Monday, February 13, 2012

Scott Walker's Expensive Entitlements

Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.
Elizabeth DiNovella, who had been covering CPAC (Conservatives Planning Absolute Corporatism) and writing about it at Dane 101, also gutted it out by listening to Scott Walker's address to the convention. In her piece, she quoted Walker's take on collective bargaining:
“Collective bargaining is not a right. Collective bargaining in the public sector is an expensive entitlement,” he said. This line got the biggest applause of the night.
When I read that, I damn near did a spit take on my monitor.

There is so much wrong with that short blurb that it will never be right.

Collective bargaining is a right, and that right might very well be extended into the public sector, as I wrote about nearly a year ago:
The ruling by U.S. District Judge Ronald Guzman affirms that collective bargaining rights cannot be overturned by governmental edict. Guzman told the Legislature “it had no business trying to interfere with collective bargaining” according to Marvin Gittler, an attorney representing Local 727 of the Teamsters.

Guzman held that the National Labor Relations Act preempts the Legislature from dictating terms for unions working at McCormick Place. This ruling is similar to the finding of The International Commission for Labor Rights, which has said, in part: The ICLR identified the right of "freedom of association" as a fundamental right and affirmed that the right to collective bargaining is an essential element of freedom of association. These rights, which have been recognized worldwide, provide a brake on unchecked corporate or state power.
Now, before anyone points out that the NLRA is for private sector unions, read on:
While the NLRA covered US employees in private employment, the law protecting collective bargaining in both the public and private sectors has developed since 1935 to cover all workers "without distinction."
The other problem with Walker's false statement is what he is calling an "expensive entitlement." He's saying that the people of Wisconsin no longer should be afforded things like weekends off, not having their kids working in sweat shops, eight hour work days, forty hour work weeks, holidays off, living wages, vacations, equality in the work place or safe working conditions.

In other words, he wants to weaken the unions, both private and public, to help maximize the profits of the corporate interests who have been funding his campaigns and who, he hopes, will buy him the Presidency of the United States.

But it doesn't end there, gentle reader.

Walker has also been bantering about the phrase "legacy costs," which is something he started in Milwaukee County, with the aid of the plutocrats at the Greater Milwaukee Committee, an old boys (and girls) club for Milwaukee's wealthiest people, who see Milwaukee has their toy thing.

By "legacy costs," Walker is speaking about health care insurance and pensions.

Health care costs are through the roof, especially in Southeast Wisconsin, which has one of the highest rates, if not the highest, in the nation. And workers should carry their fair share of the costs. But when CEOs of insurance companies and health care agencies are getting compensated in the millions of dollars, there is an obvious problem which needs to be addressed.

Of course, it is Walker and his ilk that are opposed to fixing the system. Guess who are big donors to their campaigns.

It should be noted that Walker, if the reader will remember, was swept in as Milwaukee County Executive on the heels of a pension scandal enacted by his predecessor, Tom Ament. The gist of the scandal is that it provided a super enhancer to the pension of people that had been with the county for a long time. It also included a generous backdrop that would allow retirees to take a large lump sum at the time of retirement and a smaller monthly pension payment. Some county employees walked away with a million dollars when they retired. Ironically, most of these big money beneficiaries were non-represented employees. That means Walker could have stopped it at any time, but chose not to.

But of course he didn't want to stop these payments. One, it was a great political hammer to wield. Every time Walker was caught with a budget problem (which he usually contrived), he'd just blame the pension scandal, regardless of how long ago it was. Secondly, he was appointing most of his cronies to these positions and wanted to make sure they were rewarded. (Here's food for thought, Darlene Wink, who was convicted of only misdemeanors, is eligible for her pension.)

Oddly, the pension fund, pre-Walker was sufficient that it could have covered the enhanced pension pay outs. However, the two recessions during the Bush/Cheney administration took a big bite out of it, like it did for most people. Unlike the people that had 401(k)s, the public sector had their pensions protected for the most part.

In spite of the need for Milwaukee County to contribute to the pension fund for the first time in years, Walker, as county executive, chose to short change what the county owed to the fund and instead use it to reward campaign donors with sweetheart contracts. By shorting the payments to the fund, Walker only exacerbated the situation. It would be much akin to not making the minimum payment on a credit card. Not only do you still owe the balance, and the next payment, they add on fees and interest to make the next payment exponentially bigger.

To deal with this self-constructed problem, Walker tried to get a pension obligation plan pushed through. The wheeler and dealer behind this plan was a man name Nick Hurtgen, a GOP operative who eventually got busted himself in a kickback scheme. Fortunately, the County Board preempted Walker's move by making it a referendum question which the voters killed.

