Yves Smith on the Wisconsin Budget Fight

The post is here.  This caught my eye:

It’s bad enough that the “make the workers suffer” push is misguided (any budgetary pain should be shared, not dumped on a single target group). According to David Cay Johnson of Tax.com, the average Wisconsin pension is $24,500 a year, which is hardly lavish. But what is stunning is that 15% of the money contributed to the fund each year is going to Wall Street in fees. Thus the blame for any shortfall should go in very large measure to probable kickbacks rank incompetence in the state’s dealing with the financial services industry and the impact of the financial crisis on state revenues. A recent paper by Dean Baker concludes:

Most of the pension shortfall using the current methodology is attributable to the plunge in the stock market in the years 2007-2009. If pension funds had earned returns just equal to the interest rate on 30-year Treasury bonds in the three years since 2007, their assets would be more than $850 billion greater than they are today. This is by far the major cause of pension funding shortfalls. While there are certainly cases of pensions that had been under-funded even before the market plunge, prior years of under-funding is not the main reason that pensions face difficulties now. Another $80 billion of the shortfall is the result of the fact that states have cutback their contributions as a result of the downturn.

In addition, the governor has poor-mouthed about the state pension and budgetary concerns generally while handing out further tax breaks to business. And in a strained economic climate, the state has been increasing gimmies to corporations. The state had tried tightening up provisions which had contributed to 2/3 paying no taxes in 2007, often due to income shifting to lower tax states. But tax expert Lee Sheppard believes that corporate tax cuts implemented by Walker will probably undo 2009 tax law changes intended to increase revenues from corporations. And note corporations pay for only 5% of the state’s general revenues.

15% of pension contributions are going to Wall Street fees?  If that is the case, the Republican war on state pensions is actually going to morph into a war on Wall Street, which will get pretty interesting.