Pension Default as White House Strategy

Politics is the art of the possible.Otto Von Bismarck, remark, Aug. 11, 1867
German Prussian politician (1815 – 1898)

Gay marriage, flag burning, stem cells, medical marijuana, and other social issues designed to inflame an electorate to mindlessly vote their prejudices might work to get Chris Christie into the White House.  Pension reform in New Jersey won’t.

If given the choice between having a fully funded state pension system and a talking point to bash unions and default on pensions I have no doubt that Christie would much prefer the former and never have to deal with another pension reform.  Yet a Bloomberg story today quotes several politicians and pundits as seeing this as some sort of strategem for 2016:

“I don’t think he really wants this solved — he wants the political points,” said Senator Ray Lesniak, a Democrat from Elizabeth. “Beating up on public workers is a popular thing to do. His approval ratings dropped dramatically since the bridge scandal. They’ve stabilized and now he’s trying to get back with this.”

NO! Beating up on a large, well-organized constituency is not politically savvy.  Making your base think you are beating up on them while secretly acceding to their wishes may be but that is not possible when you have absolutely nothing to offer them but giveback demands.

Senate President Stephen Sweeney, the West Deptford Democrat whose support helped Christie win approval for his pension overhaul, said he’s not asking workers for more concessions. The governor has allowed his national ambitions to creep into Trenton policymaking, Sweeney said.

“He’s looking beyond New Jersey and running for president,” said Sweeney. “It’s absolutely not going to happen. He made an agreement to that funding and the avenue was there for that funding but he chose not to do it. Why would anybody agree to go back for another round.”

NO!  Taking on public employee unions is not a godsend issue for a governor.  Working with those unions and getting problems solved (as the 2011 pension reform story in New Jersey went) makes you look presidential.  Not being able to solve a problem without stealing from someone makes you look sorry and sad.

“His campaign rhetoric will be that Democrats wanted him to raise taxes so union bosses could have cushy pensions, and he refused,” said Ben Dworkin, the director of the Rebovich Institute for New Jersey Politics at Rider University in Lawrenceville. “This is a great message to take before a conservative presidential primary electorate.”

That may be the rhetoric but the reality will be union protests at every campaign stop and benefit cuts for public employees that will only forestall bankruptcy by a couple of years as government is run by fiscal crisis.

Brigid Harrison, a professor of law and government at Montclair State University, said the television appearances on “The Tonight Show Starring Jimmy Fallon” and CNBC coupled with calls for a new pension clampdown are aimed more at shoring up support with a national Republican constituency.

“He’s gone past sticking his toe in the water and his whole foot’s in,” Harrison said. “There’s very little for him to gain within New Jersey — he’s already won his last election here and he violated a policy he created. It’s all allowing him to travel the country and say he’s taking on these public unions.”

So a constant state of fiscal crisis that necessitates arbitrary and illegal (to the extent that word has validity in New Jersey) defaults on promises is an attractive state to a national Republican constituency?

The truth is that political careers are made and elected offices obtained by distracting often-ignorant voters with fake issues that either have absolutely no solution or an easy solution.  The pension fiasco in New Jersey fails on both counts.  There is a solution (start putting in an extra $10 billion a year into the plan) and it is not easy (either take that extra $10 billion from essential services as defined by taxpayers or short circuit the political spoils system).  Neither is possible with the politics and the politicians we have.

31 responses to this post.

  1. Posted by Tough Love on July 9, 2014 at 11:50 am

    Quoting …. ““His campaign rhetoric will be that Democrats wanted him to raise taxes so union bosses could have cushy pensions, and he refused,” said Ben Dworkin, the director of the Rebovich Institute for New Jersey Politics at Rider University in Lawrenceville. “This is a great message to take before a conservative presidential primary electorate.””

    Is this guy Ben Dworkin completely blind when he says “Union Bosses”

    Union Bosses my ass. The grossly Excessive Public Sector pensions benefit (in the extreme) ALL of NJ Public Sector workers … from the lowest to the highest paid. It’s the ridiculously generous pension :”formulas” and “provisions” (MULTIPLES more generous than even the BEST Private Sector pensions) that is the problem.

    Reply

  2. Posted by Tough Love on July 9, 2014 at 12:06 pm

    Quoting … “There is a solution (start putting in an extra $10 billion a year into the plan) and it is not easy (either take that extra $10 billion from essential services as defined by taxpayers or short circuit the political spoils system). ”

    Sorry John, but here’s where we disagree. I don’t believe anyone examining the facts w/o bias would conclude anything but that (a) the current DB pensions are excessive by any reasonable measure, and (b) the current excessive generosity VERY likely is the result of the Public Sector Unions’ buying the favorable votes of our elected officials with campaign contributions and election support …THEREBY screwing the taxpayers.

