By ELAINE MAGLIARO
(NOTE: I posted the following article on Res ipsa loquitor on October 6, 2013.)
In the past couple of years, we’ve heard many reports from the mainstream media about how the pension funds of public sector workers are experiencing shortfalls and how they are bankrupting states and municipalities that may be unable to fulfill their pension obligations. All of the blame for this problem has been laid at the feet of public sector workers and their unions. Have the mainstream media presented the public with a true picture of the “pension crisis”—or have they just been repeating the talking points fed to them by certain politicians, organizations, and think tanks? Are “greedy” public sector workers and their unions truly responsible for the “pension crisis”—or are there other causes that are at the root of the problem?
David Cay Johnston, a Pulitzer Prize winning investigative journalist and book author who is a specialist in economics and tax issues, wrote about the issue of public employee contributions to their pension funds in the state of Wisconsin in March of 2011:
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 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.
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