Gov. Walker’s basis for stripping collective bargaining rights contains major false premise
Monday, February 28, 2011 at 5:26 pm
Syracuse University law professor and journalist David Cay Johnston writes in an editorial for Tax.com that a major premise on which the debate over public unions’ collective bargaining rights in Wisconsin has been built is an outright lie.
Wisconsin Republican Gov. Scott Walker has claimed that collective bargaining has allowed unions to negotiate pension and health plans that take too much from the taxpayers, and that one of the main reasons he seeks to end collective bargaining is to impel state employees to “contribute more” to their pension and health care plans. This argument has been reported without further inspection by reputable news outlets around the country, and yet, Johnston explains:
“Out of every dollar that funds Wisconsin’ s pension and health insurance plans for state workers, 100 cents comes from the state workers.
How can that be? Because the “contributions” consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.
Thus, state workers are not being asked to simply “contribute more” to Wisconsin’ s retirement system (or as the argument goes, “pay their fair share” of retirement costs as do employees in Wisconsin’ s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.”
Johnston writes that Gov. Walker has created a perception that public employee unions are using taxpayer funds to pay for retirement and health insurance packages, when, in fact, this is only true insofar as their salaries are taxpayer-funded and the pension and health care payments are taken from their salaries. As governor, Walker has to know this well and would be more honest to say that he wants public employees to take a pay cut — or more accurately, squeeze $30 million in additional payroll taxes from their paychecks.
Gov. Walker’s targeting of public unions’ pension plans comes despite evidence that the Wisconsin pension is among the strongest and best invested in the country. Zach Carter reports in the Huffington Post that liabilities in the Wisconsin pension fund are 99.67 percent “funded,” one of the highest rates in the nation. That means that funds projected to be paid out over the long term to those collecting their pensions are almost 100 percent paid for. For reference, government and private investment firms consider 70-80 percent funding rates a benchmark of financial stability.
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