The Wisconsin Lie Exposed–Taxpayers Actually Contribute Nothing To Public Employee Pensions

FORBES ^ | 2-25-11 | Rick Unger

[WilliamofCarmichael]

deferred compensation- money that employees would have been paid as cash salary but . . . .

Collective bargaining - the government agrees to pay employees at the rate of 150 dollars an hour but 100 dollars of the 150 dollars an hour goes into the employees' retirement benefits account. Therefore the employees are contributing to their own retirement and the taxpayers will not be obligated to pay any portion of the employees' retirement benefits cost. (Employees union agrees to contribute $400 million dollars to management's election campaigns.)

I see.

[taildragger]

There is some truth in this – but not as much as many seem to think. Because the pension plan is a defined benefit plan – requiring the state to pay the agreed benefit for however long the employee may live in retirement- if the employee lives longer than the actuarial plan anticipated, the taxpayer is on the hook for the pay-outs during the longer life.

This is the money and the ounce of truth. But they stuck their foot in it.

This is what bit GM in the @$$, they actuarially blew it, they do not have a liability crisis as much as they have a longevity boom ( Thank you American Health Care which is about to be destroyed). In both cases it was not planned for, they thought everyone would be gone @ 65-ish. They made promises they couldn't keep in a "contract" and now they want others to pay for it.

I am sorry, IMHO the people of Wisconsin do not have some joint and serveral liability in this case, ditto that every other state.

The State Consitutions and the Accounting Equation is the double dose of reality that is bitting so many in the Arse including Obama, but he is in a box on this one, he can't print his way out of this one....

[flaglady47]

“The “deferred compensation” is money paid by the taxpayers. It is a complete “bennie” (benefit).”

The gov’t worker, be it federal or state, is paid totally by the taxpayers to do specific jobs that help fed or state gov’ts accomplish certain work obligations. Whether money is physically set aside as “deferred compensation” or not is a rather useless discussion. Either you pay the worker upfront and he/she in turn then pays x amount of dollars into their pension funds themselves, or it is part of a negotiated package upon hiring that states one will get paid x amount in salary, but x amount of that salary will be paid directly into a pension fund by the employers rather than the employees. Both ways, the money is all taxpayer funded for public servants to be hired to do specific jobs. Its a question of semantics that is pointless to argue about, as the money source is the same.

Public jobs are funded by taxpayers, period. And we expect those public employees to do specific work to earn their pay. Their jobs are legitimate, necessary for the most part, and are jobs that those in the private sector for the most part chose not to do themselves, expecting the public sector to handle them. At any time, we the people can choose to elect officials who will determine which jobs should be handled by public employees and which jobs should be left up to the private sector. And if we don’t like the choices being made, we elect new officials with a different philosophy. For the most part in our history the division of labor has worked itself out fairly well.

For many years you made more money in the private sector, but took more risk; you made less in public sector jobs, but had more security (pension benefits were more assured). Now the pendulum has swung in the opposite direction, and the taxpayers believe it has swung too far in the public sector’s favor. Time for a course correction. However, be careful not to blame the public workers themselves or color them all as lazy mooches. This is not true, and many of you have public workers in your own families who are fine public servants.

It is time to renegotiate pay/benefits for public workers to correct some of the excesses; however, the public worker is not to be blamed for the contractual obligations they took on, along with the pay/benefits that went with these public jobs. A deal is a deal. And it is not the public sector’s fault if their elected public officials, be it state or fed gov’t, then took their pension funds and spent it up on other services rather than fully funding their employees’ pension funds. That has been unconscionable, and too many of our public officials have been morally bankrupt themselves to have done this. And of course Unions have had a hand in this fiasco to boot by greedily strong arming elected officials for more and more benefits that couldn’t in the long run be sustained financially.

What has been really bothering me is how cavalier many conservatives have been about saying that contractual obligations can be broken when it comes to public employees’ jobs, when that has always been a sacred cow both in our Constitution and in all of our business dealings in the private and public sector. When Obama broke contractual obligations with the takeover of GM, conservatives went nuts. Now, it appears, too many conservatives are willing to do the same with contract obligations when they are part of public sector jobs. You don’t break contracts, unless in a bankruptcy proceeding as determined by a bankruptcy judge, and states themselves cannot declare bankruptcy for many good reasons. Also, many states protect public retirement benefits of their employees in their state Constitutions and therefore the contract terms for their states’ public employees cannot be changed even if one wanted to attempt it. Dinking with contracts is a bad precedent to set under any circumstances.

So, now money is short, changes must be made, but it will serve no useful purpose to demonize public workers as if they are mere slaves to the private sector rather than just fellow workers trying to raise and feed their families. Equally, it is time for public sector workers to stop being excessively greedy regarding pay and benefits during bad times, knowing that it is their fellow private workers who are footing the bill.

Another thing, a lot of the private workers are also making a good buck, such as bankers, wall street traders, hedge fund operators, wealthy financiers, corporate workers, etc. It isn’t all a bunch of poor private sector workers being forced to fund public sector jobs. I’m just getting disgusted at everyone fighting everyone else over the almighty dollar now that we have hit hard times. Greedy banks raising fees on everything that moves, greedy oil speculators, greedy Unions, greedy and corrupt elected gov’t officials, greedy credit card companies, bah humbug.

