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Truthout...
Really Bad Reporting
in Wisconsin: Who “Contributes” to Public Workers’ Pensions?
Thursday 24 February 2011
by David Cay Johnston
When it comes to improving public understanding of tax policy, nothing
has been more troubling than the deeply flawed coverage of the
Wisconsin state employees’ fight over collective bargaining.
Economic nonsense is being reported as fact in most of the news reports
on the Wisconsin dispute, the product of a breakdown of skepticism
among journalists multiplied by their lack of understanding of basic
economic principles.
Gov. Scott Walker says he wants state workers covered by collective
bargaining agreements to “contribute more” to their pension and health
insurance plans.
Accepting Gov. Walker’ s assertions as fact, and failing to check,
created the impression that somehow the workers are getting something
extra, a gift from taxpayers. They are not.
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.
The labor agreements show that the pension plan money is part of the
total negotiated compensation. The key phrase, in those agreements I
read (emphasis added), is: “The Employer shall contribute on behalf of
the employee.” This shows that this is just divvying up the total
compensation package, so much for cash wages, so much for paid
vacations, so much for retirement, etc.
The collective bargaining agreements for prosecutors, cops and
scientists are all on-line.
Reporters should sit down, get a cup of coffee and read them. And then
they could take what they learn, and what the state website says about
fringe benefits, to Gov. Walker and challenge his assumptions.
And they should point out the very first words the state has posted at
a web page on careers as a state employee (emphasis added):
The fringe benefits offered to State of Wisconsin employees are
significant, and are a valuable part of an individual’s compensation
package.
Coverage of the controversy in Wisconsin over unions collective
bargaining, and in particular pension plan contributions, contains
repeated references to the phrase “contribute more.”
The key problem is that journalists are assuming that statements by
Gov. Scott Walker have basis in fact. Journalists should never accept
the premise of a political statement, but often they do, which explains
why so much of our public policy is at odds with well-established
principles.
The question journalists should be asking is “who contributes” to the
state of Wisconsin’ s pension and health care plans.
The fact is that all of the money going into these plans belongs to the
workers because it is part of the compensation of the state workers.
The fact is that the state workers negotiate their total compensation,
which they then divvy up between cash wages, paid vacations, health
insurance and, yes, pensions. Since the Wisconsin government workers
collectively bargained for their compensation, all of the compensation
they have bargained for is part of their pay and thus only the workers
contribute to the pension plan. This is an indisputable fact.
Not every news report gets it wrong, but the narrative of the
journalistic herd has now been set and is slowly hardening into a
concrete falsehood that will distort public understanding of the issue
for years to come unless journalists en masse correct their mistakes.
From the Associated Press and The New York Times to Wisconsin’s biggest
newspaper, and every broadcast report I have heard, reporters again and
again and again have written as fact what is nonsense.
Read the complete article, plus links, at Truthout
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