No Governor Schmuck

Every month New Jersey governor Chris Christie goes on the radio to answer selected listeners’ questions.  Yesterday’s program featured the pension issue three times and the clear impression left by the governor was that something big was coming but he could not say what it was though he did hint:

There is a real problem and the legislature is doing nothing about it:

There is a real problem but I am not going to tell you what I intend to do about it because I do not want to look like a schmuck:

The ‘B’ word:

Governor Christie obviously has something big up his sleeve that an inner circle that believes states can file for bankruptcy has worked out. What can possibly go wrong?

20 responses to this post.

  1. Posted by MJ on April 22, 2014 at 11:10 am

    Pensions are being paid the B word is thrown around and alarms are sounding but still the beat goes on . Doesn’t sound like Detroit turned out all that bad. Ten years from now we will be reading the same nonsense about pensions. I think most are de-sensitized to it by now and have either accepted it or moved. Christie will not change anything as he and his cronies are generously benefitting from the system. Just hope my house sells before anymore shit is thrown out there and I hope a teacher and cop family buy it!


    • Posted by Tough Love on April 22, 2014 at 11:48 am

      Interesting videos. I’m guessing that retiree healthcare reductions are first on his agenda.

      Not only are the legal barriers for reduction far less burdensome than for pensions (especially PAST service accruals …. which ALSO need to be reduced given the enormous unfunded liability), but given that estimates of retiree healthcare cost (that Private Sector workers almost NEVER get any longer) are 12% of pay, there is no reasonable justification for continuation in it’s present form…. meaning i.e. Taxpayer-funded.

      Of course (as one of the 3 videos discussed), he may (and likely will) be gone before such action is taken, but is making it clear … don’t blame me as “I told you so”. And he clearly is correct. NJ is w/o doubt on a path to insolvency w/o material Public Sector pension & benefit reductions.


      • Posted by MJ on April 22, 2014 at 1:44 pm

        TL. What does it matter what pay and benefits private sector workers get as that comes out of company profits etc. There is still no reason for the excessive ness of public healthcare and pensions. Way too many publics doing way too little for way too much.


        • Posted by Tough Love on April 22, 2014 at 2:17 pm

          My “point” was, that with 85% of all workers in the Private Sector, it’s the PRIVATE Sector that should set the standard as to what is fair “total compensation” (cash pay + pensions + benefits).

          Right now, almost everywhere, cash pay in the Public/Private Sector are just about equal (in total for all occupation), but PUBLIC Sector pensions & Benefits are ALWAYS multiples greater in value at retirement when factoring in BOTH the richer formulas AND the more generous “provisions”. As such,there is simply no justification for greater TAXPAYER-funded pensions & benefits.

          “Funding” (or lack thereof) is NOT the appropriate issue (or the ROOT CAUSE of our financial problems), excessive generosity IS.


          • Posted by Anonymous on April 22, 2014 at 3:03 pm

            My point is that you fools keep on believing Christie. He knows he can sucker you fools right to the bitter end. Why not you are desperate to believe. Believe this pension or no pension you will pay through the nose with you taxes.


          • Posted by Tough Love on April 23, 2014 at 11:15 am

            Anonymous, You need to share that pain proportionately to the gross excessive you (and all Public Sector workers) have been unjustly sucking from the system. Even a 50% pension reduction and loss of all retiree healthcare subsidies would only get us PART of they way there.


    • Posted by Jomama on April 22, 2014 at 2:36 pm

      Interesting info from State Retirees Assn…..
      There is a crisis in the NJ pension systems – but it is not what you assumed! Rather than the crisis being that the systems are grossly underfunded, it is that the unfunded liability of the systems is grossly overstated! Accordingly, there is an urgent need to have the legislature review the State Treasurer-mandated actuarial assumptions for the Pension Systems.

      Specifically, the Treasurer directed the system’s actuaries to use an actuarial assumption that projects that pension system employees’ future salaries will rise by 3.45% for the next five years and then to 4.7% thereafter. (TPAF, PFRS and SPRS have slightly different assumptions, but they use similar rates.) This “assumption,” is used to project what an employee’s final average salary will be when s/he retires.

      So, for example, if an employee where to be hired today at $50,000, and she were to get 3.5% increases for five years and then 4.7% thereafter, her final average salary, after 30 years, would be $168,456, with her projected pension benefit being $91,884. (See Appendix A, attached.)

