Ravitch/Volcker on New Jersey Budget Crisis


The report on New Jersey was released a few hours ago by the State Budget Crisis Task Force.  I expect to have highlights soon but, for now, I found what Richard Ravitch had to say in his closing remarks during the live stream* of the prolegomenon most insightful.  What galls him the most is:


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Mr. Ravitch obviously spent a lot of time and effort, along with the other members, putting out what I expect is a critically important and useful report which 99.99999% of people are never going to see, read, or hear about since the odds of TMZ picking up on it are negligible.

I share his frustration and tomorrow I hope to share his information.
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* It was a live stream that had glitches along the way so it’s not my video software or your computer that put those blips in the youtube.

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9 responses to this post.

  1. Posted by Anonymous on December 13, 2012 at 3:38 pm

    The report and others can be found here:

    http://www.statebudgetcrisis.org/wpcms/

    Reply

  2. Posted by Tough Love on December 13, 2012 at 4:28 pm

    The NJ Report (in the Summary section) said …”Honoring Pension Promises will force NJ to make extraordinarily difficult choices about spending priorities and taxes”.

    Now I know I’ve said this before, but considering how the Public Sector Union/Politician cabal created these extraordinarily generous (and grossly excessive when compared to what Private Sector Taxpayers get) pension promises (via the trading of campaign contributions and election support for favorable vote on pay, pensions, and benefits), instead of agreeing to “honor” these (dishonorable) underhanded deals (that betrayed the Taxpayers), I suggest that Taxpayers take a good hard look at what would have been granted in the absence of the Union/politician collusion, (likely less than 50% of these “promises”), and fund the pensions ONLY to the level that would support THAT benefit.

    Greed HAS consequences, and the Taxpayers are tired of being suckered.

    Reply

    • Posted by Anonymous on December 13, 2012 at 5:16 pm

      You voted for Christie and he told you that he is fixing the problem. Why are you still bellyaching. You are the one who voted for the guy. He is the best you could have done. At this point you might as well move out of New Jersey.

      Reply

      • Posted by Tough Love on December 13, 2012 at 5:37 pm

        Christie certainly did more than any Democratic Governor would have done. The COLA freeze is indeed a financially material change (if it withstands Court challenges). The other changes mostly apply to new employees with won’t save anything for decades.

        Without question … and not even addressing the existing unfunded liability for PAST service …. NJ must freeze the DB Plans or materially reduce (by 50+%) the pension accrual rate for FUTURE service for CURRENT workers. Doing so will at least stop digging the financial hole we are in even deeper.

        To address the existing unfunded liability, see my suggestion above.
        ********************************************************************************

        P.S. You call it bellyaching because you are are on the receiving end of these promises. Understandable, but quite greedy, aren’t you ?

        Reply

  3. Posted by EDVANTJR@aol.com on December 13, 2012 at 8:28 pm

    Dear John, There is no sound? Regards, Ed Vant, Jr.

    Reply

  4. Posted by Tough Love on December 14, 2012 at 2:05 am

    John, I just finished listening to the to full live stream (of all the participants). To put it mildly, I was unimpressed. Multiple times they made it clear that recommendations on to how to FIX the mess NJ is in are policy (and political) decisions, and not something their committee addressed.

    Well whoop-i-doo … what a waste. Compare this group to RI treasurer Gina Raimondo and compare this group’s report to the report of CA’s Little Hoover Commission.
    The RI treasurer and the Little Hoover report addressed the issues head-on with SPECIFIC recommendations for actions to take.

    This group’s report is no more than a compilation and regurgitation of facts with zero action steps and is as tired as the group of old men that produced it.

    Finally ….. when pensions were discussed, all the talk is of the need to find a way to fund the promised pensions:

    * No discussion of Pubic /Private Sector total compensation comparisons … which leads to the question of whether the current pensions are to low, too high, or just right.

    * With EVERYONE agreeing that we are in a DEEP financial hole, absolutely no discussion of whether we can afford to continue granting pension accruals for FUTURE service at the current rate.

    * No discussion of the legal framework of what pension changes are and are not possible.

    This is one gutless group and one useless report. We need real leadership. Leadership that is NOT afraid to step on toes and not afraid of the Public Sector Unions.

    Reply

  5. The report is good copy for Comedy Central. The word “corruption” does not appear in it. One really funny part is this (thank you Christie Whitman):

    The bonds issued were capital appreciation bonds, not tax exempt; and nonrefundable. The bonds sold for 7.6 percent.
    Total debt service over the 32 year life of the bonds is estimated at approximately $12.3 billion.
    The debt service schedule was skewed in that the first year was $95 million; $130 million in FY 2001; $230 million in FY
    2010; $397 million in FY 2017; and $507 million in each of the last eight years.

    Reply

  6. Posted by Javagold on December 14, 2012 at 7:08 pm

    there is NO money for pensions……best to move from this shithole and just watch it collapse

    Reply

  7. Here’s a interesting article on pension actuarial assumptions on Mich’s blog the best line here is “You’ll often hear that the pension debt was caused by the state “skipping pension payments.” What you won’t hear is that taxpayers have actually paid $8 billion more than the original ramp projected.
    Read more at http://globaleconomicanalysis.blogspot.com/#vu1xM6byoLdsbSsq.99

    Reply

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