I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Monday, July 27, 2015

Paul @Mulshine Digs Himself an Even Deeper Hole

As I blogged yesterday, the Star-Ledger's libertarian curmudgeon, Paul Mulshine, clearly misquoted Steve Wollmer, an NJEA spokesman, in a column about pension funding. Mulshine said he pressed Wollmer to name ways to raise the revenue needed for New Jersey to makes its pension payments. Here's how Mulshine characterized Wollmer's answer:
I asked Wollmer what level of new taxes or spending cuts could make this pig fly, or at least put lipstick on it.  
"Everyone talks about the millionaires'  tax," he said. "That's $700 million a year." 
Sounds good, but that's just a fraction of the $4.3  billion annual payment recommended by actuaries. 
Other than that, Wollmer couldn't come up with  any suggestions for big-ticket revenue-raisers. Instead he reiterated the line the union's been pushing to avoid that question. [all emphases following are mine]
Except this just wasn't true. Fellow teacher-blogger Ani McHugh recounted that Wollmer had, in fact, given several other ideas for raising revenue; Mulshine just chose to pretend that he hadn't. Further, when Mulshine was confronted on his omission in the comments under his piece at NJ.com, he all but admitted Wollmer had come up with other ideas, but Mulshine didn't report them because he thought they were "silly."

Mulshine can characterize Wollmer's ideas however he wants; what he's not allowed to do is say Wollmer didn't have any other ideas. He clearly mischaracterized Wollmer in his piece, and when caught tried to weasel out of issuing a correction.

Well, I guess Ani and I and the NJEA put enough heat on Mulshine that he had to admit he had not played it straight. Because Mulshine has a new piece out today where he once again all but admits he did not portray Wollmer's words accurately. But rather than step up and take responsibility like a professional journalist, it looks like Crazy Uncle Paul is, instead, doubling down on his teacher bashing rhetoric:
I invited Wollmer to give me a menu of tax hikes that could generate that $4.3 billion. Instead he gave me a quote about how the situation had been building up for a long time and could not be solved immediately. 
True enough. But that doesn't solve the problem of raising the revenue to fund pensions that the state plainly cannot afford. 
During the conversation we discussed raising the gas tax...
Oh, so once again Paul, you admit that Wollmer did come up with other suggestions! So where's your correction? Where's your apology to Wollmer? Where's your apology to your readers?

You know, I'm just a lowly blogger, but when I screw up, I man up. I keep my ego in check enough to admit I'm human and I make mistakes. But this never seems to happen at the Star-Ledger's op-ed page. Instead, columnists like Mulshine just dig in their heels and bring on the teacher hating:
During the conversation we discussed raising the gas tax, but I noted that the Transportation Trust Fund is broke.  Everyone familiar with the state budget knows that this and prior administrations  borrowed so much money for past transit projects that even a fairly large gas-tax hike, say 15 cents a gallon, would not be sufficient to bring the trust fund back into balance. 
Furthermore the gas tax is constitutionally dedicated to transportation. 
So I was shocked when I read that blog post and read this rather amazing assertion by Wollmer: 
The union wants to raise the gas tax to fund pensions. 
Seriously. I'm not kidding. 
Here's that pro-NJEA blogger's [Ani McHugh's] own account of the interview (italics mine): 
"During that conversation, when Mulshine asked how NJ could come up with the money to fund the pension system, Wollmer says he suggested a corporate excise tax, a gasoline tax, an end to Christie's muti-billion dollar tax credit giveaways for zero job creation, and a millionaire's tax–but It seems that Mulshine ignored all but Wollmer's final suggestion."
If, lord help you, you decide to click through and read Mulshine's screed, you'll notice he does not ever discuss that Wollmer also called for an end to Christie's tax giveaways and a corporate tax. By any reasonable journalistic standard, Mulshine did not accurately reflect Wollmer's words in his original column. Mulshine stills owes a correction, plain and simple, without all the anti-teacher garbage he flings around in this piece.

Before I get to that crap, let's talk a little about the gas tax. Yes, it's constitutionally dedicated to transportation -- but it's not the only tax that is. According to the NJ Transportation Trust Fund Authority, the constitution requires $200 million of the general sales tax also be dedicated to transportation.

Actually, in 2014, $354 million was allocated from the general sales tax to transportation, and $517 million is projected to be allocated in 2015. If we raised the gas tax so that it collected commensurate revenues, those general sales tax funds could, conceivably, be used to fund the pensions. Granted, that might take a constitutional amendment, but so what? It's still possible, and potentially a big chunk of change.

According to the Authority, $531 million was raised on a gas tax of 10.5 cents per gallon (13.5 cents for diesel). According to the T@x Foundation*, New Jersey has the 48th lowest state gas taxes in the nation. If we doubled the excise tax on gas to 21 cents, we would be right at the median for all states in total fuel taxes. That would mean more than half-a-billion dollars in extra revenue.

