The Contribute More Fallacy

An excellent piece by David Cay Johnston that shows how corrupted our current debate is, and how well right-wingers have co-opted the language so that it is more favorable towards their goals:

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.

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.

Thus, state workers are not being asked to simply “contribute more” to Wisconsin’ s retirement system (or as the argument goes, “pay their fair share” of retirement costs as do employees in Wisconsin’ s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.

The labor agreements show that the pension plan money is part of the total negotiated compensation. The key phrase, in those agreements I read (emphasis added), is: “The Employer shall contribute on behalf of the employee.” This shows that this is just divvying up the total compensation package, so much for cash wages, so much for paid vacations, so much for retirement, etc.

This is an excellent point- they are not being asked to “contribute more,” they are taking a salary cut in deferred wages.

50 replies
  1. 1
    Violet says:

    Accepting Gov. Walker’s anyone’s assertions as fact, and failing to check,

    Fixed to describe how the media generally operates. They take lots of people’s assertions as fact. Probably not 100%, since there’s likely some issue where some actual reporting broke out on one occasion, but largely this is how they operate.

  2. 2
    freelancer says:

    Punchy’s schtick today is as amusing as it is annoying.

    Wait for it…

  3. 3
    BruinKid says:

    Have you seen this? An affidavit reveals that it was none other than Roger Ailes himself that told Judith Regan to lie to federal investigators about her affair with Bernard Kerik.

    But Ms. Regan never revealed the identity of the executive, even as her allegation made headlines and she brought a wrongful termination suit against HarperCollins and News Corporation.

    But now, affidavits filed in a separate lawsuit reveal the identity of the previously unnamed executive: Roger E. Ailes, chairman of Fox News.

    What is more, the documents say that Ms. Regan taped the telephone call from Mr. Ailes in which Mr. Ailes discusses her relationship with Mr. Kerik.

    It is unclear whether the existence of the tape played a role in News Corporation’s decision to move quickly to settle Ms. Regan’s lawsuit, paying her $10.75 million in a confidential settlement reached two months after she filed it in 2007.

  4. 4
    BruinKid says:

    Argh. How do you quote multiple paragraphs again?

  5. 5
    R-Jud says:

    Cole. I am lazy and drunk. Can I get a link to the whole piece cited in your post, please?

  6. 6
    freelancer says:

    @BruinKid:

    Two underscores _ between each ‘graf.

  7. 7
    Bulworth says:

    I’m a little confused about this.

    First there is this:

    Out of every dollar that funds Wisconsin’ s pension and health insurance plans for state workers, 100 cents comes from the state workers.

    then there is this

    “The Employer shall contribute on behalf of the employee.” This shows that this is just divvying up the total compensation package, so much for cash wages, so much for paid vacations, so much for retirement, etc.

    This latter ‘graph sounds like there is an employer contribution…?

  8. 8
    Violet says:

    @R-Jud:
    Here’s a link to the article quoted.

  9. 9
    Tom Q says:

    I agree that this is misleading language which, as usual, helps make the right-wing argument look better.

    But I’m guessing most of the people against the union position wouldn’t be swayed even if it were phrased correctly. To them, it will simply be, “I have to pay more for my medical insurance than I did last year (or 2/5/10 years ago), and so should they”.

  10. 10
    Violet says:

    @Bulworth:
    No, the “on behalf” part means they’re just operating as the intermediary and doing the actual contributing of the money. The money itself comes from the employee. Like if I gave you some cash and a deposit slip filled out for my checking account, and you went to the bank and deposited it on my behalf. That’s how it’s working here.

  11. 11
    Bulworth says:

    @Violet: OK, I thought it might be that.

  12. 12
    Bulworth says:

    @Violet: although it’s surprising there’s no matching contributions by the state.

  13. 13
    General Stuck says:

    Layered bullshit, cooked up in the bowels of Heritage Foundation and AEI. The slow con on afterburners. Dress up taking something that is not theirs, from workers cloaked in patriotic jingoisms of “contributing more”, to dress up taking away bargaining rates in service to shared sacrifice from immediate economic emergencies with the bullseye to defund the dem party pol machine, and the middle class pol power. In a bill also chocked full of various wingnut welfare party favors.

    This is no Trojan Horse, this is burglary from men in elephant suits.

  14. 14
    Amir_Khalid says:

    @Violet: Deadline pressure is partly to blame. You’ve got an editor constantly breathing down your neck for the story. And nowadays a newspaper doesn’t just print stories for the morning edition any more. It tweets the thing, puts it up on the website ASAP, all while competing with other news outlets to be the first.

