Well, it's here - but this still is an appropriate picture.
Posted on 02/25/2011 8:10:46 PM PST by tcrlaf
Pulitzer Prize winning tax reporter, David Cay Johnston, has written a brilliant piece for tax.com exposing the truth about who really pays for the pension and benefits for public employees in Wisconsin. 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.
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.
Many of us are familiar with the concept of deferred compensation from reading about the latest multi-million dollar deal with some professional athlete.
A review of the state’s collective bargaining agreements – many of which are available for review at the Wisconsin Office of State Employees web site - bears out that it is no different for state employees. The numbers are just lower.
(Excerpt) Read more at blogs.forbes.com ...
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.
But is this the fault of the state employees? The pension agreements are the result of collective bargaining. That means that the state has every opportunity to properly calculate the anticipated lifespan and then add on some margin for error. What’s more, the losses taken by the pension funds over the past few years can hardly be blamed on the employees.
Take a look at what Sue Urahn, an expert on the subject at the Pew Center on the States, has to say about this when describing the $1 trillion gap that existed between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises.at the end of 2008-
To a significant degree, the $1 trillion reflects states’ own policy choices and lack of discipline:
* • failing to make annual payments for pension systems at the levels recommended by their own actuaries; * • expanding benefits and offering cost-of-living increases without fully considering their long-term price tag or determining how to pay for them; and * • providing retiree health care without adequately funding it
Via Pew Center on the States
That is the point. While the governor of Wisconsin is busy trying to shift the blame to the workers in an effort to put an end to collective bargaining, the reality is that it was the state who punted on this – not the employees.
Further, by the state employee unions agreeing to the deal proposed by Walker on their benefits (as they have despite Walker’s refusal to accept it) they are taking on much - and possibly all – of the obligation out of their own pockets.
As a result, the taxpayers do not contribute to the public employee pension programs so much as serve as insurers. If their elected officials have been sloppy , the taxpayers must stand behind it. But if the market continues to perform as it has been performing this past year, don’t be surprised if the funding crisis begins to recede. If it does, what will you say then?
.
Who pays their compensation?
Taxpayers, now or later.
Forbes is full of crpp on this one.
.
BARF-HURL-AND BOVINE EXCREMENT ALERT!!
Ok folks, have at this.
Explain to me how deferred compensation, especially deferred compensation that is never paid, and never budgeted for, is not paid by the taxpayers???
This is making big rounds on the Leftist internet websites, aspecially Daily Kos...
How much do public employees pay toward their health insurance?
Well, it's here - but this still is an appropriate picture.
Forbes is a Global Bankster -
http://investing.businessweek.com/research/stocks/private/relationship.asp?personId=3795994
I guess I’m missing something here. The insurance is paid for as part of compensation, just as their salaries are paid for. Taxpayers pay both to the teachers.
The only “lie” would be if the benefits were paid for by teachers out of their own pockets separately—i.e. if salaries were the ONLY compensation the teachers received from the state.
I must be missing something.
The Unions donate to the Democrats who in turn use the taxpayers money to fulfill the state's unsustainable obligation. When we reach the point that the state can no longer fulfill the obligation then the system goes bankrupt and "poof" go the obligations into bankruptcy. This doesn't seem very moral to me.
I learned something new ... deferred compensation appears magically out of nowhere! It’s magic found money that came out of no one’s pocket and magically appears on the books like money from the tooth fairy.
OK..so part of the paycheck goes to the employee and part to retirement, but at the end of the day..with a defined benefit plan the shortfall must be made up by the taxpayer with additional taxes. That is the perfect argument for a defined contribution plan. That is the only thing that protects the employee and the taxpayer from evil doing by the politicians who have underfunded the retirements funds.
Every cent paid to a public employee is paid by the taxpayers or those who pay fees for specific services. How can an outfit like FORBES fail to understand this?
Bump for tracking
This is pure sophistry.
And this is why there needs to be some focus on total compensation (and how its 2x private sector jobs), because public union workers are financially pampered from hire date to grave, and then some.
And just where does “their pay” come from??? The taxpayers! State to not generate anything, or make anything. Their only source of funds to pay state employees, deferred or not, comes from tax revenue that comes from tax payers.
Someone get the popcorn!!!!
Heads are going to explode!!!!
As I understand it, there is no provision for states to actually go into bankruptcy.
However, at some point their checks will just start bouncing and suppliers will stop doing business with them.
I believe IL is very near this point now.
Today, Flee Levin had a Maryland caller who would not identify himself. He said some folks are collecting on their retirement fund prior to retirement. The loot gets dumped electronically into accounts.
One is a legal definition and the other is a literal definition. But both are basically the same thing. WE IS BROKE!
Where does that 100 cents come from?
The paycheck fairy?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.