Now, you might disagree that any of this should go to pensions; that's fine. But you can't deny it is a significant source of revenue, and even if it required a constitutional amendment it is a viable idea. But Mulshine wants it off the table immediately. Why? Because, lord help us all, sometimes teachers move after they retire:
If we are to believe the author [McHugh], the union is actually suggesting that the revenue from a gas tax should go not to repair our roads, with their tire-swallowing potholes, or to help keep down NJ Transit fares, which were just raised once again. 
They don't want the revenue  to go to people here in the state who desperately need the services. 
They want it to go to people who may have retired to North Carolina and Florida.
What a stupid argument. Would it be better, Paul, if pensions only went to teachers who stay in New Jersey? Should we pass a law that requires teachers to stay here after they've worked for years, made their mandatory payments into the pension, and then retired?

Nobody denies this state needs to fund transportation. But since when has any state been able to back away from its debt payments simply because it has other spending priorities yet refuses to raise revenues to pay for them

Mulshine made a snarky comment below his previous column about retired teachers sitting by pools in Florida sipping margaritas. Guess what, doofus -- that's part of retirement, and there's nothing wrong with it. It's not like we can spend the day surfing and drinking beer and then write about it for a dying newspaper; we work, and our pensions are part of what we are paid for that work.

Pensions are part of the total compensation owed to teachers for work they have already done. They aren't bonuses that can be taken away on a whim; they are payment for services already rendered. The notion that the taxpayer pays for public employee pensions is wrong: every public employee pays for 100 percent of his or her** pension, because it is compensation for work they have already done.

As wrong as the last NJ Supreme Court decision was, even they reaffirmed that the state will not be able to walk away from this obligation. But Mulshine wants to try to frame it like the pensions are some sort of a gift that was granted for political favors. That's why he's always going on about the political connections of the NJEA, or retirees living out of state, or some such similar nonsense.

That's why Mulshine avoids mentioning the average annual allowance on the pension is $40K, as if that is some outrageous sum. It's why he won't acknowledge that New Jersey's pensions are already some of the stingiest in the nation, or that teachers are modestly paid compared to similarly educated workers.

Mulshine dares the NJEA to push for a constitutional amendment to fund the pensions and use a higher gas tax to help pay for it. But I've got a dare for him: go ahead and continue to let the wealthy and the corporations enjoy their tax gifts, and let the pension funds run dry. See what happens then, Paul. See if anyone ever works as a public employee in this state again. See if Wall Street ever trusts this state. See if the federal courts let the state get away with reneging on its obligations.

Yahoos like Paul Mulshine are enabling a very dangerous mindset for this state. But what does he care? He'll probably move to Florida when things get rough.

Paul Mulshine (artist's conception)

* "T@x Foundation"? From the early days of this blog...

** As I've noted before: the War on Teacher Pensions is a War on Women.

Do you think that "sipping margaritas by the pool" comment was directed equally at men? If so, you're incredibly naive. Part of the War on Teachers has been an undercurrent notion that women don't really need stable retirements, because their men will take care of the little darlings. 

Back in the day, when a teacher dared to tell Chris Christie she wasn't making a lot of money, he told her "well, you know what, you don't have to do it." As if working was, for women, an option -- something fun to pass the time and make a little pocket change before getting back to the house and starting dinner before Daddy gets home.

Oh, yes, I know, I am so completely off the rails here. Obviously this obsession with "overpaid" teachers has nothing to do with the fact that three-quarters of the profession is women. It couldn't possibly be the case that tools like Mulshine and Christie feel free to take their swipes because, after all, it's only the gals...


Dave said...
This comment has been removed by the author.
Dave said...

10 years ago, we sometimes had conversations starting out, "Can you believe what Mulshine said?"

Now, if he even came up in discussion, most would say, "Who's Mulshine?".

Almost certainly, you have far more readers than he does. For many of your readers, this will be an introduction to the weirdness of Moron Mulshine. I only call him that because he actually calls people that, regularly, in his column.

Thanks for this post about the legend (in his own mind).

Duke said...

Hi Dave,

Followers on Twitter:

@Mulshine: 1,036

@jerseyjazzman: 4,727

Just saying... ;-)

Thanks for reading.

StateAidGuy said...

It's disturbing that Paul Mulshine would totally mischaracterize a conversation like that, but I share Mulshine's belief that it is unrealistic for NJ to make the full actuarial payment.

1. Subsidies

You talk about cutting corporate subsidies, but most of these subsidies to retain businesses or induce them to relocate to NJ, which is something that can pay off with taxes since the employees still pay state and local taxes, even if the corporation’s taxes are reduced. The subsidies are really tax subsidies anyway on future earnings, so if NJ stopped giving $2 billion of these subsidies it’s not like NJ’s treasury would have another $2 billion to spend. Sure, sometimes these subsidies go to companies that were bluffing about leaving NJ, but not all threats to leave are bluffs, and sometimes businesses really would depart if not granted the subsidies.

