Arguing False Promises

There is a court hearing going on right now on whether New Jersey will have to make an extra $1.57 billion pension payment this coming June:

A lawyer for the state argued today that Gov. Chris Christie cannot be forced to make full pension payments because the 2011 law committing him to fully fund the state system in exchange for union concessions was unconstitutional.

Interrupting the assistant attorney general, Superior Court Judge Mary Jacobson said the state’s case suggest that 2011 promise was “a hollow commitment.”

“You’re saying it should have been known at the time that it was a false promise,” Jacobson asked. “You’re saying that from the get-go, this statute, the requirement to make these contributions was void.”

I can answer that.

No, it was not a false promise…….at the time.

However, it was not a promise made on behalf of taxpayers in 2011 who continued to get off the hook for making anywhere near the required contributions to honestly fund these benefits.  It was a promise made in 2011 on behalf of taxpayers in 2015 who, through the state, are trying to weasel out by claiming those people who committed them to making this arbitrary payment that they now cannot afford to make had no right to do so.

Several questions come to mind:

  • Why didn’t this unconstitutional aspect surface back in 2011?
  • Are the employee obligations in that 2011 law also unconstitutional since they obligated future employees to higher contributions and lower benefits?
  •  (the Escherish question) Isn’t not making this $1.57 billion contribution in 2015 obligating taxpayers in years after 2015 to make that $1.57 billion payment, with interest, which would also be unconstitutional?

But if I were arguing on behalf of the plaintiffs I would bring the bond market boogie man to the table:

  •  If you cannot commit future taxpayers to make contractual pension payments then can New Jersey default on bond payments (also a contract) whenever they can no longer afford to make them?

4 responses to this post.

  1. Posted by dentss dunniga on January 15, 2015 at 5:53 pm

    As an answer to you question “If you cannot commit future taxpayers to make contractual pension payments then can New Jersey default on bond payments (also a contract) whenever they can no longer afford to make them” if they are GO bonds that is the risk you take when buying them ,however rare if the monies are not there …well yes .

    Reply

  2. Posted by Mike on January 15, 2015 at 5:55 pm

    Maybe – and only maybe – a NJ citizen could argue that the law was and still is unconstitutional. I don’t really see that is a position that should be upheld, but at least in theory I could see some citizen arguing that.

    But for the governor to have a lawyer argue on his behalf as a governor that he always thought it was unconstitutional is just beyond the pale. Why should anyone believe that this newly announced position is what Governor Christie actually thinks today ?

    Reply

  3. Posted by Tough Love on January 15, 2015 at 8:36 pm

    Quoting … “However, it was not a promise made on behalf of taxpayers in 2011 who continued to get off the hook for making anywhere near the required contributions to honestly fund these benefits. ”

    And you think that taxpayers should be …. “on the hook for making anywhere near the required contributions to honestly fund these benefits.” ?

    Well I strongly disagree because the extreme generosity of “these benefits” upon which the “required contributions” are based are WITHOUT DOUBT the result of underhanded horse-trading (of Union campaign contributions for higher pay, pensions, & benefits) between the Public Sector Unions and our Elected Officials, benefiting BOTH of THEM, while screwing the Taxpayers called upon to pay for almost all of it.

    Taxpayers should CONTRIBUTE no more toward Public Sector pensions (AND benefits) than what THEY get in retirement benefits from their employers. We’re growing weary of being financially “mugged” by the insatiably greedy Unions/workers and our enabling politicians ….. and that’s assuredly no more than 1/4-1/3 of the “required contributions” necessary to fund the current grossly excessive pension & benefit promises.

    EQUAL, but NOT better.

    —————————-

    P.S. Of course Christie is a jerk …. but being one will NEVER translate into justification for Taxpayers to fund these outrageous, unjust, unfair, and unaffordable promises.

    Reply

  4. Posted by George on January 15, 2015 at 9:44 pm

    “can New Jersey …?”

    Answer: Yes unless the feds send in troops, or the state police overthrow the government. Worcester v. Georgia(1832) Supreme Court rules against Georgia, but it does not matter as there is no method of enforcement as President Jackson refuses to intervene on behalf of the Cherokee.

    Defaulted Argentine bonds seem to attempt to get redress through transnational means. But NJ bond holders are probably US entities, and mostly NJ. But if Argentina can default why not NJ?

    Argentine Default Bad Test Case for Sovereign Debt Negotiations

    http://foreignpolicy.com/2014/08/25/argentine-default-bad-test-case-for-sovereign-debt-negotiations/

    Reply

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