Walker did give Hurtgen a $300,000 contract to restructure the county's debt. In return, Hurtgen gave Walker a $25,000 campaign fundraiser.

Now Walker wants to convert the state's pension system, which is a defined benefit system and is fully funded and in good shape per all reports, into a defined contribution system. (They are looking at trying to do the same thing in Milwaukee County, even though there is no proven need for it.)

This is, as you might suspect, preposterous.

First of all, as I mentioned above, the pension system is fully funded and not a problem for tax payers.

Secondly, Walker can't complain about expenses, since his forcing public sector workers to "pay more" for their pensions is nothing more than a scam, since public sector workers are already paying 100% into their pensions:
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.
By implementing Act 10, Walker is docking the workers' paychecks, because he can, and diverting the money.

But that diversion isn't enough for him or his campaign contributors. They want more. Hence the idea of converting, or fixing, the system, even though it's not broke or broken.

But while it might be sound like a good plan to your average squawk show listener, the reality is that it would not only stick it to the workers, but also to the taxpayers:
And governments are concerned about delivering on the promises that they have made to their citizens and to their employees as tax revenues shrink amid a weakening economy. In this environment, some have proposed replacing traditional defined benefit (DB) pensions with 401(k)-type defined contribution (DC) retirement savings plans in an effort to save money.

But decision-makers would be wise to look before they leap. To deliver the same level of retirement benefits, a DB plan can do the job at almost half the cost of a DC plan. Hence, DB plans should remain an integral part of retirement income security in an increasingly uncertain world because they offer employers and employees the best bang for the buck.
So why do it if it's not good for anyone? Well, it does benefit the fat cats on Wall Street, who in turn, reward Walker for being a good employee for them.

The real kicker of this is, as I just pointed out with the above cited passage, is that if Walker gets his way, it's going to really stick it to the people of Wisconsin.  Why? Well, in Walker's own words, in sworn testimony given before a Congressional committee:

After an unresponsive answer by Governor Walker, Kucinich pressed, “Did you answer the questions? How much money does it save, Governor?” 
“It doesn’t save any,” admitted Governor Walker. 
Kucinich then requested permission to enter into the record a letter from the State of Wisconsin’s Legislative Fiscal Bureau (page 3 specifically), a nonpartisan state budget agency that confirmed Governor Walker’s efforts had no effect on the state’s budget. 
“The Bureau was asked to identify provisions in the Governor’s bill that are non-fiscal; non-fiscal policy items that have no state fiscal effect. This letter confirms the obvious; that Governor Walker’s effort to repeal the rights of state workers is a non-fiscal policy item. No effect on the state budget shortfall,” said Kucinich.

The only expensive entitlements involved here are the ones that Walker wants to take with our money so that he may give it to his campaign contributors and cronies.

18 comments:

  1. Great post, thanks.

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  2. Great post. When any of my 'friends' asked me to tell them what was rreeeaallyy going on, I simply told them it was a pay cut. We already funded our retirement and health care through hits to our salaries. But your long explanation and the middling amount of thought required by the reader doesn't fit into a nice, pithy sound bite like "pay their fair share". Never thought I'd pine for the good old days of QEO and Tommy T.

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  3. Aaaahhhh yes, the good old days! lol

    As an outside observer I would think all things being equal public employees would want their pensions separated from govenments borrowing hands. Seems unlikely that Chicago will be able to pay out on all their pension obligations. And if you get your way, WI will be in that same finacial crisis.

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    1. I have a suggestion. Try reading the article before commenting. You'll run less chance of looking silly, like you do here. What part of fully funded pension don't you understand?

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    2. I have an Illinois pension. It is unfunded. It does not mean I do not collect my retirement. It means it comes from the taxpayers instead of from my contributions making interest as my WI fund is making. People, wake up. Funded pension through my contributions vs. unfunded taxpayer pay out.

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  4. OK, I'll bite. These are excerpts from JS:

    In March 2009, the county issued $400 million in pension obligation bonds.

    The bonds are a debt the county must repay. If by investing the borrowed money the county can reach its goal of an 8 percent return, it could save an estimated $237 million in pension contributions over 25 years. But if the investments don’t earn at least 6.19 percent, the county could wind up paying extra.

    And one from Owen:
    If I were a Milwaukee County employee who was counting on that pension for my retirement, I’d be clamoring to have it converted to a 401(k) or something ASAP. At least then, I’d have some control over it. Right now, if you are a county employee, you are counting on the collective intelligence and good will of the county board to keep it solvent. That should be enough to worry anyone.

    I am just saying I agree with Owen.

