Arrogance of Naivete

In response to a Star Ledger editorial agreeing with the current New Jersey governor that former New Jersey governors are to blame for the state’s pension mess a former New Jersey governor dashed off a rebuttal that appeared in today’s paper:

The Star-Ledger’s March 26 editorial titled “On pension woes, Christie is right to blame former govs,” once again misrepresents the Pension Security Proposal (PSP) that I implemented as governor. The PSP ensured that all pension obligations were accounted for – before then, the pension obligations were carried off the books and not as part of the budget. We brought them on before there was any legal requirement to do so.

While I’d be happy to go into all the details, the important fact is that mine was the last administration that had the pension systems fully funded – in fact, over funded. When I left office, the state had the largest surplus in its history to that date. No governor since has come close to that fiscal health. It’s time to set the record straight.

Gov. Christine Todd Whitman

Setting aside the fact that back in 2001 the plans were actually underfunded were honest actuarial assumptions used, though hardly at the bankruptcy level of today, what Christine Todd Whitman is bragging about is inheriting a working vehicle and then deciding to start filling it with sugar instead of gas to be able to afford other things and every subsequent governor has been essentially required to go cheap on the fuel.

Last year in a blog ranking New Jersey governors who have done the most damage to the state’s retirement system I had Christine Todd Whitman as number one for two reasons:

  1. getting talked into Pension Obligation Bonds thus foisting then-current costs onto future taxpayers (us, if we choose to pay); and
  2. deleting the pension contribution as a budget line item for both the state and local municipalities thus making bankruptcy ineluctable.

Chris Christie’s bungling heavy-handed jabs at reform could eventually vault him past Whitman and it may be the arrogance aspect that decides.  If so, Whitman pulled a little more ahead today.

24 responses to this post.

  1. Posted by Anonymous on March 31, 2015 at 1:56 pm

    Hey Tough Love, guess what? Christie has done more damage to the pension system than any other governor. and you are dumb enough to believe his cock and bull story of saving the system. I guess you they are right , when they say, you cant fix stupid.

    Reply

    • Posted by Tough Love on March 31, 2015 at 3:39 pm

      The only thing YOU believe is that Public Sector workers are entitled to a CONTINUATION of the FAR FAR better Pension/Benefit deal than the Taxpayers that pay their way.

      They’re NOT.

      Reply

      • I don’t see how a plan being any better or worse than the private sector has anything to do with it. What matters is there is no money to pay for these benefits. The state and its municipalities are like any other bankrupt. They need to void the existing promises and start from scratch.

        Perhaps they can just be enrolled in the Soc Sec program by retroactively paying into that system so then all are in the same boat, but whether the plans are better or equal to the private sector has nothing to do with the issue and just makes your arguments sound like rank envy.

        Reply

        • Posted by Tough Love on March 31, 2015 at 7:32 pm

          Quoting … “I don’t see how a plan being any better or worse than the private sector has anything to do with it. ”

          Wrong. With Private Sector Taxpayer responsible for 80-90% of the total cost of Public Sector pensions, there is ZERO justification for ANY (yes ANY) greater Public Sector pensions or benefits …. whether we had the money or not (as there are FAR better uses for extra revenue than unnecessarily overcompensating our Public Sector workers).

          With Private Sector Taxpayers footing most of the cost,EQUAL but NOT BETTER Public Sector pensions & benefits sure DOES matter.

          Reply

          • The arrogance is overwhelming.

          • Posted by Tough Love on March 31, 2015 at 11:35 pm

            Brian D, And your stupidity is beyond pale ……. or is it simply GREED because you benefit from a continuation of the current structure?

          • Quoting: “and your stupidity is beyond pale”

            Yes, I guess I am stupid for expressing prior solidarity and agreement with many of your posts. You obviously are very narrowly focused on “fairness” – the buzzword of the left – and for some reason have a serious hate on for public workers.