    As such, a MUCH better and FAIRER option (than cutting essential services or raising taxes*) is to renege on that portion of these excessive pension & benefit promises that likely would NOT have been granted in the absence of that Union/politician collusion…. and the share that should REMAIN, should reasonably be estimated to be what Private Sector employers TYPICALLY grant THEIR workers in pensions & benefits …….. which today, is 1/4-1/3 that now ROUTINELY granted all Public Sector workers. Public Sector workers are not “special” and deserving of a better deal on the Taxpayers’ dime.

    * while “short circuit the political spoils system” is a great idea, what’s really doable isn’t likely to raise even 10% of the cash needed to shore up the promised pensions & benefits.

    Reply

    • What’s fair does not necessarily equate to what’s possible.

      Outside of a tax on pensions, which Christie may be exploring in secret right now, the COLA restoration made it clear any benefit cut (except for retirees who left before 1997) will get overturned eventually so, from a practical point of view, that becomes another maneuver to shift costs to future taxpayers in the same league with Pension Obligation Bonds, actuarial gimmickry, and contribution holidays.

      Reply

      • Posted by Anonymous on July 9, 2014 at 12:42 pm

        Amen John. TL you need to get a life.

        Reply

        • Posted by Tough Love on July 9, 2014 at 12:54 pm

          Why are you entitled to “more” than those who pay your way ?

          Reply

          • Posted by truthnolie on July 9, 2014 at 1:08 pm

            Further exhibiting your communist ideology.

            To expand upon your moronic reply, why is Christie entitled to more???, why is Obama entitled to more???, why are Superior Court Judges???, etc, etc……In short, what it comes down to in your mind is that NO ONE is entitled anything more than what you have or can get…..Now….who is the greedy pig??

          • Posted by Tough Love on July 9, 2014 at 1:32 pm

            To truthnolie, I haven’t said that I’m entitled to more. I have ALWAYS said that it is appropriate for comparably situated Public and Private Sector worker to get reasonably EQUAL compensation. That’s certainly NOT the case today, with near equal Public/Private Sector “cash pay” but FAR FAR FAR greater Public Sector Pensions and Benefits.

            If you’re looking for the Pig, look in the mirror.

      • Posted by Tough Love on July 9, 2014 at 12:53 pm

        Yes, and I was thinking of that as I wrote my above response.

        It’s quite a pickle for taxpayers when the protections (from even PROSPECTIVE pension & benefit reductions) afforded PUBLIC Sector workers are so FAR greater than those afforded PRIVATE Sector workers …… and with legal challenges being adjudicated by judges who are conflicted by participating in the SAME pension & benefit Plans.

        If reducing Retiree healthcare remains an option (and noting the recent ruling in Ill., even THAT may be ruled as protected one day soon) Christie should propose it’s complete elimination for new workers, and a sliding scale for active and retired workers looking something like …………… the State pays no more than 1.5% of the total annual premium for each completed year (of FULL TIME 1000+hours) of Past service (with no additional credit for future service).

        Union complaints should simply be responded to with …. “it’s IN LIEU of JUSTIFIABLE pension reductions that the Courts will not allow”.

        Reply

        • Posted by Anonymous on July 9, 2014 at 9:12 pm

          TL never speaks the truth. She calls someone a pig and then swears she never resorts to name calling.

          Reply

      • Posted by truthnolie on July 9, 2014 at 1:10 pm

        Now a tax on pensions…..Ha….you want to see a flight out of NJ, anyone who retires with a NJ pension will bail the day after they retire.

        Good luck with that.

        Reply

        • Posted by Tough Love on July 9, 2014 at 1:35 pm

          Your pension and benefits will likely be halved (or worse) one day, and if you’ve moved away, you won’t even have a vote to oppose it.

          Reply

          • Posted by truthnolie on July 9, 2014 at 2:23 pm

            LOL……never will happen as the politicians & judges getting pensions won’t cut their own throats or risk the wrath of the unions

        • @truthnolie, I could be wrong but I believe pensions are already taxed in NJ, hence the flight of retirees to southern states…unless this is about a different type of tax on pensions.

          Reply

          • Posted by truthnolie on July 9, 2014 at 3:40 pm

            Yes you are very correct……what I was LOL’ing about was the thought of a new tax in ADDITION to state tax….something like a pension tax although this would not probably be legal since it would be a double tax but who knows in this corrupt cesspool of a state.

      • Posted by Anonymous on July 9, 2014 at 2:01 pm

        John, are you saying then that the pensions as they exist now will be paid in full as promised for old and new public employees alike? How many more financial shenanigans can they come up with and how will other budget items be paid for. I don’t see the economy gaining a whole lot of ground and our real estate taxes, tolls, fees, etc are already the highest in the country. Where will the money come from if Sweeney will not ask for more concessions. Every day we read about another city or municipality going into financial chaos. Will they cut the pensions and let it play out for years in the court system? thus freeing up more money? The situation sounds absolutely ludicrous.

        Reply

        • Existing pensions can’t be touched which is a real problem when you don’t want to pay for them. They’re pushing $1 billion a MONTH in pension payouts and the state can’t come up with $1 billion a YEAR in contributions.