    The concept of a daily news cycle has become a relic of a more slow-moving age. Unfortunately, that’s how haste has become a primary value in news these days. Sometimes more so than accuracy or context.

  15. 15
    Bulworth says:

    @General Stuck: as was reported I think by this very webtubes blog, the person running Wisconsin’s health and welfare department is someone from Heritage. Go figure.

  16. 16
    General Stuck says:

    Cripes, no edit function. That is not terrible grammar and spelling in my post, it is code, and secret.

  17. 17
    khead says:

    @R-Jud:

    I feel like this should be my post but it’s just too early.

  18. 18
    Violet says:

    @Amir_Khalid:
    Yeah, I get that. And I understand all the pressures. But it still doesn’t make it right that something is reported as “fact” without being checked.

  19. 19
    General Stuck says:

    @Bulworth:

    AKA – The Institute of Fleecing Research

  20. 20
    Uncle Clarence Thomas says:

    .
    .
    Fortunately, President Obama will soon be making a fierce, historic speech somewhere in Wisconsin in solidarity with America’s middle and working classes against the depraved fat cat Republican war on them.
    .
    .

  21. 21
    BruinKid says:

    @freelancer: Ah, thanks. It’s been a while since I quoted more than one paragraph here.

  22. 22
    Lukeness says:

    They’re not just “taking a salary cut in their deferred wages,” but also in their current compensation as more of that will be required to be contributed to the pension fund.

  23. 23
    R-Jud says:

    @khead: It’s 11 pm where I live. Maybe I am you, from the future?

    Also, thanks, Violet, for the full link.

  24. 24
    cyntax says:

    @Violet:

    Fixed to describe how the media generally operates. They take lots of people’s assertions as fact.

    Only “serious” people it seems are entitled to have their facts non-checked. I was just reading over at the GOS (don’t like that site redesign) that none of the Sunday talkshows will have anyone from labor on. So as long as you’re supporting the top .1%, you’ll get airtime; otherwise, not so much.

  25. 25
    Sko Hayes says:

    This kind of goes along with what David Waldman said over at the GOS earlier today:

    Public sector unions, Walker’s theory goes, must be smashed because they “lobby” the government to pay their members more, and then their members use their pay to kick in dues, which are used to “lobby” for even more money. That’s precisely the argument Republicans used against liberal-leaning interest groups in the 1990s. Almost verbatim. But what makes the theory so dangerous is that following its logic, every dollar a public sector employee is paid is and always remains “taxpayer money.” Just as in H.R. 3, where tax deductions granted to offsetting the cost of buying insurance coverage become “fungible” and therefore turn every dollar in your wallet forever into “taxpayer money,” so that Republicans can forbid you from using even money every normal American thought of as your own to pay for insurance plans that cover abortion.

    Of course, no one ever suggests that Blackwater’s money is “taxpayer money,” do they? Halliburton’s? Lockheed’s? No, of course not.

    http://www.dailykos.com/story/.....nst-unions

  26. 26
    El Cid says:

    That’s all well and good, but these people need to hurt too just like David Brooks and everyone else.

  27. 27
    goblue72 says:

    Just one more example on a pile of examples of what happens when the bulk of a country’s mass media is controlled by a very small coterie of multinational corporations. They will NEVER report accurately because the mainstream media has a well-known right-wing bias.

  28. 28
  29. 29
    El Cid says:

    @Sko Hayes:

    …what makes the theory so dangerous is that following its logic, every dollar a public sector employee is paid is and always remains “taxpayer money.”

    If you follow their argument that taxes, especially income taxes, are government theft via coercion.

    Thus, ‘government schools’ are taking your money by force and making you pay these lazy union teachers to fail your kids when only the citizens can choose best how to spend their money.

    These are people who want to get rid of public employees and public schools and public services.

    Except for all that stuff when tax money goes to rich people types.

  30. 30
    Svensker says:

    @El Cid:

    Except for all that stuff when tax money goes to rich people types.

    Well, yuh, because rich people are producers who create wealth and jobs. Union folks and school teachers are moochers and leeches who produce nothing, but just steal our money via taxation. I mean, do you think teaching kids produces anything of value? Do you? Do you?! Friggin’ commie.

  31. 31
    agrippa says:

    To state the obvious, I doubt if very many people in the general public are going to notice any of this.

    The people in the political class – the politicians and the commentariat – will not be ‘shocked’ by any of it.
    I wonder if very many of them consider how corrupt it has all become. And, that they are participants in it.

