David Cay Johnston: Some Stats Behind the Wisconsin FightFebruary 14, 2011
DYLAN: David, The AFL-CIO in Wisconsin is outraged in that state, a state where 2/3 of the corporations pay nothing in taxes and where the percentage of overall state revenue from corporations is down 50% in that state. We all know that the banks were selling fraudulent mortgages to pensions who are trying to keep up with their free-spending governors in order to keep their jobs. What are your thoughts on the situation developing right now in Wisconsin where you're got a politician trying to eliminate the ability for anybody to tell them -- anybody to resist?
DAVID: Well, Dylan, I think this is a very revealing move. You know, Aristotle taught us the tyrants first surround themselves with bodyguards who will go after anybody who challenges what they do. We shouldn’t forget that historical lesson. You know, the pensions they want to go after, they're not very big in Wisconsin. I just calculated the numbers. The average Wisconsin state employee gets $24,500 a year. That's not a very big pension. The state pension plan, 15% of the money going into it each year is being paid out to Wall Street to manage the money. That's a really huge high percentage to pay out to Wall Street to manage the money. And what I think is going on here is this is the state as we began where public employee unions were first by law allowed, and if this governor can break these unions then you're going to see this happen all across the country and further drive down wages. And if you can drive down wages in the public sector, it means private employers can drive down wages in the private sector.
DYLAN: And if you were to contextualize the rating of the pensions with the trillion dollar vampires that are off foot in this country from defense to energy to banking, who do you hold responsible -- how responsible, for instance, is the media for failing to hold the politicians' feet to the fire on the trillion dollar vampires and instead chasing the little ghosts and cupids that are set out of Facebook by leftists and rightists around the world?
DAVID: Well, you know, Dylan, it is terrible that most journalists went into the business to tell stories and they don’t know how to count because the numbers here are quite compelling. And you know, Wisconsin, if you go to GoodJobsFirst.org subsidy watch, you can see the tens and tens of millions of dollars over the years Wisconsin taxpayers have been forced to pay to give to corporations, to everybody from SC Johnson and Company in Racine to Harley-Davidson to various cheese companies that is massive amount of taxpayer gifts going to businesses instead of their competing in the marketplace. So this should be very, very troubling to people, but it's this notion that -- you're going to -- the first thing you announces, "I'm going to call out the National Guard." Well, first of all, do you understand a lot of the National Guard are people who are schoolteachers and public health nurses and judges and it's going to call them out on themselves.
DYLAN: I mean -- I'm almost at a loss for words because it's --
DAVID: It is -- I mean what we're doing here in the coverage of the story unfortunately, Dylan, is this. This is -- there may be an issue. Perhaps the pensions are too lucrative in Wisconsin. I don’t know the system they're wound up but $24,500 a year doesn’t suggest to me that this is some overly lavish program. But compared to the other problems that we have in our economy, compared to what the bankers on Wall Street have done where there hasn’t been a single -- single conviction and virtually no indictments of any kind compared to more than a thousand --
DYLAN: Not to mention no reform and they're still taking money out.
DAVID: -- convictions in the much, much smaller S&L crisis 20 years ago compared to the huge fees that are being sucked out of taxpayers' pockets by the Wall Street investment firms, by contractors who generally cost taxpayers twice as much per worker as civil service. This is minor stuff, and I think this is really part of a larger attack in which it's rather clear that a number of people in this country have decided that we are going to be poorer in the future. And so they are getting in a position of driving down the wages of ordinary people, even people with college degrees here, working people to protect the fortunes of the already rich instead of focusing and creating new fortunes.
DYLAN: And do you think people even understand how many subsidies these businesses -- how this businesses that claim to be compadres are actually leeches on the taxpayer whether it's the banks or some cheese company in Wisconsin?
DAVID: Oh, no, not at all. In fact, you mentioned that 2/3 of the companies in Wisconsin are not paying any corporate income tax. That's mostly the big companies. It's the mom-and-pop operations who actually tend to pay state income taxes. Wisconsin at one point had a giveaway program to Hollywood when they made the movie Public Enemies with Johnny Depp. For every dollar that they said they spent in Wisconsin they get 92 cents back from the government. Think about that, 92 cents from the taxpayers for every dollar that you spent. What an incredible giveaway program but almost nobody in the public knows this. Very few people understand what they hear is, "It's welfare." Of course, we don’t have welfare like we used to have. It's this public employee means. And by the way, the public employees here negotiated with contracts to take less cash pay and have money put into the retirement plans so when they're old age they wouldn’t be starving. So what the governor is really doing here is unilaterally trying to cut their wages. He was talking about the taxpayers' contribution. This is money that the workers could have said, "We don’t want a pension. We're going to take it all in cash today." It would be the same amount of money.
