Although he sells himself that way, Gov. Chris Christie is not a “reformer.” He simulates being candid, but uses that illusion to cloak a host of crooked problems he’d be hard pressed to explain. And he’s the big hope of the Republican party? Gee, I hope so:
How can anybody fill 88 pages on New Jersey’s fiscal catastrophe and not once use the word “corruption”? That is what authors of the State Budget Crisis Task Force New Jersey Report managed to do.
DIPPERS: Of all factors pushing New Jersey off its own self-inflicted fiscal cliff, the biggest is the hidden pension debt built up over decades.
The report, released Thursday, outlines much of the malfeasance and nonfeasance of state and local politicians over the decades that put the state with the highest taxes in one of the deepest holes of public debt.
But the C-word is nowhere to be found.
Of all factors pushing New Jersey off its own self-inflicted fiscal cliff, the biggest is the hidden pension debt built up over decades.
That totals more than $25 billion based on delusional official accounting.
According to the report, “… the governor and the legislature made major changes to scale back pension benefits, including suspending COLAs for retirees and requiring increased employee contributions. As a result of these changes, the state’s unfunded liability was reduced by 30 percent from $37.1 billion to $25.6 billion, which increased the system’s funded ratio from 56.4 percent to 65.2 percent.”
Unfortunately, official accounting is rigged to hide the true magnitude of pension debt. Based on extrapolation using the state’s own assumptions and data from the latest full-year U.S. Census Survey of State Administered Pensions, I calculate as of this year New Jersey actually is in a $168 billion pension hole.
Yes, New Jersey’s pension problems have their roots in 1997, when Gov. Christine Todd Whitman first began to play games with state pension money to fund (you guessed it) tax cuts. She floated a pension bond that haunts New Jersey to this day, and all NJ can afford to pay is its interest.
And official accounting never includes the cost to taxpayers of abuses such as double dipping.
Those abuses add up in New Jersey and virtually every other state. Defenders of government defined benefit pensions try to claim that while such abuses exist, they don’t contribute much to total pension costs. However, they cannot prove that.
What is proven is that in New Jersey at least, abuse is pervasive.
New Jersey Watchdog editor Mark Lagerkvist found rampant abuse while looking into just one small part of the pension system.
Lagerkvist exposed 60 double-dippers collecting nearly $10 million a year – $4.4 million in pensions in addition to $5.5 million in state salaries.
The administration of self-proclaimed reformer Gov. Chris Christie hired one third of them.
Lt. Gov. Kim Guadagno made false statements in 2008 when Monmouth County Sheriff to get her chief officer, Michael W. Donovan Jr., nearly $85,000 a year in retirement pay in addition to his $87,500 annual salary.
Under state statute, “Any person who shall knowingly make any false statement or shall falsify or permit to be falsified any record or records of this retirement system … shall be guilty of a misdemeanor.”
In May 2011, a state pension board requested a criminal investigation of the Donovan matter. The case was referred to the Attorney General’s Division of Criminal Justice. However, the DCJ investigation is riddled with conflicts of interest.
Last week Christie announced Guadagno will be his running mate again in 2013.
Louis Goetting, who collects $229,000 a year from the state – a $140,000 salary as Christie’s deputy chief of staff plus $89,000 in state pension from early retirement actually is a triple dipper. Ironically, Christie hired Goetting in 2010 as a budget guru to help trim the cost of government.
He also received two golden public parachutes – severance packages of $190,000 from Brookdale Community College in 2009 and $180,000 from University of Medicine and Dentistry of New Jersey in 2002. Goetting has gotten more than $1.1 million in pension and severance pay – and he still draws a six-figure salary from the state.
Ezra Klein, who’s been a reliable White House conduit, says the White House is going to make a deal with the Republicans that will accept a relatively small increase in taxes on millionaires — in exchange for the chained CPI that will cut benefits for the vulnerable elderly. By the way, not only will the chained CPI cut benefits for the elderly (disproportionately affecting women), it will also affect benefit payments for disabled veterans.
In addition to being an actual cut, it’s a cut that hides its face behind the skirts of technical jargon. After voters were told that Social Security cuts are “off the table,” we learn that they’re simply going to be hidden under a different shell in this game. (Remember when I told you to pay attention to Obama using the word “slash”?) This is more than discouraging; it’s undemocratic. Voters were clear and unambiguous: they supported Obama to prevent Medicare and Social Security cuts, and the president accepted their support by assuring them it wouldn’t happen. But he used enough weasel words that some of us figured what was coming.