            I have pointed out that the benefits have grown unaffordable, but they were not always so. The reasons why they are are macroeconomic, but you evidently think only in one dimension. A pity since you seem very familiar with pensions, and armed with a broader understanding of how inflation has been the real cause of the problem you might have made a valuable and more persuasive contribution to the debate. Your one sided and me against the world approach makes you come off as bitter and angry. Too bad.

            To reiterate my own views in this final post here, the only relevant point to pension reform is that pensions and health care benefits for public workers and retirees must be scaled down to avoid screwing the taxpayers. By focusing solely on comparisons to how much worse the private sector has it (btw, no member of my family is a public workers and I draw no pension nor will I) as the basis of your criticism, you weaken the call to action and play right into the hands of those who accuse you of being against PWs because of envy.

            What matters now is to fix the problem, not whine about the inequity of it all. I pity you for not having a life. Since it seems like this forum is just you vs public workers, I am moving on. Thanks for clarifying your position that 98 percent agreement on solutions is not good enough to avoid a label of “stupidity beyond pale”. Again, you are the most arrogant person I have ever encountered, and I feel obligated to say this as someone who actually AGREES with your policy prescriptions. By all means go back to being a “nowhere man” making all your nowhere plans for nobody….

            BTW, as a patent attorney dumb enough to have returned to NJ after working in NC and the Patent Office in VA, i fear your label is appropriate, just not for the reasons you think. I am rectifying that mistake this year, though.

          • Posted by Tough Love on April 1, 2015 at 3:12 pm

            Brian, Mia Culpa ….. i was off-base when I responded to you that way … and was sorry I sent it as soon as I did so. It was a gut-reaction to one element or reform goals that I believe to be very important

          • Posted by Tough Love on April 1, 2015 at 4:06 pm

            Brian, So that you understand where I’m coming from, I will explain in a bit more depth …

            It’s not really equal Public Private Sector pension “benefit” levels, it’s the COST to Taxpayers of Public Sector pension promises that is important, and within reasonable boundaries, equal Public/Private Sector “benefits” leads to roughly equal “costs”. So my saying equal benefits, is essentially a proxy for taxpayer contributions (levelized as a % of pay, and using appropriate assumptions) toward Public Sector pensions roughly equal to what Private Sector employers contribute toward their workers’ pensions.

            And keep in mind, my fairness position as described above is in the context of Public Sector workers (on average) only paying for 10-20% of the total cost of their pensions …. with the Taxpayers responsible for the 80-90% balance.

            And of course I’m NOT saying to JUST look at pensions & benefits, but the “equality” I call for is in “Total Compensation” (wages + pensions + benefits) in comparable occupations. So if it can be demonstrated that “wages” are less (on average) for Public Sector workers, then that can and should be offset by higher pensions/benefits sufficient to offset that wage difference. In fact, one study suggests that in NJ, average Public Sector “wages” are 4% less than those of comparable Private Sector workers* …… of course, right now, the Public Sector’s “advantage” in pensions & benefits FAR exceeds that wage shortfall.

            Even if the equality that I feel appropriate as a goal is unobtainable (and it may be …. especially for safety workers) we still should measure other options against a structure that IS equal, because that is the only way to judge the COST-Fairness of alternative proposals. For example, I wouldn’t argue that safety workers deserve “SOME” premium because of nature of those jobs, but how big a premium is certainly arguable….. 25% greater pensions, 50% greater pensions ?

            I’m sure many unbiased observers would feel that that a 25% or 50% Pension/benefit “premium” seems OK and reasonable, but how many of those unbiased observed realize that RIGHT NOW, safety workers pensions in NJ for the 55 year old retiring with 25 years of service, TYPICALLY have a “value” at retirement (which means that it encompassed not just the greater $ pensions form greater “formulas”, but from the incremental value of being able to collect that unreduced pension 10 years earlier than their Private Sector counterpart) 400% to 500% of their Private Sector counterparts? I find it hard to believe that ANYONE (w/o a vested interest in such pensions) would find that reasonable, necessary, fair to taxpayers … or, if they have any financial sense, affordable long-term.
            ————————————-

            * that same study concludes that on average, NJ worker Public Sector “Total Compensation” is 23% higher (34% higher if the incremental value of much greater job security is included).

