FE2 – Preserving Intergenerational Equity

Our analysis seeks to maximize efficiency and preserve intergenerational equity.

That was the second paragraph and it made it difficult to read the rest.

New Jersey Policy Perspective (NJPP) released a report yesterday citing nine bad decisions made over the last quarter century by Republican governors and the courts that brought New Jersey to this bankrupt state which they teased with a youtube:
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and this introduction:

Nine key decisions have driven this downward spiral. Both major political parties and all three government branches contributed to the failure. Behind each decision were two unstated assumptions: that policymakers can promise essential services without bothering to pay for them, and that future taxpayers should bear the burden for today’s spending even though they will not benefit from it. At the heart of this duplicity is the intentional, systematic and large-scale raid by governors and legislatures of both parties of the assets that had been set aside for the funding of pensions and retiree health benefits for hundreds of thousands of public employees. The New Jersey Supreme Court abetted this massive, fraudulent raid.

The NJPP report fingers some of the villains (if you do a search the word ‘Florio’ does not come up and ‘Corzine’ is only a footnote) who brought us from this:

Just three years following the enactment of the [1994] Pension Reform Act , pensions’ unfunded liabilities multiplied more than five-fold, to $4.2 billion from $800 million. (page 3)

to this:

The unfunded liabilities have reached a staggering $194.5 billion, according to a New Jersey Watchdog analysis of State Treasury records. The shortfall has increased by $19 billion — or roughly 10 percent — in the past year.

Twenty-five years of blatant generational theft under various guises have made the possibility of any type of generational equity going forward impossible (except if benefits were to be cut to the level at which they were funded which would mean about an 80% immediate across-the-board cut).

Perhaps instead of ‘preserve’ the FE authors had inserted ‘take a stab at’ it would have made some sense since you can’t preserve something that never existed.

38 responses to this post.

  1. Posted by skip3house on September 15, 2016 at 5:25 pm

    Would it be better to suggest solutions to the ‘9’ rather than re work the wording?

    Reply

    • No, understanding the real depth of the problem is a critical first step or else you get more non-solutions that exacerbate the situation like those 8 (not sure how not spending money on the ARC tunnel made the NJPP list).

      Reply

      • Posted by Anonymous on September 15, 2016 at 6:02 pm

        Problem under the assumption that, in addition to the construction jobs, businesses and jobs would have been created as a result of the project.

        Reply

        • Posted by bpaterson on September 16, 2016 at 2:03 pm

          potential jobs are nice to hope for and velocity of money would at least be taxed for the coffers, but then the billions of potential overruns translating to debt would have damaged us further. NJPP, in effort to justify their paltry existance is probably just another political whitewash avoiding that the main issue came about between the years 2000 and 2010. Like the star ledger and suburban news, just a waste of paper and print IMO

          Reply

    • the problem is people will not accept the fact that the only solution is very painful. there is no shuffling broccoli anymore. boomers are ruining the economy through greed and debt. defined benefits are ponzi schemes. boomers love ponzi schemes because they wont be around to pay for it. boomers want all the benefits and they do not care one bit about the future, at all. i have talked to many of them. they admit it, freely, they admit it. they just want what they want.

      Reply

  2. Posted by barbara on September 15, 2016 at 8:43 pm

    Do you ever have anything positive to say?

    Reply

    • Posted by Anonymous on September 15, 2016 at 9:19 pm

      Evidently Bernie Sanders does. His “free” college education would balance the inter generational wealth by taxing the insatiable greedy Wall Streeters and other 1-2 percenters.

      Reply

    • there is nothing positive to say when the entire country is caught in the defined benefit spinning toilet flush that is currently taking down a lot of people….being positive would be accepting a fairy tale.

      “oh think positive”……ok, yea, sure, that’s gonna save the ponzi scheme defined benefit plans…..sure…..

      Reply

      • Posted by Anonymous on September 19, 2016 at 12:41 pm

        You’re not serious with all the 1-2℅ wealth growing at an expotnetial rate and trust me they’re not in any DBP plan.

        But if you are then don’t be one of those back peddling exceptionaries who say not the Feds or at least exclude the military – no disrespect but it’s about the numbers right? The Federal non SS & Medicare P&B deficit is ~$3T!

        Like SMD said don’t pay the bills your debt grows!!

        Reply

  3. “New Jersey Policy Perspective drives policy change to advance economic justice and prosperity for all New Jerseyans through evidence-based, independent research, analysis and advocacy.
    There is the give away that this is a POLITICAL wingnut organization, be it left (in this case) or right. When you start to be an “advocate” you stop being neutral and do not produce unbiased “research”.

    Reply

    • Posted by boscoe on September 17, 2016 at 1:17 am

      I am quite familiar with eight of those nine decisions (the exception being the ARC project) and I can assure you that they happened pretty much as NJ Policy Perspective described them. They were made with varying degrees of good intentions or abject cynicism, but they were all foolish from a prudent long-term fiscal perspective. However the combination of immediate budgetary pressures, election calculations, arcane pension mathematics and product-pushing financial whore/advisors overran any effort to evaluate them carefully and in a timely manner. As far as the courts are concerned, their decisions about incurring debt without voter approval stemmed from a too-sensitive deference to the Legislature’s singular power to appropriate state monies. In the absence of a “full faith and credit” general obligation bond issue that compels future Legislatures to repay the borrowing with interest, so-called “subject to appropriation” debt issued by the state or by one of its surrogate financing authorities is theoretically subject to each successive Legislature agreeing to do its part, since one Legislature cannot bind the decisions of future Legislatures. In reality, that is nonsense; I cannot recall any Legislature refusing to appropriate funds to repay state borrowing — except of course, when it came to the pension funds, where it happened routinely even though it was not considered “borrowing.” It was financial depletion with “repayment” made only through smoke and mirrors.

