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Wisconsin Myths and Facts
Rent-seeking spin vs. the truth


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With all the interests, political grandstanding, and cheap punditry surrounding the union demonstrations in Wisconsin, it’s no surprise that a mythology has developed around Gov. Scott Walker’s proposals. Here are some of the most common myths being propagated, and the countervailing facts.

MYTH: Wisconsin is not actually facing a deficit. Rachel Maddow on her February 17 show said, “Despite what you may have heard about Wisconsin’s finances, the state is on track to have a budget surplus this year. I am not kidding.”

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FACT: Maddow wasn’t kidding, but she was wrong. She evidently derived her conclusion by reading to page 2 of a poorly structured report from the Wisconsin Legislative Fiscal Bureau. Page 2 does indeed show a $57 million net balance for Wisconsin on June 30 of this year. But that doesn’t account for several other commitments, including Medicaid shortfalls, unpaid bills, and debts to Minnesota, which are spelled out later in the document. The governor of Wisconsin accounted for these in deriving his deficit figures.
 

MYTH: Wisconsin’s budget shortfalls are not dire.

FACT: The state is currently projected to face a $3.6 billion deficit in 2013. In FY 2010, Wisconsin took in approximately $12.7 billion in taxes. So — depending on income and tax levels in the next two years, obviously — that means deficits between 25 and 30 percent of Wisconsin tax revenue by 2013.
 

MYTH: “This is not about the budget deficit.” Liberals say that Walker’s proposals can’t really be about the budget because he is also restricting bargaining rights more generally over the long term. Therefore, Walker doesn’t really care about budgets — he’s performing a power grab for power’s sake, QED. This is the theme of Paul Krugman’s latest column, which several protesters have echoed on video.

FACT: Even though restricting bargaining rights over the long term won’t do anything to reduce the deficit immediately, public-sector unions will become more expensive the more political power they have — they, like everybody else, seek greater pay and benefits using the means available to them. So restricting public-sector unions’ political and bargaining power is obviously a component of restoring sanity to the budget in the long term. Krugman’s distinction of the power issue and the budget issue is without a difference.
 

MYTH: Walker caused the budget shortfall.

FACT: This claim is usually based off of the fact that Walker and the Republican government have enacted corporate-tax cuts. But those cuts haven’t gone into effect yet, so they aren’t responsible for this year’s deficit. And for the future, the state of Wisconsin predicts that the tax breaks will actually increase revenue by stimulating more business in Wisconsin. Liberals may dispute this economic reasoning. But they can’t claim the tax cut is part of current fiscal woes.

MYTH: Walker, if he succeeds, will make Wisconsin peculiarly hard on its employees.

FACT: The governor proposes that public employees contribute 12.6 percent of the cost of their health care. That is still less than half of the national average. He proposes that they pay less than 6 percent of their earnings toward their pensions — that is in line with the national average.
 



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