Collective bargaining not responsible for deficits
By
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On Meet the press Feb. 27, David Gregory interviewed Wisconsin Governor Scott Walker about his plan to eliminate collective bargaining for State employees. To his credit, Mr. Gregory did point out that State Unions have agreed to accept proposed compensation cuts and increases in their contributions to pension funds but he failed to bring up a couple factors that needed to be discussed and allowed the Governor to use a oxymoronic defense of his position.
While the Governor repeatedly contended that the benefits negotiated by unions in the past were unsustainable and needed to be trashed, the fact is that the Wisconsin pension fund is not in fiscal trouble. Its managers weren't burned by subprime mortgage assets or mortgage-backed securities as the housing bubble collapsed. The fund also relies on an automated dividend system, which pays out benefits in years the system is making gains while restricting payouts in years when it takes losses. And while the pension fund had a rough year during 2008 due to stock market losses, it remains robust, both in terms of fundamental financial stability and in comparison to other state pension programs.
According to the Pew study, Wisconsin had about $77 billion in total pension liabilities in 2008. But according to that same Pew study, those liabilities were 99.67 percent "funded," giving Wisconsin one of the four-highest of such ratios in the nation. Other states had funding ratios as low as 54 percent. For comparison, expert analysts and the Government Accountability Office consider an 80 percent level to be a good benchmark for pension fund stability, while Fitch Ratings considers 70 percent adequate.According to the Pew study, Wisconsin had about $77 billion in total pension liabilities in 2008. But according to that same Pew study, those liabilities were 99.67 percent "funded," giving Wisconsin one of the four-highest of such ratios in the nation. Other states had funding ratios as low as 54 percent. For comparison, expert analysts and the Government Accountability Office consider an 80 percent level to be a good benchmark for pension fund stability, while Fitch Ratings considers 70 percent adequate.
If this was about closing the state budget deficit rather than about busting the major contributor to democratic candidates while the floodgates for corporate contributions to Republican candidates remain wide open thanks to the Supreme courts decision the Governor would have accepted victory and moved on by now.
Also ignored in the interview was that, instead of saving money Gov. Walkers plan would cost the state 46 million dollars in federal funding, Under a provision of federal labor law, states risk losing federal funds should they eliminate "collective bargaining rights" that existed at the time when federal assistance was first granted. The provision, known as "protective arrangements" or "Section 13C arrangements," is meant as a means of cushioning union (and even some non-union) members who, while working on local projects, are affected by federal grants.
Another fact that has been ignored is that all the states not running deficits support collective bargaining with state employees while four of five states that make it explicitly illegal are facing budget shortfalls. Sort of destroys the myth about Unions being responsible for deficits doesn't it?
Finally I haven't heard anyone point out the simple fact that the primary reasons for state employees pension plans being in trouble initially was the economic crash accrued by a combination of deregulation, primarily by the very party that has now seized control of state governments and congress, and unmitigated greed by Wall Street types or that the problem is being made worse by lay offs of state workers leaving fewer and fewer to cover pensions for retirees. If the economy is to improve employees need to be added to payrolls not laid off! Corporations, thanks largely to government bail outs are presently setting on an estimated two and a half trillion in cash that, if invested in creating American jobs, would eliminate state and federal budget deficits and create a strong economy that would increase their long term profits so why aren't they doing so?
Isn't it about time that we the people start going after the those responsible for the economic crash rather than electing them as representatives and governors?
Sincerely,
Charles Leach
Lynchburg[[In-content Ad]]
While the Governor repeatedly contended that the benefits negotiated by unions in the past were unsustainable and needed to be trashed, the fact is that the Wisconsin pension fund is not in fiscal trouble. Its managers weren't burned by subprime mortgage assets or mortgage-backed securities as the housing bubble collapsed. The fund also relies on an automated dividend system, which pays out benefits in years the system is making gains while restricting payouts in years when it takes losses. And while the pension fund had a rough year during 2008 due to stock market losses, it remains robust, both in terms of fundamental financial stability and in comparison to other state pension programs.
According to the Pew study, Wisconsin had about $77 billion in total pension liabilities in 2008. But according to that same Pew study, those liabilities were 99.67 percent "funded," giving Wisconsin one of the four-highest of such ratios in the nation. Other states had funding ratios as low as 54 percent. For comparison, expert analysts and the Government Accountability Office consider an 80 percent level to be a good benchmark for pension fund stability, while Fitch Ratings considers 70 percent adequate.According to the Pew study, Wisconsin had about $77 billion in total pension liabilities in 2008. But according to that same Pew study, those liabilities were 99.67 percent "funded," giving Wisconsin one of the four-highest of such ratios in the nation. Other states had funding ratios as low as 54 percent. For comparison, expert analysts and the Government Accountability Office consider an 80 percent level to be a good benchmark for pension fund stability, while Fitch Ratings considers 70 percent adequate.
If this was about closing the state budget deficit rather than about busting the major contributor to democratic candidates while the floodgates for corporate contributions to Republican candidates remain wide open thanks to the Supreme courts decision the Governor would have accepted victory and moved on by now.
Also ignored in the interview was that, instead of saving money Gov. Walkers plan would cost the state 46 million dollars in federal funding, Under a provision of federal labor law, states risk losing federal funds should they eliminate "collective bargaining rights" that existed at the time when federal assistance was first granted. The provision, known as "protective arrangements" or "Section 13C arrangements," is meant as a means of cushioning union (and even some non-union) members who, while working on local projects, are affected by federal grants.
Another fact that has been ignored is that all the states not running deficits support collective bargaining with state employees while four of five states that make it explicitly illegal are facing budget shortfalls. Sort of destroys the myth about Unions being responsible for deficits doesn't it?
Finally I haven't heard anyone point out the simple fact that the primary reasons for state employees pension plans being in trouble initially was the economic crash accrued by a combination of deregulation, primarily by the very party that has now seized control of state governments and congress, and unmitigated greed by Wall Street types or that the problem is being made worse by lay offs of state workers leaving fewer and fewer to cover pensions for retirees. If the economy is to improve employees need to be added to payrolls not laid off! Corporations, thanks largely to government bail outs are presently setting on an estimated two and a half trillion in cash that, if invested in creating American jobs, would eliminate state and federal budget deficits and create a strong economy that would increase their long term profits so why aren't they doing so?
Isn't it about time that we the people start going after the those responsible for the economic crash rather than electing them as representatives and governors?
Sincerely,
Charles Leach
Lynchburg[[In-content Ad]]