      Reply

      • Posted by skip3house on September 17, 2016 at 7:39 am

        @ boscoe.. ..best summary here. At least the Trenton gold dome was redone, but heard Mrs. Whitman’s inner circle excluded Don DiFrancesco (Sen. pres), and all generally failed in good advice for her tenure.as NJ gov.
        NJPP has defined problems, now let’s come up with solutions….

        Reply

  4. Posted by George on September 16, 2016 at 5:13 pm

    I would suggest #10 be the unexpected trillion dollar costs after 2001 associated with the war on terror. To the extent the money was spent in NJ it gave the impression of a better functioning economy than reality. At the same time none of the expenditures were invested for future return, unless you take Trumps ‘take the oil’ talk seriously .

    Before 2001 you can sort of understand where the future money might come from but once the war on terror spending got started it is all spent. To the extent the social security trust fund was ever real, it was spent in Middle East wars. So there is going to be funding problem.

    Good news!!! Jessica Alba appears to be selling her cosmetics biz to Unilever for a billion, just like the NJ Div of Investments valued it. If I understood that right.

    Reply

  5. Just remember, state and local government pensions are just one aspect of the generational inequities foisted on those coming after by Generation Greed.

    https://larrylittlefield.wordpress.com/2014/08/10/generational-equity-and-the-legacy-of-todays-politicians-update/

    Foisted on younger generations that are poorer. And have grown up, on average, in less stable families.

    The underlying issue is values. The rest is rationalization.

    Reply

    • Posted by Anonymous on September 16, 2016 at 9:07 pm

      LL don’t burst the anti public’s bubble…they’re just starting to have some fun!

      Reply

    • I read through the paper, and it’s actually pretty fair.

      The usual crap you read would generally pretend that either the retroactive pension increases for public employees, or the pension underfunding for tax cuts, never took place.

      But Mr. Bury is correct, there is no “preserving” generational equity now. All that can be done is impose a psychological price on Generation Greed. Those politicians who promised something for nothing were elected by those who wanted something for nothing, and benefitted from something for nothing. This needs to be said over and over.

      Make Generation Greed accept that they are Generation Greed or they will just keep taking.

      Reply

    • boomers are so greedy and they do not care about anyone else, in general, of course, not all of them, but most of them are ME ME ME. they care not one iota for society nor for the collateral damage done by manipulating the system for THEM.

      let them be poor when they are old. they deserve it for trying to pull this kind of scam on younger people.

      Reply

      • Posted by Anonymous on September 19, 2016 at 12:35 pm

        Oh you mean not like generation whine, please….As far as seniors (as you say not all of them) they’re all for cuts so long as it not going to impact them. In fact that’s true for ALL of us.

        Reply

  6. More and more people are beginning to realize that Defined Benefit plans like public pensions are not sustainable, including the private sector which has more or less done away with them. Here is my solution to this looming crisis that is only going to get worse without any correction of course:

    https://drive.google.com/file/d/0B90sU3A85q46OE9BZHJFSWEzbGM/view?usp=drivesdk

    Please help spread the word…

    Reply

  7. Aside from Abbott funding, I thought the major topic omitted by the NJPP was that NJ’s economy has seriously slowed down since 2001.

    Had NJ grown at the race it grew from 1950-2001, the state would have billions more in revenues. Our debts might be the same, but our ability to service those debts would be stronger.

    For such an important topic, it’s infrequently addressed. This piece from Michael Diamond of Gannet does explore NJ’s economic slowdown:

    “— New Jersey’s $504 billion economy, measured by the Gross Domestic Product and adjusted for inflation, was the nation’s eighth biggest last year. It is driven by high-paying industries — finance, real estate, science and technical services. But the state’s economy has grown a meager 0.8 percent a year since 2000, about half the rate of the U.S., according to the U.S. Bureau of Economic Analysis.”

    http://php.app.com/taxpain/2015/10/17/business-cry-fix-taxes-now/

    Reply

  8. This is a look at the causes of the Pension Crisis that the NJPP ignored, our economic stagnation and the costs of Abbott.

    http://njeducationaid.blogspot.com/2016/09/the-economy-and-abbott-what-njpp-missed.html

    Reply

    • Posted by skip3house on September 27, 2016 at 6:28 pm

      Sure wish tone not be set by using loose terms like liberal, left leaning,…..Offsets true efforts at common sense,….

      Reply

      • Posted by Anonymous on September 27, 2016 at 10:00 pm

        Imbecile Trump will set America straight and on a path to oblivion….how’s that for avoiding the mainstream terminology?

        Reply

      • Skip3house,

        I took your advice and deleted a few references to the NJPP being liberal or left-leaning.

        It’s common sense that NJ’s economic stagnation and Abbott spending are factors in our pension crisis, but the topics are almost never connected in journalism and analysis on the topic. I find that most attempts at explaining the pension crisis go like this “the governors raided the pension funds.”

        Almost no one looks at _why_ the governors and legislatures wanted/needed to “raid the funds.” Whitman’s tax cuts are (appropriately) blamed, but why has NJ been unable to fully fund the pensions in the sixteen years Whitman has been out of office and now that income taxes are actually ABOVE where they were during Florio’s term.

        Reply

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