by Linda Beale
Misleading tax and spend rhetoric–public worker “overcompensation” and “too-high pensions”
crossposted with Ataxingmatter
In my earlier ataxingmatter post on how tax rhetoric is used in political campaigning and think tank propaganda, I noted that our nation is threatened by an epidemic of misleading tax rhetoric. The GOP for four decades has made tax cuts its primary (if not only) answer to every problem, as well as its first-choice tool to achieve their proclaimed goal of decreasing the size of government. (I say “proclaimed” since they are notorious, when in office, of actually increasing the size of government by significant increments while cutting revenues through tax changes especially favorable to corporations and the wealthy.)
The advent of the tea party, sponsored in large part by groups run by GOP operatives such as Dick Armey and Karl Rove with lots of corporate funding, has obfuscated matters even further. We are all familiar with the irony of tea partiers decrying government activities and federal taxes as evil while chanting that the government should “stay out of” their federally administered and tax-funded Medicare benefits.
But one of the most noxious forms in which the anti-government, anti-tax screed has thrived is the anti-public servant rhetoric, which suggests that taxes are wasted when they pay decent wages to government employees, which seem to be uniformly assumed to be corrupt and lazy bums who do nothing to deserve their pay, and that pensions for public employees are just another form of welfare entitlements that should be cut in half so that taxes don’t need to be raised on wealthy constituents–whether in the form of the graduated income tax much needed in Michigan or allowing the Bush cuts for the rich to expire as the GOP scheduled them to do without enacting a new tax cut to duplicate them.
The problem with that rhetoric, as I noted in the last post, is at root a misrepresentation of the bargain between employer and employee. Public employees by and large are paid less than they could be in private positions requiring similar competencies. I pulled in about $300,000 my last year at a Wall Street law firm associate, but I left because I wanted to teach–at a significantly lower salary–at a public law school. That story is repeated endlessly for public employees, whether at educational or research institutions, regulatory agencies, high or low level bureaucrats. Part of the way that has been made possible is through collective bargaining–many public employees are unionized and have bargained for decent –not extravagant but decent–pension and health care benefits, in part to make up for the acceptance of lower salaries than they might earn in the private sector.
Yet the rhetoric continues, apparently because those on the right with a ready media voice (either as journalists or think tank operatives) have found that it triggers an expected negative response in the public at large that hears only the fact that government employees have decent pensions that have been underfunded and so will cost taxpayers now to fund them, and fails to hear the other side. That side would include the relentless attack on workers and unions carried out by the likes of the U.S. Chamber of Commerce and the National Association of Manufacturers. Unions are depicted as uberpowerful and a cause of all the problems that businesses face because of demanding too-high wages, when in fact the problem is the uberpowerful employers that have retained productivity gains for themselves and left workers’ wages to stagnate or decline. What the rhetoric about pensions and taxation glosses over is the fact that many private sector employers could and should have funded similarly decent pensions for their workers out of the substantial profits they’ve made from gains in worker productivity, but they didn’t do so. Or that others promised to pay decent pensions and got workers to work for less salary than they would otherwise have done, and then through acquisitions and restructurings used the employer-friendly laws to renege on those promises and keep all the profits for managers and owners. Or that the laws, beginning with Taft-Hartley labor “reform” and continuing with the refusal of Congress to let union formation have a level playing field (through the refusal to enact a card act, through allowing employers like Wal-Mart have unilateral access to workers to disseminate employer-friendly views about unions, etc.) have consistently weakened the ability of workers to form unions to fight for better pension and health care through the collective bargaining process.
For more on the issue of public sector employees and whether they are overpaid, and David Brooks’ complaint that unions are to blame, see Mark Thoma’s excerpts from Dean Baker’s response, at Are Public Sector Workers and David Brooks Overpaid?, Economist’s View, Oct. 14, 2010, which references John Schmitt, The Wage Penalty for State and Local Government Employees, Center for Economic and Policy Research, May 2010 (noting that some conservatives blame public employee pay for the strain facing local government budgets, rather than acknowleding the recession and the lower tax revenues/higher social service needs that are the real cause).
Ultimately, the rhetoric around cutting public employee pension benefits and pay in order to cut taxes or continue existing tax policy benefitting taxpayers generally or the better-off especially is similar to the rhetoric around privatization of Social Security. The argument is that some unworthy group is getting an “entitlement” at the cost of ordinary taxpayers, and that ordinary taxpayers should get angry over it and make sure that those people’s entitlements are cut before they are taxed another dime. The problem with the argument, both in the case of Social Security and in the case of public employee pay and pensions, is that (i) those who receive the benefits have already paid for them and (ii) taxpayers should get angry instead at the politicians who constantly tell them that every problem can be solved by cutting taxes (especially for the rich) even more than already done.