          Any solution other than paying up is bound to be either illegal or stupid which is likely why Christie is stalling in saying anything. In the latter category are Pension Obligation Bonds which the state may have to market quickly before the next wave of bond ratings downgrades.

          Reply

          • Posted by Anonymous on July 9, 2014 at 3:03 pm

            Don’t want to pay them or can’t pay them for real?

          • Posted by Hoboken_Guy on July 10, 2014 at 11:01 am

            So people with a pension from Detroit are getting their full promised benefits?

            Jersey can tax the people of Jersey all it wants. Like many pensioners who take the money and run I too can vote to not pay for these benefits… with my feet.

          • Posted by Tough Love on July 10, 2014 at 11:18 am

            Detroit had “cash flow” problems much more than a “pension” problem. NJ’s pensions are in MUCH worse shape than were Detroit’s pensions. Decisions will have to be made once pay-go hits in 3-5 years, and I seriously doubt that our elected reps will raise taxes anywhere near sufficient to continue paying current retirees w/o massive compensation cuts somewhere (most likely in retiree healthcare).

  3. Posted by Tough Love on July 9, 2014 at 1:42 pm

    To truthnolie, There is a rather brilliant and sharp-witted actuary (Mary Pat Campbell) with some words of wisdom for Public Sector workers (just change Ill. to NJ):
    —————————————————–

    http://stump.marypat.org/article/79/public-pensions-watch-illinois-law-v-reality

    Employees of Illinois: save as much cash up as you can, and follow the taxpayers out of Illinois as well. The blogger at Second City Cop and his commenters are delusional that this ruling is at all good for them. All it means is that the end of your sweet benefits are just that much closer. Thinking that you’ll always get yours means that you will not make the deals that need to be made before catastrophe occurs.

    The public employees of Greece thought they had theirs. The public employees of Prichard, Alabama thought they had theirs. The employees of Rhode Island thought they had theirs.

    The unions think they’ll always get theirs.
    And they will.
    Right up until they don’t.

    Reply

    • Posted by truthnolie on July 9, 2014 at 2:47 pm

      Hah….Your hero Mary Pat is not even a pension actuary but an insurance actuary (gee what a surprise you touting one of your own) who even admits in another post that she doesn’t know all the in’s and out’s of pensions…..

      So you two have a lot in common

      Reply

  4. Posted by Elaine on July 9, 2014 at 4:00 pm

    Truthnolie

    I’ve been reading public pension blogs and new stories for going on 3-4 years now. And following TL and Mary Pat Campbell through it all. (but rarely have the time to reply to her).

    Always suspected the two are one pea in a pod. After following both through the years stuff slips out here and there. Like TL says she’s never met Mary Pat but somewhere in the bowels of comment history they separately mentioned going to the same school at the same time. And other stuff I don’t have time to dredge up.

    I could be totally off the mark but it’s something to keep in mind.

    One other questions I’ve always wondered about. How in busy demanding job like actuarial work does someone have the time to post all over the place?

    When I was worked my public job I had NO time to do anything but work. Lunch was done in 20 minutes at my desk usually working. And now in my private job you won’t see my name all over these comment sections….I’m working again. The amount of free time those two have all day long is a true mystery.

    Reply

  5. Posted by Tough Love on July 9, 2014 at 5:20 pm

    Quoting … ” Like TL says she’s never met Mary Pat but somewhere in the bowels of comment history they separately mentioned going to the same school at the same time.”

    Respect her writings,yes. Met her, no. Same school, impossible as I’m quite a bit older.

    Reply

  6. Posted by Elaine on July 9, 2014 at 6:23 pm

    Okay TL good to know. I’m wrong and you both are two peas in a pod. You must be at least semi-retired then to be able spend all day on the internet.

    Reply

  7. Posted by Anonymous on July 9, 2014 at 8:55 pm

    Well at least one thing is fairly certain Chris Christie will never be President even though he thinks he will. He is as delusional as ever.

    I also predict that anything he proposes in the way of pension reform will NOT be posted by Sweeney for a vote. So I think we will be in a holding pattern until Christie is gone.

    Reply

  8. Posted by Javagold on July 9, 2014 at 11:50 pm

    Tick Tock motherfukkers. Tick Tock.

    Reply

  9. Posted by Hoboken_Guy on July 10, 2014 at 12:28 am

    So the democrat narrative is becoming clear. Despite the Dems having control of the legislature for decades and having sporadic control of the Governor’s seat it’s not their fault that the pension system went unfunded and it’s certainly not their fault the system has gone beyond the point of saving. No, no, no, the fault is Christie and only Christie.

    I think Christie is a massive SOB but if the NJ Dems are looking for who is at fault for the pension systems unavoidable collapse the best place to start is with a mirror.

    Reply

  10. […] Posted by Hoboken_Guy on July 10, 2014 at 12:28 am […]

    Reply

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