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    1. OF course you would. He doesn't know what he's talking about either. But maybe if I reproduce what I wrote in the post, you'll be able to read that much:

      In spite of the need for Milwaukee County to contribute to the pension fund for the first time in years, Walker, as county executive, chose to short change what the county owed to the fund and instead use it to reward campaign donors with sweetheart contracts. By shorting the payments to the fund, Walker only exasperated the situation. It would be much akin to not making the minimum payment on a credit card. Not only do you still owe the balance, and the next payment, they add on fees and interest to make the next payment exponentially bigger.

      To deal with this self-constructed problem, Walker tried to get a pension obligation plan pushed through. The wheeler and dealer behind this plan was a man name Nick Hurtgen, a GOP operative who eventually got busted himself in a kickback scheme. Fortunately, the County Board preempted Walker's move by making it a referendum question which the voters killed.


      In other words, it wasn't the pension that was the problem, but Walker's dishonest and poor budgeting skills.

      Try to be honest and not blame Walker's victims for Walker's misdeeds.

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  5. OK then, lets agree then that the pension was poorly budgeted without going into reasons why. It re-inforces Owens theory that it might be beneficial to be free of the constantly changing government. I think the same for health care, insane hey?

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  6. I think all county employees should volunteer, thus working for free, but then get "contractually obligated bonuses" instead.

    Does anybody know anything else about the Morse issue in Bice's column?

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  7. Addressed to the commenter known as "imustbeawhitesupremacist,"

    From December 2011:

    "Investors Lose Faith in Stocks as Billions Pour Out of Funds"

    http://www.cnbc.com/id/45741694/Investors_Lose_Faith_in_Stocks_as_Billions_Pour_Out_of_Funds

    Everyone in pensions already has plenty of exposure to equity markets which have almost zero transparency. 1% commands Scotty to increase that exposure, because it will help them loot it. Scotty and the duopoly does what he's told.

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    1. Again, you reinforce my point. If your money is in a matched 401k you can put your retirement into a much safer (but slower growth) fund at any time you want to yank it out of the "evil" 1%ers hands. Now, you rely on your county government to make those choices for you. Hope they do well for your sake.

      I use that name to make it easier for the mindless to attack me. Feel better?

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    2. Typical troll who can't make a valid argument to support a POV, so resorts to abusive name-calling. Have you stopped beating your spouse yet?

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  8. Walker is not interested, as has been quite clear, in saving Wisconsinites any money. He is interested only in grabbing any monies that he can -- even those like the savings fund entirely funded by public workers, Wisconsinites as well -- to give it away to his rich corporate cronies.

    Admittedly, he finally would be ponying up some of his own bucks as one of those pensioners. Isn't he already collecting on his pension as a former state legislator? And another pension as a former county worker? So he's already "triple-dipping," in JS and talk-squawker terms? (That's an incorrect use of the term, but if they use it for others still earning pay, still working for it, while receiving pensions, then he would be so, too.)

    And he will get another pension for his years as governor -- although perhaps not as many years as he thought he would have. . . .

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  9. p.s. exacerbated, not exasperated.

    Just in case you're quoted on this otherwise fine essay, as I hope that you will be.

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  10. Addressed to the commenter known as #imustbeawhitesupremacist:

    No, you clearly don't have a 401(k) and you clearly don't know anything about the markets.

    *****No one can time the markets***** At least, not over time. You may get lucky a few times, but it always catches up with you. Sure you can move your money in and out. They CHARGE you.

    You are competing with HIGH FREQUENCY TRADERS, who literally never OWN a stock or not for more than a few milliseconds. It's a technological grand canyon between the HIGH FREQUENCY TRADERS and 401(k), drones against pitch forks.

    Please tell, what are the "safe investments," of which you speak?

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    1. No, heres is reading for you on investment options within your 401k. http://www.fool.com/money/401k/401k02.htm. Although with your level of trust maybe you should consider a passbook saving or maybe a pillowcase. Seems you would rather trust the county board to invest your retirement savings.

      BTW, the way the democrats try to keep the black community reliant on government may be more supremecist than I could ever be.

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  11. Yes, please do. I want safe investments..ha mostly I do not care.for illegal Walker action. He makes democracy a joke, and I don't like that about him. He is a crook. He was a crook in his short lived college days, he was a crook at Mke snd he is still a crook. His spots just are now paid for by the Kochs. Who in their right mind would vote for a governor who admitted he was thinking about bringing in "plants" to the protests? And why for christ's sake should act 10, now 11 let him sell the power plants? And obtw Act 11 is a fiscal bill it adds a headcount as admin to the tune of 120 k so that in itself is an illegal bill.

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    1. Passbook savings pays a few percent. It is as safe as you get. Insured up to $100,000 by the chinese hopefully since they will own us soon if Obama is re elected.

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