David Cay Johnston, a 2001 Pulitzer Prize winning economics journalist, writes:
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.
The entire article is linked here.
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3 comments:
James Suroweicki of the New Yorker wrote a good Financial Page a few months ago on financial literacy. The financial literacy of the average person is quite low. Although Jimmy S. was referring to personal finances, I think the same came be said about their understand of the economics of wages and tax policy.
A pension system, whether public or private, is one that is based on the contributions of the worker either directly or indirectly.
The ultimate goal of Scott Walker and his puppeteers is to eliminate the pension program requiring every person to find their own program.
The reason why the pension program was setup was that the workers would rather have a collective program, just like how they would rather bargain for their wages and working conditions.
Considering the great performance of the Wisconsin Retirement System, the decision of the workers has been correct and should be maintained.
No, this is all wrong. Under WI state law:
1. The employer is required to contribute a % to the fund.
2. The employee is required to contribute 5% to the fund
This is right under the paragraph quoted in the ETF website.
The law also states that, if both parties agree, the state may also pay the employee share.
That is the text quoted from one of the contracts.
Currently, the state is paying the employee share for ALL state employees.
So, who has been paying 100% of the pension fund contributions?
The state, a.k.a. the taxpayers.
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