Also, sometimes these subsidies have real merit. I know that the developers who fix up buildings in downtown Newark get a lot of state subsidies. Since a refurbished historic building has so many positive externalities isn’t this something the state should support?
Even the notorious (among liberal edubloggers) Revel subsidy is misunderstood. It was a refund on taxes that the Revel was expected to pay. It wasn’t a $261 million check from NJ’s Treasury to the operators of the Revel. If the subsidy hadn’t been given the Revel wouldn’t have been finished in the first place.

Liberal edubloggers seem to think that since NJ’s economy is doing so badly despite larger subsidies that the subsidies are completely ineffective or even harmful. Ok, maybe the subsidies are a waste of effort, but this misunderstands why other states are doing better economically than we are. It’s complex and different states are thriving for different reasons, but NJ has some handicaps that don’t exist elsewhere, like a relative lack of buildable land, small population increases, no hydrocarbons to frack, a collapsing anchor industry in Atlantic City, a declining pharmaceutical industry, and (IMO) overly high taxes.

2. Gas taxes
I’m for this if we can change the constitution.

3. Increasing taxes on high-earners

I’m for this too, but not that hopeful about it. According to Thomas Byrne (a Democrat) “One half of one percent of New Jersey taxpayers account for almost a third of income tax revenues, and only 600 filers - many of whom may already have second homes outside of New Jersey – account for about $1.4 billion in income tax payments.”

Let’s say that just 10% of the 600 big-filers decide to leave NJ because they don’t have the same worldview you have and are sick of paying higher taxes and getting nothing back, that would reduce the state’s taxation by $140 million. A tax increase billed at $700 million might end up only being a net revenue increase of $560 million.

Also, Steve Wollmer is either highly ideological or politically naïve if he thinks the crisis could be solved without cuts. Seriously? Do you think NJ isn’t going to make service cuts and raise revenue to try to solve this crisis?

Giuseppe said...

From Paul Buchheit at commondreams.com:
Big Companies Pay about a Third of their Required State Taxes
An earlier report noted that 25 of our nation's largest corporations paid combined 2013 state taxes at a rate of 2.4%, a little over a third of the average required tax. Many of these companies play one state against another, holding their home states hostage for tax breaks under the threat of bolting to other states.

Without Corporate Taxes, K-12 Public Education Keeps Getting Cut

Overall spending on K-12 public school students fell in 2011 for the first time since the Census Bureau began keeping records over three decades ago. The cuts have continued to the present day, with the majority of states spending less per student than before the 2008 recession.

It's Getting Worse

Total corporate profits were about $1.8 trillion in 2013 (with other estimates somewhat higher or lower). The $46 billion in total corporate state income tax in 2013, as reported by both Ernst & Young (Table 3-A) and the Census Bureau, amounts to just 2.55% of the $1.8 trillion in corporate profits, a drop from the 3% paid in the five years ending in 2012.

The Worst Offenders

The most recent Pay Up Now analysis for 2014 shows some of the biggest and the worst offenders among U.S. corporations in 2014. Twenty companies with total U.S. profits of over $150 billion paid just 1.4% in state taxes. Some of the lowlights:
Three of the largest California companies (Google, Intel, Wells Fargo) paid just 1.4% of their profits in state taxes. That's less than 1/6 of the required California rate. Apple, which paid about half of its required state taxes in 2014, shamed itself by claiming residency in tax-free Nevada to avoid California's high rate.
Texas has a modest franchise tax instead of a state tax, but two giant firms (Exxon and AT&T) still managed to claim sizable state tax credits. Exxon, which has almost 80% of its productive oil and gas wells in the U.S., declared only 17% of its income here, while using a theoretical tax to account for 83% of its smallish federal income tax bill. On the state side, the company received hundreds of millions in subsidies for its refineries in Louisiana.
In Illinois, a state beleaguered by pension woes and the nation's worst per-student spending cuts in 2011-12, lost nearly a billion dollars in tax revenue to just six companies (Boeing, Archer Daniels, Walgreen's, Caterpillar, Exelon, Abbott Labs), which paid just 1.9% of their profits in state taxes, about a quarter of the required amount.
New York's most notorious tax avoider is Pfizer, which had nearly half of its sales in the U.S. over the past three years, yet claimed $50 billion in foreign profits and losses in the U.S..


Giuseppe said...

It appears that the contracts that were negotiated between the public employees and the state are just so much garbage to be ignored. One big ha, ha. Never mind that the retirement age has been raised and that public employees have made sacrifices through benefit cuts, wage freezes and increased pension and health payments. Even current retirees have made sacrifices with the elimination of the COLA.
The most important thing is to not inconvenience in any way, shape or form the large corporations and the wealthy. That's serious business not to be tampered with while you can tamper with public employees' benefits all you want. We can't raise taxes on the corporations or the uber wealthy because they might flee NJ. But it's OK to stomp those "greedy" teachers into the dust.