Real World Impact of Crappy Journalism

From David Cay Johnston at

When it comes to improving public understanding of tax policy, nothing has been more troubling than the deeply flawed coverage of the Wisconsin state employees' fight over collective bargaining.

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…

The collective bargaining agreements for prosecutors, cops and scientists are all on-line

Reporters should sit down, get a cup of coffee and read them. And then they could take what they learn, and what the state website says about fringe benefits, to Gov. Walker and challenge his assumptions.

1 thought on “Real World Impact of Crappy Journalism

  1. Jim Caserta

    To the extent that pensions are fully-funded, Johnston is correct. The problem is that many states have not been fully-funding their plans – Illinois has been putting in 60% of what was needed the past 5 years. When a plan is not fully-funded, you end up with a transfer at some point, or a decrease in benefits. Wisconsin’s plan is one of the 5 best funded and they had been putting plenty in, even now. So there is not big transfer looming, but there has been money going out each year. Either way, it’s somewhat ironic that Wisconsin is where this battle is taking place.
    I also disagree with his example on costs. Wisconsin probably has the best plan in the country, so the 0.3% cost is a lower-bound. The 1% he quotes is pretty much an upper-bound for the cost of mutual funds in a 401k. I am in Vanguard funds which are 0.15% costs.


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