        • Posted by S Moderation Douglas on April 2, 2015 at 1:14 am

          “I don’t see how a plan being any better or worse than the private sector has anything to do with it.”

          Total compensation has everything to do with it. Too little and you will not be able to retain qualified workers. Too much and it is wasteful and unfair to taxpayers.

          The current problem is exaggeration of public sector pay, and painting with a broad brush. Clearly many public sector workers….even with the value of benefits….earn much less than private sector counterparts.

          And stressing only the difference in pensions is misleading. It is quite likely a public sector professional can have twice the pension of a similar private-sector worker. Even if that private sector worker has NO pension (or employer paid retiree healthcare) but earns 50 percent more in wages, his total lifetime compensation will be higher.

          And, ultimately, *all* the pension is proceeds of taxpayer funds.

          “Public Sector workers (on average) only paying for 10-20% of the total cost of their pensions …”

          …..is a red herring. Some public workers pay NO direct contributions. It is a negotiated term, often because it is more beneficial to the employer. It is *all* part of the total compensation.

          Safety workers are a special case. Earlier retirement is not just a “benefit” for the employee, it is also a cost saving advantage for the employer (that would be the taxpayer) How much is a cop worth? I don’t know. I have no problem with a cop or firefighter making a lifetime average income as much as a good car or real estate salesman.

          For Christie to call pensions an “insatiable beast”, when that “beast” has been intentionally starved for more than a decade is ludicrous. Given that, it is true there is not enough money. Unfortunately, it is now a lose/lose situation.

          Reply

          • Posted by Tough Love on April 2, 2015 at 1:36 am

            Quoting … “The current problem is exaggeration of public sector pay, and painting with a broad brush. Clearly many public sector workers….even with the value of benefits….earn much less than private sector counterparts. ”

            Use of the word “many” is misleading. Is 10 “many” ? Is 100? Is 1000? Depends on the size of the population universe from which they arise.

            An ACCURATE way to put it would be to state the percentage. From the study that you like to quote, in NJ (which is focus of THIS Blog) on average (for all workers combined), Public Sector “wages” are 4% lower, but Public Sector total Compensation (wages + pension + benefits) are 23% HIGHER … and 34% HIGHER if the incremental value of Job Security is also included.

            And readers should be aware that the “Professional” group that you singled out to discuss includes only encompasses 2% of all Private Sector workers. Yup…. just 2% . Big Woop !
            —————————–

            And WOW, you’ve outdone yourself with BS this time:

            * So, Public Sector workers ONLY paying 10-20% of their enormously rich pension is …………. “beneficial to the employer” (meaning the Taxpayers).

            Really, in what universe?

            * “Safety workers are a special case. Earlier retirement is not just a “benefit” for the employee, it is also a cost saving advantage for the employer ”

            Really, in what universe?

      • Posted by Anonymous on April 1, 2015 at 1:45 am

        B.S. they have payed their own way for the most part and lately more so.

        Reply

        • Posted by Tough Love on April 1, 2015 at 2:07 am

          Oh really ? Well, If you work up the numbers, you’d see that ALL of the worker’s own contributions (INCLUDING the investment earnings thereon) RARELY accumulates to a sum at retirement sufficient to buy more than 10-20% of their VERY VERY rich pension that they have been promised.

          The Taxpayer contributions and the investment earnings thereon ………. .investment earnings that in the absence of the need to fund these grossly excessive pension promises would have stayed in the Taxpayers’ pockets, perhaps to help fund their much SMALLER retirements ………… are responsible for the 80-90% balance.

