Wrong System Under Fire

Today’s New York Post had an editorial that included another fat-pun, recognized that New Jersey has a serious pension problem, and then completely misdiagnosed the cause:

The pensions that ate New Jersey

Of the many challenges New Jersey faces — sky-high taxes, budget projections that keep falling short, a Supreme Court that likes to mandate spending — there is no darker cloud over the state’s future than its massively underfunded pension system.

That much ought to have been clear when Gov. Chris Christie last month suspended promised state contributions to the pension system to close a budget shortfall. He promised to lay out a plan for pension reform some time soon.

It can’t come soon enough. Back in January, a report from the Common Sense Institute of New Jersey warned that without serious reforms, the system is headed for bankruptcy. The main reason for this is the outdated system of promising defined benefits rather than the defined-contribution system that dominates in the private sector.

As one coauthor of the report put it: “Defined-benefit plans and politics are a toxic combination.”

What the Post misses is that politics and anything is a toxic combination.

Politics is basically the science of rewarding politicians themselves and the campaign donors who give the money to influence the thinking of an apathetic public.

To that end government must spend at least 20% more money for whatever they do and they demand that something (anything) be done or built so they can accumulate their vig.  Nobody needs a $25 million golf clubhouse more that the campaign donors who build it.  Nobody needs the government to spend money on curing the disease-of-the-day more than the government itself that can siphon off 7.5% for their general budget or the administrator who will be getting a six-figure salary, six weeks vacation, personal days, free insurance, and a defined benefit pension.

A defined benefit system works fine but, as with a gun, you can not put it in the hands of someone who does not know what they are doing.  In New Jersey not only has it been handled by children but it’s  loaded, cocked, and aimed.