Blurry Choice to Fix NJ’s Pension Crisis

Thomas Byrne is believable when he starts his nj.com opinion piece with:

I’m watching the state pension fund melt as the stock market drops……The fund balances are declining for two reasons. First, stock markets here and abroad have been bad for nearly a year. Second, our cash flow is negative as over $9 billion in annual benefits dwarf about $3 billion in contributions from the state and its municipalities.

since he is the Chair of the State Investment Council and that fund was officially at $71.69 billion as of 12/31/15 though, considering all the ‘alternative’ investments included and the recent stock drops, is probably closer in real value to $50 billion now while, to cover all the liabilities accrued, it should be at $250 billion.

But Tom Byrne is much less believable when he dons his other hat as shill for (and member of) Chris Christie’s handpicked Pension and Benefit Study Commission where he claims to see only two clear paths to a solution:

1. Ask taxpayers to continue subsidizing a level of health benefits that even the Obama administration says is too rich.
2. Put those benefits at or near the highest level specified under Obamacare, and use those savings to fill the hole in the pension funds.

The Obamacare reference is to the level of health benefits that New Jersey public employees and retirees get which the president’s people define as ‘cadillac’ (though they have yet to assign a model of car to public pension benefits) so the idea is to cut those costs by about $3 billion at all levels which would mean that a typical employee who is now paying $2,000 annually for health benefits out-of-pocket (through copayments, deductibles, or premiums) would need to pay about $15,000 annually.  If employees balk then we go back to what always seems to be option one: the taxpayer pays.

But another option exists though those charged with finding solutions don’t see it so clearly.

Clean up New Jersey.

Roughly 20% of all taxes paid to New Jersey are paybacks for campaign contributions, favors for friends, or useless spending that somebody particularly benefits from but nobody in a position of responsibility (assuming such a role exists in the state) has any incentive to curb.

A partial list of alternatives:

1. eliminate county (or municipal) government
2. tax out of existence all campaign contributions
3. put in place ethics laws that bureaucrats chosen for their fealty to the status quo have no role in drafting
4. enforce those ethics laws

All clear and obvious to anyone seriously looking out for the welfare of the general public.  But to those leeching off the general public – a little blurry.