DYLAN: Can you compare the knee-jerk response from the governor of Wisconsin to unleash the National Guard on protesters who want to protest even in the context of everything we've just described with the Egyptian government's use of its own military?
DAVID: Oh, I think in that it's severe, but I noticed today, I went to a number of websites in Wisconsin where people referred to Governor Mubarak and things like that. But this is without presses and remember -- let's remember what governors in the south did when they wanted to soften people up. They used the National Guard to keep Black children out of schools, to keep workers from organizing. There's a long history of this use of force rather than dealing with the democratic process as a society. And this guy right out of the box, the governor, Scott Walker, was previously the Milwaukee County executive and he makes much of the fact that he hasn’t raised property tax rate. That's true, but at the end of his years in office county finances were in a terrible mess. So he didn’t really improve anything. He just held down taxes while things deteriorated and pushed off into the future, cost that will be even higher because they weren’t taken care of in a timely fashion?
DYLAN: That's called kicking the can down the road, is it not?
DAVID: That's exactly what he's doing and that's what become commonplace now for politicians. Instead of coming together and finding solutions to our problems we blame and we kick down the road. And if the voters are busy, not paying attention and the journalists are not telling them what's going on in terms of the issues, only the controversy, only who's yelling at who then people have no idea of what's really going on.
DYLAN: So is it fair to say that at the heart of the -- we know the politicians are dysfunctional. We know that a lot of the American electorate is either misinformed or ill-informed to a lot of the core issues whether it's the corporate subsidies or the trillion dollar vampires. Is it fair to lay the blame for that at the feet of the American media?
DAVID: Oh, I think a lot of the blame -- oh, absolutely. I mean as somebody who spent 40 years as a big city newspaper reporter, the last 13 I went to New York Times, I'm very, very critical of fellow journalists. I post often at the Romenesko blog for journalists about things that seem to be unethical or badly done, and without a doubt we are spending way too much time listening to what politicians say instead of looking at the numbers. One of the best examples there right now, Dylan, is today's Wall Street Journal and five other newspapers I looked at all talk about the out of control cost of social security. Social security is the best funded program the government has. It has a surplus. There is no significant financial problem with social security. Minor tweaks would address its problems. But because we keep hearing this lie, we keep hearing another lie -- the tax cuts produced more revenue, they produced less revenue, that we don’t have a revenue problem, we have a spending problem. You know Obama's budget? He just put forward smaller than the previous budget. Smaller.
DYLAN: But revenue is off a cliff.
DAVID: Well, revenue has come up because the economy is improving, but if you go back, say, 10 years along for a time revenue has fallen significantly and it's fallen even though the population keeps growing which should be really troubling us that he population is growing so that we are literally to use Grover Norquist's phrase "starving the beast," starving the government, and in Wisconsin you want to go after schoolteachers what you are really saying as a politician if I want my state to be poorer in the future because I don’t want my children to be able to compete in the world economy. I don’t want them to be able to add up, divide, subtract, do algebra, understand science and engineering concepts, as well as the children who are going to school in China and Korea and Japan and Australia and Canada and everywhere else.
DYLAN: David, it is always a pleasure. May the information that is the truth about the corruption that is pervasive in American corporate culture, the tax subsidies, meanwhile the abuse on the teachers, judges, and the poor in this country be heard from coast to coast so that we can actually move against it. And if we have to move against the American media in the process so be it but hopefully they will get hip to what is actually going on. David, it's an absolute pleasure to get some more time with you.
David Cay Johnston, professor of law and business at Syracuse. As you heard, you can check him out on Romenesko, also on Tax.com. We'll talk to you next time. Thank you so much, David.
DAVID: Thank you, Dylan.
DYLAN: And thank you all for joining us for yet another episode of Radio Free Dylan. If you like what you hear, share it with your friends. This is an effort that all of us as central to and the effort that I'm referring to is the sharing of the truth and information among each other and with each other so that we can actually mobilize, organize, and end the culture of corruption that is rotting our country from the top down and destroying the lives of the most vulnerable in our country in the process.
I am Dylan Ratigan and I look forward to talking to you next time.