New Jersey Public Pension Slugfest Omits 15 Years of Governors Stealing From Workers
Jan 7, 2011 at 2:26 AM
DailyBail in Public Employees, christine todd whitman, new jersey, pension timebomb, pensions

The shell game started in 1995 with Christine Todd Whitman.


Source - Yves Smith

If you live in the world according to the mainstream media, the row between state executives and unions is all about (by implication) greedy unions trying to preserve their perquisites when budget “realities” demand that they suffer. Consider this excerpt from a recent article New York Times article about the fight in New Jersey:

Across the nation, a rising irritation with public employee unions is palpable, as a wounded economy has blown gaping holes in state, city and town budgets, and revealed that some public pension funds dangle perilously close to bankruptcy.

Um, the “wounded economy” trashed the state budget? Funny how the article fails to point fingers at the real perp, which is the global financial crisis, brought to you by your friendly TBTF banks. Andrew Haldane, Executive Director of Financial Stability for the Bank of England estimated that the costs of the financial crisis was 1 to 5 times global GDP. If you were, as economists recommend, to try to tax them to recoup the cost of the damage they did over a period of 20 years, the charge would be over $1.5 trillion a year. That’s more than the market cap of the biggest global banks. Funny, their staff and executives got record bonuses in 2009. So maybe the unions have the wrong strategy. They need to screw up in a particularly destructive manner.

And how exactly did the crisis “reveal” that some pension funds were close seriously under water?  A more accurate rendition would be that, at least in New Jersey, the state has been raiding the pension kitty for over 15 years.  This is not news to anyone who has been paying attention, any more than underfunding of corporate pensions.  In the Garden State’s case, Governor Chris Christie skipped the required $3.1 billion pension fund contribution last year.  He claimed this move was to force reform, but what impact does another $3.1 billion failure to pay have on an unfunded liability that was already over $50 billion?

The shell game started in 1995 with Christine Todd Whitman.

And what should the unions do now that they are in this mess? I’d fight for shared sacrifice. The dire state of the budgets is hitting everyone. The union members will have to take less, as many Americans have had to. But they need to recognize that these fights over pensions are an effort to eliminate public unions as a political force; the budget battles are simply a useful excuse for the right to break a long-standing foe. Thus the unions need to find a way to regain the moral high ground. New Jersey, one of the richest states in the US, has mismanaged its way into this mess. That fact needs to be hammered hard, and the unions also need to put forward a realistic plan in which they make concessions provided upper income earners do their part to address the budget shortfalls.

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