          Reply

  2. Posted by Tough Love on March 31, 2015 at 3:37 pm

    From Gov. Whitman’s quote …”When I left office, the state had the largest surplus in its history to that date. ”

    I’d bet that the pension assets (which gets her to that “surplus”) included the $2-$3 Billion in POB’s the State issued, but the obligation to repay the POB principal and interest (now being a legal “debt” obligation of the Taxpayers) is ignored.

    Reply

  3. Posted by Anonymous on March 31, 2015 at 5:15 pm

    TL didnt you read what John posted. Whitman did the most damage to the pension system besides governor Christie. I guess you dont agree

    Reply

  4. Posted by skip3house on March 31, 2015 at 7:55 pm

    New News? NJ has not balanced a budget since Gov. Whitman’s crew took charge, making a mockery of 8th grade arithmetic. Now, current NJ citizens are paying for services given to past taxpayers, many moved or passed on.

    Reply

  5. Posted by Anonymous on March 31, 2015 at 8:05 pm

    Whitmans showed the way when it came to being a first rate crook. others saw how easy it was and followed suit.

    Reply

    • Posted by Tough Love on March 31, 2015 at 8:13 pm

      That ignores the 2 biggest crooks of all …… The the Public Sector Unions and the Elected Officials whose favorable votes (on NJ’s over-stuffed pension & benefits) were BOUGHT with Public Sector Union campaign contribution support….. or threats to get them out-of-office if they refuse to go along with the Union’s demands.

      Reply

    • Posted by skip3house on March 31, 2015 at 8:35 pm

      I did say her ‘crew’, not herself……..

      Reply

  6. Posted by S Moderation Douglas on April 2, 2015 at 4:15 am

    A long time ago, on a blog far away, we were cautioned by a wise man to disregard Tough Love and his confederate SurfPuppy.

    SurfPuppy and his various aliases lost all relevance long ago, and Tough Love has succeeded in following into futile logic limbo.

    Thank you, Ted, for trying to warn us.

    Reply

    • Posted by Tough Love on April 2, 2015 at 10:33 am

      Ah yes, the incredibly strange TED who claims (via handles) to be a doctor, lawyer, candlestick-maker, and even GOD…. and rarely end any comment without something like “zzzzzzzzzzzzzzzzzzzz”.

      And of course, also being a retired (Calif.) Public Sector worker, when the subject is Pension/Benefit reform. he speaks with the bias of extreme self-interest …. as do you.

      Reply

  7. Posted by Anonymous on May 24, 2015 at 9:02 am

    TL and devout followers; individuals presenting a right wing conservative perspective based on half-truths and lies.

    TL continual posts repetitive misinformation citing sources with extreme ideology. Yet sumarial dismisses other posts with conflicting opinions and sources.

    Specifically, purposely misstated the tax status of public pensions in the following post; https://burypensions.wordpress.com/2015/05/22/christie-curses-out-nj-media/#comments When called to task tried to double talk their way out of it. Standard operating procedure for most of their commentary.

    Fair and equal for all is the mantra. Fair enough, but not when I suggest Federal workers and members of our beloved Armed Forces be part of the bigger conversation. The response, they’re different. But why, because they risk their lives like first responders at home. Their DBP are paid with Federal tax dollars as opposed to State or Local. Everyone knew the job risks when they accepted employment. But they also knew what their salary, pension, and benefits were supposed to be.

    To blame and demonize public workers for the current situation is unfair and untrue. Do politicians make “deals” with unions that don’t always have the taxpayers best interest? I think everyone knows the answer to that is yes. But politicians are always making “deals” it’s what they do. Just ask the various segment market corporations; defense spending (lucrative contracts), farming (subsidies) and the list goes on and on.

    Your bully tactics and demeaning attitude only motivate me more to push back your parties ridiculous vision for NJ and America. Yes I’m sure John knows all of our IP address, so you and your business name can be exposed as well.

    The purpose of continually posting this comment is to allow the counterpoint perspective to be heard. I will no longer personally engage your comments tit for tat.

    Reply

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