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The truth behind Wisconsin public employee benefits

26 Mar
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Rick Ungar, of Forbes.com, published a post to his article entitled, “The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing to Public Employee Pensions.”

On this article Rick references a document written by the Pulitzer Prize winning tax reporter, David Cay Johnston of tax.com. Using the information written by Mr. Johnston and some of his own explanations we learn the truth behind Wisconsin employee’s benefits.

Let’s start with the excerpt from Johnston’s document.

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, creates 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.

Turns out that the public employee’s pension plan is a deferred compensation plan. Reading the definition of a deferred compensation plan reminds a lot of a 401K or 403B that private employers may offer. With deferred compensation the employees choose to have portions of their salary placed into the state operated pension fund where the money is professionally managed.

The article continues to draw an analogy between this and what’s been going on with the dealings of some professional athletes. Ungar points out that reviewing Wisconsin’s collective bargaining agreements indicates that the public employee’s situation is no different (only with less zeros at the end).

Unfortunately the media hasn’t gone to any effort to discredit these claims by the Governor and thus many people have taken Walker at his word. We’re not talking about some free benefits from the taxpayers, the employees are putting their own money back into the pension. This benefits them as they have a lower taxable income, a convenient way to invest in a retirement plan, and gain the benefit of so many people pooling their money which lowers the administration costs. The plans that Walker has for the public employees end up costing the employees more for the same level of coverage and in essence are a pay cut for the employee.

Whether or not a teacher is worth what they’re paid is an entirely different discussion. Yes, their salary is paid for by taxpayers, but as this research indicates taxpayers aren’t also paying an additional 100% for the public employee’s benefits. It was just another case of public figures twisting data to get the results they wanted. The very fact that the Republicans pulled the collective bargaining lines out of the budget bill and into its own bill, just to convince Dems to come back, proves that this action has nothing to do with trimming budgets and everything to do with squashing unions.

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Posted by on March 26, 2011 in Political Crap

 

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