The one thing that would help us a whole lot will be when we can dump Obama and his socialistic minions from public office and get some fiscally conservative elected officials in there instead. Then we can get our fiscal house back in order, and hopefully the economy will rebound from the financial depths we are now wallowing in. The unknown factor that always lurks in the background is what happens on the world stage to throw a monkey wrench into the works. And having a weak leader (and I use the word “leader” loosely) doesn’t help at all in this international arena. We must defeat Obama in 2012, we must.

[REPANDPROUDOFIT]

I’m retired now, but when I was working, my company NEVER gave me a company car. To be fair, they should now have to buy me a new BMW every year!

[raybbr]

Where does any single dollar come from that goes to a public employee? It’s ALL tax dollars.

[listenhillary]

Fine, continue current policy with 1/3 of the workers still employed.

[Presbyterian Reporter]

For those who still subscribe to Forbes, now would be a good time to stop that subscription.

Forbes needs to know there is a price for publishing garbage.

[listenhillary]

OK - start paying income tax on all the health insurance if it is just salary in a different form.

Yes.

I already pay income tax on a life policy my employer provides.

[Gilbo_3]

while it is true that it is state employees’ own money that funds the pension plan, when the pension plan comes up short it is up to the taxpayer to make up the difference.

can you say ponzi ??? i knew ya could...

this is a ponzi scheme on roids, simply streamlined to eliminate the 'employer' from actually having to install real $$$ into the system, since the system IS the employer...

mrs g doesnt belong to the union, and her 'pay' that is pocketed is the established wage, minus the retirement 'contribution' and medical...numbers in a ledger, nothing more, nothing less...

when and if there is still a system when she is eligible [just as i with SS] then the next wave of payors will hafta install the dollars [or euros or rubbles] to cover her salary...

even better is the fact that none of this is optional...the allotment [on paper] for her bargain basement 'health' policy would easily cover the entire family *IF* she could have that money in cash, but the accounting gimmick requires all of the bennies to be merely shuffling numbers on a ledger, not actual money to be invested...

the bottom line in the states general fund [ie the taxpayers contributions] is the pit that all these electrons are dumped into, and the results are that the taxpayers are fully funding all of it...

[onevoter]

What is particularly galling is Ungar’s complete disregard for those who disagree with him. Much like Obama, Ungar clearly believes he is the “smartest man in the room” even though his grasp on the facts is completely flawed. I also couldn’t help noticing that Ungar has been kind enough to write a book explaining to all of us “average Joes” just what Obama’s healthcare bill is all about - kind of an “obamacare for dummies.” This guy must be popular at parties- I’ll bet his arrogance combined with his ignorance can clear out a room.

[EVO X]

states should just require workers to stay at their jobs longer before their pensions are fully vested.

I don't agree with that. They need to setup a system that encourages turnover instead of an old geezer seniority protection plan.

[USS Alaska]

Whose pocket did the first dollar to pay these "public workers" originate in?

The state government has no money except that which it confiscates from its citizens.

So, this whole article is bullshit, the entire state is funded by citizen's money, not "state money".

[an amused spectator]

Oh, I see. The taxpayers don’t pay for the pensions, the employees pay for it out of their own pay. The tooth fairy leaves their pay under their pillows.

You win the thread.

[Carling]

What you faid to realize is that if the money doesn’t exist, then it doesn’t matter what contractual obligations are owed the public unions.

Think Enron...

[knittnmom]

Thanks for posting that - I needed that link for a response to a Facebook acquaintance.

[Carling]

In the comments section this Ungar guy spent what looks like an entire day defending his assinine article.

Clearly the guy is a far left liberal who doesn’t understand where the public union’s money comes from, and how deferred compensation actually puts the taxpayers on the hook for even more financial obligations to the public union leeches.

[bmwcyle]

That is the biggest lie of the week. All government money comes from the tax payer. If they are not paying all their retirement then it is coming from the tax payer. Forbes is not worth the paper it is written on.

[sickoflibs]

RE :”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. How can this be possible? Simple. The pension plan is the direct result of deferred compensation- money that employees would have been paid as cash salary but choose, instead, to have placed in the state operated pension fund where the money can be professionally invested (at a lower cost of management) for the future. “

Did you read this above ? See, 100% of the taxpayers money suddenly becomes 100% of the public workers money by slight of hand. All the money in the economy becomes the governments. My Mises post explained the same thing clearly:

The enormous power of government-employee unions effectively transfers the power to tax from voters to the unions. Because government-employee unions can so easily force elected officials to raise taxes to meet their “demands,” it is they, not the voters, who control the rate of taxation within a political jurisdiction. ...

Politicians are caught in a political bind by government-employee unions: if they cave in to their wage demands and raise taxes to finance them, then they increase the chances of being kicked out of office themselves in the next election. The “solution” to this dilemma has been to offer government-employee unions moderate wage increases but spectacular pension promises. This allows politicians to pander to the unions but defer the costs to the future, long after the panderers are retired from politics.

[texmexis best]

Too clever by half.

Deferred wages my butt. The tax payer pays it all.

[noinfringers2]

This illustrates semantic hogwash. The deferred comp is nothing less than a cut from a bloated salary. Just another way government employees true cost to the public is subsadized and hidden. A closer examination would show other areas of public gouging. Government apologists are very good at this kind of semantics.