Pension crisis and my Asbury Park Press endorsement

By Dan Jacobson

So I’m running as an Independent for the state Assembly. And I can’t wait to face the Asbury Park Press editorial board for the endorsement interview.

That ought to be interesting. I’ve been blasting them as hypocrites of the first order for over a decade. I also call them assholes whenever necessary. They deserve it.

Yet on the most important issue facing our state government – the $120 billion shortfall needed to pay pension and retiree health benefits – suddenly the Asbury Park Press has eerily followed the triCity line.

In other words, I look forward to their endorsement.

From my column last week:

Any day now, you’ll see our Republican Governor and Democratic legislative leaders announce a deal to “reform” our state pension system.

Don’t believe it. This is a problem requiring 20 years of fiscal discipline. These people can’t see beyond the next election in 20 weeks….

So when you see our Republican Governor and Democratic legislative leaders announce some deal to address this problem, remember this: It’s all about the election in five months when the Senate and Assembly are up for grabs. It’s not a permanent deal. It can always be reversed or changed later…

Sure, they’ll make some progress with their deal – just enough to con you to think something is getting done. But not on a scale that really solves this problem. There’s not enough political upside and way too much political downside.

Indeed, the next day such a deal was announced. Three days later, the Press ran a front page article on the agreement entitled “Experts: Reforms not Enough”.

A better headline would have been “Jacobson was right”. Here’s the Press:

Government workers are white-hot angry over a proposal to make them pay more for their pensions and health care.

But with the state now facing a $120 billion long-term cost for the unfunded portion of pensions and retiree health benefits, experts say that the measure, expected to be voted in the full state Senate on Monday, does not go far enough.

“It’s a healthy modest bipartisan step, but it doesn’t deal with a lot of the major problems,” said Michael Riccards of the Hall Institute, a nonpartisan think tank that specializes in state issues. “I see a lot of it as postponement.”

Jeremy Gold, a New York-based actuary consultant who reviewed the pension and benefit reform proposal for New Jersey Press Media, agreed. “Any step in the right direction, I don’t want to be too harsh about,” Gold said. “But they are a long way from solving their problems.”

…(E)xperts see flaws in the package. Riccards, who has written extensively about the pension and benefit problems, said the state has yet to deal with the high cost of health care, such as the price of drugs, especially common drugs such as antibiotics.

He also noted that the state must still pay for retirees’ medical care out of the annual budget. In tough economic times, that could be a problem, Riccards said.

Gold said he takes issue with how the funding levels of the pension funds are calculated and said government rules over public pensions are too lax.

Tell you what. I was certain the Press would fall for the hype and cover the bipartisan “reform” as if it solves this catastrophic $120 billion crisis. They’re usually pretty clueless. To my shock, they got it right.

As did I.

Hell, I didn’t even have to see the so-called reforms beforehand. I knew what was coming.

(Sure, I’d vote for this bipartisan deal – it’s better than doing nothing. But I wouldn’t brag about how great it is, as you’ll now see the Governor and some Democratic leaders do as they compete for votes this November. The experts interviewed by the Press had it right: This is only a modest bipartisan start – the tough stuff still remains. Why am I not shocked?)

OK, so now what?

The elected officials are utterly incapable of dealing with something of this magnitude: The proposed state budget for this year is only $29 billion compared to the $120 billion gap we face on pensions and retiree health care.

My framework for a solution? Ripping the problem away from the politicians. I see no other way out.

I’d advocate a constitutional amendment – approved by the voters – establishing an independent Board of Trustees to oversee the pension and retiree health benefits system. They’d calculate the true amount necessary to make the system solvent – and take it out of the Treasury every year.

No cheating on figures. No cheating on the funding. Remember that the pension system has been underfunded for over 15 years. The politicians spent that money elsewhere. Just like what happened with Social Security on the federal level for the past 20 years. But in the end, we’re all responsible for this debacle. We elected these people.

The problem of pension and retiree health benefits in New Jersey can’t be solved without spreading the pain among everyone in our state. And the sooner we get to it the better. Otherwise, this debt will destroy us – and you’ll see the streets of Trenton looking like Athens, complete with the tear gas and rioting. What a nice image of New Jersey as a place to live and locate your business.

The constitutional amendment I envision would empower the independent Board of Trustees to draw up a rescue plan with the directive to seek equity in the sacrifice of the populace. That means benefit cuts to workers already retired and who will retire. And new revenue from taxes. The Amendment would specifically require both. You can’t do it any other way. Any politician telling you otherwise is lying. If you want to keep buying the bullshit, go ahead. It’s worked great so far.

Remember this: The more you spread around the sacrifice, the less of a burden it is on everyone individually. But you can never pull that off in the political system. That’s why I’d have the Pension Trustees do it for us. Of course, their rescue plan would require voter approval. You got to have that to raise taxes and cut benefits in this fashion.  

If voters reject their rescue plan, the Trustees would still take what’s needed each year from the state Treasury to fund the system. No more putting off Judgment Day. And then the three ring circus – the Governor, the Senate and the Assembly – can figure out how to pay for it. That ought to be one hell of a show.

In my proposal, I’d have the Board of Trustees appointed to staggered and lengthy terms by the Governor with the approval of the state Senate. They’d be barred from political activity, and would have no past connections to unions for a decade if not more.

The concept is to get a group of our state’s best talent to tell us the truth, and present us a plan made in good faith to deal with this issue. In the end, we make the call. If the Trustees get too political, or go too far off the rails, the voters would reject it. Anyone got a better idea?

An independent Board of Trustees sounds reasonable to me. Which means it will never happen. But in the unlikely event I get elected to the Assembly – only one Independent has done so in 50 years – at least someone will stand up and speak the truth about this explosive problem.

Just like I did in this space last week – as the Asbury Park Press most unexpectedly confirmed a few days later.

Man, this campaign is already getting awfully weird, and it’s only been three weeks.

(The 11^th District where I’m running includes: Asbury Park, Long Branch, Red Bank, Ocean Township, Neptune, Neptune City, Interlaken, Deal, Allenhurst, Loch Arbour, West Long Branch, Eatontown, Shrewsbury Borough, Shrewsbury Township, Tinton Falls, Colts Neck, Freehold Township and Freehold Borough.)

Posted: June 23rd, 2011 | Author: Art Gallagher | Filed under: Dan Jacobson, NJ State Legislature | Tags: 11th Legislative District, Dan Jacobson | 4 Comments »

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