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Words from Winterbilt

The Problem with Public Employee Unions is….

Shannon Bohrer

(May, 2011) Lately there has been a lot of news about public employee unions and the need for reform of these unions because of the deficits in municipal, local, state and federal governments. The PEA party (People for Ethical America) must have been asleep because we thought the deficits were directly caused by a financial meltdown, the one where our government bailed out the banks. It was our opinion that the recession was responsible for the deficits, we were not aware that it was the public employees that were taking us broke. It is just amazing what you can learn when you watch television!

"It used to be that public employees were underpaid and over-benefited. Now they are over-benefited and overpaid compared to their private-sector counterparts."

Governor Tim Pawlenty of Minnesota

The argument is that if we allow the public employee unions to exist, they will eventually take us broke. These unions have direct access to the elected officials that pass laws. The direct access results in higher salaries, benefits and pensions. It has been reported that they are higher than private industry. This is why the public employees make so much money. This is amazing that we are just now coming to the realization and we really need to address this issue.

"Average government workers are now making $30,000 a year more than the average private-sector worker." Former Governor Mitt Romney of Massachusetts

Our local state and federal governments cannot continue in this direction. If public employees have access to our elected officials, who else could have access? What would happen if big business, oil companies and financial industries had access to our elected officials? Wait a minute, they do have access, but does their access relate to bloated salaries? The government does not regulate salaries of private industry, so access to government by private industry does what?

In the oil companies (and this was a surprise to me), their access gives them subsidies - can you believe it? The subsidies are in the form of nine different tax breaks, written just for oil and gas companies. The oil company subsidies amount to 45 billion (that’s right – 45 billion) over the last 10 years. During that same time period, the last decade, the big five oil companies made about 1 trillion (that’s right) 1 trillion in profit. The argument in congress is that the oil companies need the subsidies and without them oil production would slow down…. I think the argument is weak. In fact energy production in all areas has been up for the last two years. What’s really amazing is that one oil company has made industry record profits for the last two years. After we tackle the public union problems maybe we should look at the access the oil industry has, just maybe. If we don’t - how far will they go?

After doing extensive research on the oil companies (about 10 minutes on Google) I did some research on the financial industry, specifically Hedge Funds. I did know what a Hedge fund was, but I had heard on the radio that Hedge fund managers only pay 15 percent on their income tax because it is capital gains. You may recall that Warren Buffet (the investor and one of the richest persons in America) testified that he had a lower tax rate than his secretary, because his income came from capital gains. It turns out that if you invest your own money in something and earn, say, a million dollars, you only have to pay 15 percent in taxes. I don’t know why, but I would say it has something to do with the financial industry having access to our elected officials – just a wild guess.

In 2010, the top 25 Hedge fund managers made 25 billion in income (not millions, but billions) and one manager made over 4 billion – and they all paid 15 percent in taxes? I did find this a little confusing. You see capital gains tax of 15 percent is for capital gains and capital gains is money you make from investing your money. The confusing part is that Hedge fund managers are investing other peoples money and yet they only pay the 15 percent? My intuition tells me that the Hedge Fund managers also have access to our elected officials. If the PEA party can find this out in 15 or 20 minutes on the internet, who else has access to our public officials and what is this costing us?

I do wonder what the oil and financial industry have done with all that money. The oil industry is always running advertisements on television about how safe drilling is and how many jobs the industry provides. Forty five billion dollars should provide a lot of jobs, and there might be enough left over to pay for the television advertising. I do not ever remember seeing an advertisement for Hedge funds. The extra money they make by only paying 15 percent in taxes probably goes to bonuses. After all, without paying bonuses you can not keep the best and brightest…. Of course you can always donate to your favorite political campaign….

Having done some additional research on the issues, because of being a little more than slightly confused I found a briefing paper on "Debunking the Myth of the Overcompensated Public Employee," by Jeffrey Keefe. The research was done by the Economic Policy Institute in Washington, D.C. According to the paper, government workers are actually paid less than private workers, by about $6,000. Not only are they paid less, the government worker is better educated, 54 percent having a college degree. If we do not stop the influence that public employee unions have on our elected officials, the public employees will soon make as much as their counter parts in private industry. Of course if their counterparts in private industry also continue to have influence with our elected officials, they can stay ahead of the public employees - with subsidies and tax breaks, I think?

In general, the art of government consists of taking as much money as possible from one part of the citizens to give to the other. Voltaire (1764)

As the official spokesperson for the PEA party, I must admit that both members are a little confused. We agree that too much influence with elected officials can have negative consequences. Then again it is written, "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

The PEA party’s official position is that access to elected officials is not the problem. It seems that everyone who has access to the elected officials’ benefits – except those of us who do not have access – we think.

Read other articles by Shannon Bohrer