      But, if one were to assume a salary growth of 2.5% per year, the projected final average salary, after 30 years, would be only $98,845. And the projected pension benefit would be just $54,460. This would mean a $37,424 smaller beginning pension benefit than if we use the treasurer-directed assumptions. That is a 41% reduction in the projected payout — a big difference! And the smaller the projected benefit-payout is, the smaller the unfunded liability.


  2. Posted by Jomama on April 22, 2014 at 1:56 pm

    The Gov is done. He’s had his 15 minutes of fame, now he’ll be a footnote on how not to reinvigorate a state economy (supply side economics). He has no authority to do anything, and the mere fact that he is backing away from the previous pension deal, will ensure there will be no others.

    As for the health benefits–1997 law guarantees no reduction in VESTED benefits. It will be another lawsuit the state will lose, just as COLA. The simple answer is for the state to pay it’s share that has been neglected for the past 20 years.

    If the state wants to declare bankruptcy, I’d be willing to consider taking the same deal they got in Detroit–it ain’t gonna happen–zero chance.

    This is the Gov doing anything he can to get public discussion away from Bridgegate–stick a fork in him, he’s done.


    • Posted by Tough Love on April 22, 2014 at 2:22 pm

      Money doesn’t grow on trees (and it’s doesn’t exist to pay current “promises).

      Raise taxes much more and the exodus of PRODUCTIVE residents & business that DO pay taxes will accelerate..

      There are no REALISTIC options but to materially reduce Public Sector pensions & benefits.


    • States are not subject to Bankruptcy law or its protections as debtor. They are subject only to the terms of their own laws, State Constitution, and the U.S. constitution. There is no pot of “blight remediation” funds big enough to solve NJ’s problems or restore solvency to its pension plans.


  3. Posted by Anonymous on April 22, 2014 at 3:05 pm

    Where will you go, everywhere is going bankrupt eventually!


    • Posted by Tough Love on April 22, 2014 at 3:40 pm

      Only until the politicians see the writing on the wall and change sides …. then you’re “done”.


      • Posted by Anonymous on April 22, 2014 at 9:21 pm

        You’re dreaming. First, your assuming that they’ll slit their own throat. Second, there is no mechanism to reduce the pensions which are a contractual right. So it would violate not only the NJ constitution but also the US constitution. Let alone, the state can’t declare bankruptcy. Then of course there is the whole issue of the takings clause of the constitutions–can’t confiscate personal property.

        The only real viable solution is to cut the 2 billion that the Gov gave to businesses, increase employee contributions to the pension system, and continue to pay down the debt. It will get easier if/when the state ever makes full payments.


        • Posted by Tough Love on April 23, 2014 at 12:19 am

          If denial makes you feel better about the cuts sure to to come …… by all means, go for it.


        • The state can weasel out of having to pay without “passing a law to impair a contract.” As Obama knows from his non-enforcement of deportation laws, all that is required is for NJ to stop writing your checks which happens when the account balances reach zero. Problem solved.


  4. Posted by Javagold on April 22, 2014 at 4:51 pm

    Take away all health benefits from all the public takers. Put them on Obamacare.


  5. Posted by MJ on April 22, 2014 at 7:15 pm

    What will happen is that so much of the budget will be crowded out by public salaries, benefits, pensions, perks, etc. that there will not be much left for anything else. So real estate prices will continue to decline, nice neighborhoods will deteriorate, anybody who can will sell for less or walk away, businesses will close or move to more tax friendly states, schools will turn out even more dummies, and taxes will kill anyone who remains even the publics. With taxes already being the highest in teh country, politicians have shot themselves in the foot as there isn’t a whole lot of room to raise them much more. No need to speculate, rant or rave, it will all take care of itself under the rules of economics, mathematics and the free market. I guess the only real question to answer is who will be left to foot the bill? Not me.


    • Posted by Anonymous on April 22, 2014 at 9:25 pm

      First, taxes are NOT the highest in the country. Real estate taxes are–and of course incomes are also among the tops in the country. Those towns that offer quality education, police and fire, and infrastructure will continue to prosper. Those that continue to cut, will see their property values reduced. Do you think property values and taxes are higher in Trenton or in Mountain Lakes? Trenton is real cheap–it’s a wonder people aren’t flocking there, after all everyone wants cheap.


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