For all of the pomp and ceremony that Washington residents saw this week, the president's inauguration may not have commemorated the most consequential election of 2012. In the longer view of history, Wisconsin Gov. Scott Walker's decisive victory in his state's union-led recall election may prove to be a bigger deal.

Walker had placed himself on the front lines of a growing struggle between local government leaders and public-sector unions over control of state, county and municipal budgets. He pursued reforms that have begun to liberate the finances of cities and school districts throughout Wisconsin, and his success has inspired other states' governors and legislatures to take similar action.

Unions represent more than one-third of all government employees. But unlike private-sector unions, they can leverage their political power to elect their members' bosses -- that is, the legislature and the governor. That power can make state government reform nearly impossible. Unions reliably resist as the proverbial camel's nose under the tent anything that would trim the workforce or alter the pension and other benefit programs that are steadily choking state budgets.

Walker tackled the immovable obstacle head-on by limiting public-sector union collective bargaining, requiring unions to hold annual recertification votes (which would require 51 percent of members, not just those who vote, to approve) and prohibiting automatic payroll deduction of union dues. In short, he required the unions to prove that their members actually stand behind them.

The unions launched a scorched-earth campaign in response. Noisy protesters filled the State Capitol for weeks on end, vowing to make an example out of Walker. They proceeded to lose a series of special elections, culminating in Walker beating their recall effort by a larger margin than he had won the governorship by in the first place.

For a while, it looked like that a pyrrhic victory for Walker, since the unions had also succeeded in tying up the reforms in court. Two judges had stayed the reforms, and their future looked shaky. But on Friday, a three-judge appeals court panel upheld them, rejecting the unions' argument that the reforms were unconstitutional because they excluded police and firefighters and therefore violated the equal-protection clause.

"We cannot, as the unions request, determine precisely which occupations would jeopardize public safety with a strike," the majority wrote. The judges wrote that to invalidate the legislation on that basis "would elevate the judiciary to the impermissible role of supra-legislature."

That's hardly the end for the Wisconsin reforms. The second case is still pending before another appeals court, and the reforms remain frozen in the meantime. The issue may eventually go before the Supreme Court. Still, Friday's ruling is a big win for Walker and for other governors, like Michigan's Rick Snyder, R, who have taken on the power of the public-sector unions. Just a few years ago, this would have been unthinkable, but unions are losing their grip. The latest Bureau of Labor Statistics data show that the number of public-sector union members peaked in 2009 and has since fallen 6.4 percent. Local government union membership is down sharply, off 10 percent since its peak in 2008.

Walker has shown that stalwart leaders can take on entrenched interests to enforce budget discipline and keep voters in control of government finances. As the separate but related debate over entitlement spending rages in Washington, maybe some people on Capitol Hill should take notice.