Proofing Propaganda

Politicians throw out whatever sounds palatable at the time and to the audience they seek to either convince or placate.  But when it comes to a situation where there is nothing to brag about the truth needs to be massaged though rarely to the level of absurdity found in the New Jersey Budget Summary for the 7/1/15 – 6/30/16 tax year. For example:

page 2 on ignoring responsibilities:

For decades prior to Governor Christie’s taking office, the State ignored its responsibility to fund its employees’ pensions adequately, resulting in a crushing unfunded liability that threatened the income security of hundreds of thousands of current and future retirees.

.

 page 10 on that scary cadillac tax:
Absent common-sense plan design changes to lower state health benefits insurance premiums, the State will be subject to the federal “Cadillac Tax” on benefit-rich plans at a cost of $58 million in fiscal 2019,rising to $284 million in fiscal 2023.
$58 million that might be taxable in 2019 (if they don’t change a law that they have been constantly changing)! Christie spends about as much on blue-ribbon panels that certify he’s clueless about what his employees are doing.

.

later on page 10:
While the need for real and sustainable long-term reform to contain the ever-increasing cost of pension and health benefits cannot be understated, minimizing the continued compounding of the problem requires a substantial increase in State contributions in the near term. Accordingly, the Governor’s fiscal 2016 budget includes a defined benefit pension payment of $1.3 billion, almost double the fiscal 2015 amount and3/10ths of the Actuarially Recommended Contribution (ARC). This will be the largest defined benefit contribution in New Jersey history.
$1.3 billion also represents what the New Jersey pension plan pays out to retirees in a month and a half.

.

still later on page 10:
Through fiscal 2016, the Christie Administration will have contributed $4.2 billion to the State’s underfunded pension system, a commitment to funding that exceeds that of any previous administration. This contribution level is $781 million higher than total funding from fiscal 1995 through fiscal 2010.
That’s 4.2 billion over 6 YEARS and that’s about what the pension plans pay out out currently in 5 MONTHS.

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on page 11:
At 3/10ths of the ARC, the proposed fiscal 2016 contribution is at once the largest pension contribution in State history and a strong foundation for moving forward on a fiscally responsible and sustainable path toward full funding of the ARC. To help ensure the long term solvency and stability of the pension systems, Governor Christie recommends that the fiscal 2016 contribution serve as the first of future annual contributions that increase in 1/10th increments. A regular schedule starting at 3/10ths that increases annually and results in a return to full funding of the actuarial determined contribution will ensure the long term solvency, health and stability of the pension systems.
After a 5-year phase-in in 2003 and a 7-year phase-in in 2010 that were each abandoned we have a proposed 10 year phase-in of the ARC.  This should not be looked at as forcing ‘full funding’ of 1/10th of an already low-balled amount but as officially sanctioning NOT funding 9/10ths.

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finally on page 34 in a three-paragraph section on New Jersey Economic Outlook where the first two paragraphs were on labor market as manipulated by federal policies the third paragraph reads:

The outlook for the New Jersey economy continues to remain positive. The index of coincident economic indicators shows that New Jersey’s economy expanded in 2014 with the New York Federal Reserve Bank’s index increasing 1.5% and the Philadelphia Federal Reserve Bank’s index increasing 2.3% over the course of 2014. The Philadelphia Federal Reserve Bank also administers a regional manufacturing survey which includes South Jersey firms. The diffusion index value for future business activity, which is the difference between the percentage of firms reporting an increase in activity and the percentage of firms reporting a decrease, has exceeded 50.0 for eight straight months, which last occurred in 1992-1993. Continued economic growth combined with further improvements in the labor market should create upward pressure on wages and salaries which should then translate into a stronger housing market recovery that further bolsters New Jersey’s economic growth.

Is that a bumper sticker likely to be seen in Iowa?

13 responses to this post.

  1. Posted by skip3house on March 9, 2015 at 8:04 pm

    per Josh Barro of trillion dollar coin fame?

    Reply

  2. Posted by Anonymous on March 9, 2015 at 8:13 pm

    John: If they adjusted all benefits to remaining assets what percentage of promised benefits would that be ? so that those of us near retirement age can plan on the amount of personal assets needed to retire.