  32. 32
    jwb says:

    Texas Republicans push for constitutional convention. Yeehaw!

  33. 33
    Chat Noir says:

    @agrippa: Along these same lines, Steve Benen had a post today that reinforces my mindset that there are way too many clueless Americans.

  34. 34
    Art says:

    Great points, but too nuanced.

    All the “public” knows is union = bad.

  35. 35
    danimal says:

    Question for conservatives.

    Hypothetical: You get everything you want. I’m a generic state employee in South Conservastan. I have 10 years experience as a professional and a bachelor’s level degree. You cut my pay 10-20%, you stautorily cap pay increases to no more than the rate of inflation. You pass on any health care cost increases to me. My pension is switched from a defined benefit plan to a 401(k). I receive nothing in return except scapegoating from every Rush Limbaugh wannabe under the sun.

    Who are you going to get to fill my job?

  36. 36
    El Cid says:

    @danimal: Mexicans. And you can keep them fearful by having ICE raids every now & then.

    Remember, they refuse to pass laws for penalties on employers who hire the undocumented. So the cheap labor’s kept compliant.

  37. 37
    jwb says:

    @danimal: You’re in government. You’re therefore by definition an unproductive worker. Why would your job need to be filled? The state can just outsource it to private industry. /wingnut

  38. 38
    chopper says:

    yeah, there’s a lot of confusion over the way pensions work. health insurance is a bit different, because it’s optional and different plans have different costs so the total compensation is variable if the employer contributes. same with a 401(k) or TSP or what not. but disregarding those benefits, with a pension your salary plus your pension contributions make up a consistent total compensation that was already bargained for – if walker signed a bill tomorrow that merely ends state employee pensions completely, employee salaries would immediately go up the amount that is no longer contributed to pensions.

  39. 39
    PurpleGirl says:

    I’ve mentioned it a couple of times, but government workers are ALSO taxpayers. Unless there have been some laws which exempt them from taxes that I haven’t heard about.

  40. 40
    danimal says:

    @PurpleGirl: Agreed that government workers are taxpayers.

    Voters, too.

  41. 41
    burnspbesq says:

    I’m tempted to call Johnston “the Matt Taibbi of tax,” but there’s no reason for me to gratuitously insult Taibbi.

    It’s a pleasant surprise to see that he still knows how to read a contract. This is definitely in the” broken clock is right twice a day” realm.

  42. 42
    burnspbesq says:

    @chopper:

    ” if walker signed a bill tomorrow that merely ends state employee pensions completely, employee salaries would immediately go up the amount that is no longer contributed to pensions.”

    That seems highly doubtful. Can you point to specific statutory or contract language that achieves that result?

  43. 43
    Suffern ACE says:

    @burnspbesq: I’m more inclined to think that not only will pay be cut, but the pension money will be deemed state money that was “overpaid” to be returned…let the union sue for it. That seems to be how the republicans are rolling in the state these days.

  44. 44
    rikyrah says:

    thank you for another great post telling the truth

  45. 45
    Bubblegum Tate says:

    But…that would mean Republicans are lying! And that can’t be right.

  46. 46
    honus says:

    Aren’t those pension plan contributions protected to that “sanctity of contract” I heard so much a while back? You know, about the time that high taxes on Wall Street bonuses would be class warfare?
    Maybe that U of Chicago law professor who was strapped on $400k a year can weigh n on the compensation of the Wisconsin school teachers.

  47. 47
    Caz says:

    Simply false. But, hell, it makes a good article, right?

    This is the “Plan 9 From Outer Space” blog. So bad, it’s good, lol.

  48. 48
    Chris says:

    Something about this reminds me of Alan Greenspan and the Social Security trust fund/subsequent tax cuts for the rich, but I can’t quite put my finger on it/assemble the proper snark…

  49. 49
    burnspbesq says:

    @Suffern ACE:

    I’m more inclined to think that not only will pay be cut, but the pension money will be deemed state money that was “overpaid” to be returned…let the union sue for it. That seems to be how the republicans are rolling in the state these days.

    I think that’s mostly right. If the public employee retirement plan in Wisconsin is a typical defined benefit plan, the benefit is based on a formula along the lines of “x percent of career average comp (or average comp for the last y years before retirement) times years of service.” So pay cuts lead inexorably to benefit cuts.

  50. 50

    […] already presented better by someone else here, but anyay:  following up John’s post on the deliberate deception behind “contribute more” demand of public service workers in Wisconsin, here’s […]

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