Hi, my name is [NAME] and I’m a constituent living in [CITY].
I would like the senator to commit to opposing any cuts to Social Security, Medicare or Medicaid benefits.
This includes committing to oppose any plan which raises the retirement age or Medicare eligibility age, or changes the cost-of-living adjustment to reduce benefits over time — all of which are benefit cuts.
Can I count on the senator to vote against any bill that includes any cuts to Medicare, Medicaid or Social Security benefits?
Here are the coming attractions:
Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White House’s oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion. Congress will get instructions to use this new baseline to embark on tax reform next year. Importantly, if tax reform never happens, the revenue will already be locked in.
On the spending side, the Democrats’ headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits. Beyond that, the negotiators will agree to targets for spending cuts. Expect the final number here, too, to be in the neighborhood of $1 trillion, but also expect it to lack many specifics. Whether the cuts come from Medicare or Medicaid, whether they include raising the Medicare age, and many of the other contentious issues in the talks will be left up to Congress.
The deal will most likely attempt to modify the effect of the chained CPI with a bump in benefits, as recommended by the Simpson-Bowles chairmen’s report. For the typical single elderly woman, the cut from the chained CPI would reduce her monthly benefits by an amount equal to the cost of one week’s worth of food each month at age 80. She would still have two years to wait before receiving any help from the bump-up.The Bowles-Simpson bump-up would restore her monthly benefits to current levels for only two years – and then benefits would fall behind again.
Neither of the two proposals released yesterday include a continuation of the payroll tax cuts — which the CBO says would have the same negative effect on the economy as having no deal at all.
Digby points out that making a deal at this stage that only postpones the debt-ceiling fight for one year means more cuts will be coming — and that Obama wants it that way. She also informs us that the chained CPI will hike taxes in the lower brackets.
Mike Lux says this deal “stinks”:
It is outrageous that Republicans are demanding cuts in Social Security to do this deal, but if the President who ran his entire campaign on fighting for the middle class agrees to it, it would be wrong. It would be bad policy, forcing middle class folks for generations in the future to pay for the tax cuts and wars and bad economic decisions of the Bush years. And it would be politically stupid, beyond the pale stupid- dividing the President from his base and from working class swing voters dependent on Social Security. And this is in a situation where he had all the leverage coming off a strong election victory and taxes scheduled to go up automatically at the end of the year.
Krugman’s reaction is a little more optimistic than mine:
Unlike what we’d heard from Republicans before, this contains stuff that Obama can’t get just by letting us go over the cliff: more revenue than he could get just from tax-cut expiration, unemployment and infrastructure too. But it has a cost, those benefit cuts.
Those cuts are a very bad thing, although there will supposedly be some protection for low-income seniors. But the cuts are not nearly as bad as raising the Medicare age, for two reasons: the structure of the program remains intact, and unlike the Medicare age thing, they wouldn’t be totally devastating for hundreds of thousands of people, just somewhat painful for a much larger group. Oh, and raising the Medicare age would kill people; this benefit cut, not so much.
The point is that we shouldn’t be doing benefit cuts at all; but if benefit cuts are the price of a deal that is better than no deal, much better that they involve the CPI adjustment than the retirement age.
But is this rumored deal better than no deal? I’m on the edge. It’s not clear that going over the cliff would yield something better; on the other hand, those benefit cuts are really bad, and you hate to see a Democratic president lending his name to something like that. There is a case for refusing to make this deal, and hoping for a popular backlash against the GOP that transforms the whole debate; but there’s also an argument that this might not work.
I want to see more — and also want to see whether the Republican crazies scuttle the whole thing before it even gets off the ground. If they don’t, there will be some serious agonizing for progressives, yours truly included.
Dylan Matthews of the Washington Post gets the last word:
Here is a sentence you won’t hear politicians or policy wonks saying in the next few weeks: “We should pay Social Security beneficiaries less in the future and push a lot of people into higher tax brackets.” Here is a sentence you almost certainly will hear: “Let’s adopt chained CPI.”
The real crimes he’ll never answer for.