    Reply

    • Posted by Tough Love on March 9, 2015 at 8:53 pm

      WARNING ….. You Better Sit Down !

      Reply

    • It’s all negotiable. Right now after adjusting for employee contributions, Pension Obligation Bonds of $2.3 billion, and correcting for the proper market value with all those alternative investments there are not enough remaining assets to cover 50% of the benefits for those already retired. Everyone else has nothing.

      You should get a better idea of what the cuts well be if they get this constitutional amendment to cut benefits to pass – and pretty quickly too after that. Until then it will be very hush-hush as to how much and who will get cut.

      Reply

  3. Posted by PatB on March 9, 2015 at 9:05 pm

    In their statement, the state officials strongly praised the deal (with Exxon), calling it “the single largest environmental settlement with a corporate defendant in New Jersey history,” (for 3 cents on the dollar). Sounds a lot like page 11.

    Reply

  4. Posted by Eric on March 9, 2015 at 10:40 pm

    John:
    I agree with Tough Love that the health benefits will be cut long before any discussion of pension benefits. Even though politically it is a “tough sell”, it must be done.
    Eric

    Reply

    • Posted by Tough Love on March 10, 2015 at 1:37 am

      I clearly see STATE worker/retiree healthcare benefits being very materially reduced, because the “savings” can directly be used to fund the (hopefully frozen) PAST Service UAAL associated with the STATE worker pensions.

      RETIRED teachers, while never “State” workers will likely see similar healthcare cuts because the STATE (which has little money available) is “responsible” for their healthcare.

      What seems a bit more “iffy” to me is getting (non-teacher) LOCAL workers/retirees to agree to either pension or healthcare cuts, because they ERRONEOUSLY believe their pensions are pretty well funded. They’re not, but not quite as bad as the STATE Plans). Similarly, WORKING Teachers (whose healthcare is now LOCALLY funded) will not be amenable to healthcare reductions.

      And for what it’s worth, if I were a Local town administrator/Council/Mayor I’d refuse to accept that the State can unilaterally shift financial responsibility for Teacher pensions and teacher retiree healthcare costs to the Locality without an iron-clad GUARANTEE that the “cost-neutral” result that the Commission Report speaks of will actually materialize. I don’t see working and retired Teachers and other Local employeesbeing willing to give back enough of their current healthcare benefits to pay for their Pension UAAL.

      Localities that aren’t VERY careful with any “deal” they agree to, may find themselves needing huge property tax increases in the not to distant future.

      Reply

      • Posted by bpaterson on March 11, 2015 at 10:58 am

        league of municipalities should be able to protect the towns’ interests (hopefully)

        Reply

        • Posted by Tough Love on March 11, 2015 at 11:11 am

          The trouble has always been that those making the deals (supposedly on behalf of the taxpayers) have no skin-in-the-game, and often, via themselves (or family members) participating in the same or similar Pension & Benefit Plans, have little incentive to cuts THEIR OWN perks. And of course, playing-ball with the Unions generates Union block-voting in their elections, as well as campaign contributions and election support.

          Reply

  5. Posted by javagold on March 10, 2015 at 12:29 pm

    Get rid of all public takers health care cost. Shove them all on Obamadontcare. Where they belong since they voted for their King twice. Then freeze the rest of pensions. Cap ALL the double dippers at $48,000. And lower property taxes 67%, so our children can afford to stay and live in NJ. Public takers own PROPERTY too. So the lower property taxes will be great for them. (Crickets)

    Reply

    • Posted by Tough Love on March 10, 2015 at 3:18 pm

      Quoting …”Get rid of all public takers health care cost. Shove them all on Obamadontcare. ”

      NJ is one of the 34 STATE where Obamacare is “Federally” administered.

      While I doubt the US Supreme Court will should down the Federal Obamacare subsidies (now being argued in Court) due the ENORMOUS negative implications for MILLIONS of low and lower-middle income workers (who now get “affordable” healthcare for the first time), should they do so, your suggestion won’t work.
      ————————————-

      Of course I agree with you that ALL Public Sector pensions & benefits should be frozen, capped, materially reduced, etc. …. WHATEVER it take to reduce them to a level NO GREATER than what comparable Private Sector workers TYPICALLY get from their employers.

      EQUAL…. but NOT better !

      Reply

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