulation are ridiculous,” he wrote.

Republicans have regurgitated banking industry talking points before as justification for opposing help for troubled homeowners, and currently, House Republicans are trying to “pull the plug” on the administration’s foreclosure prevention efforts. Scaremongering about the proposed settlement — which, if anything, lets the banks off too easy — is simply one more indicator that Republican lawmakers in Congress are fundamentally uninterested in grappling with the foreclosure crisis.