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Thursday, July 01, 2010

Here's what "shared sacrifice" looks like in New Jersey

Posted by Jill | 6:34 AM

Now that New Jersey is becoming a Republican paradise, the rest of the country might want to see what the "shared sacrifice" that Governor Chris Christie promised looks like:

Here are the facts: The 16,000 families in New Jersey earning more than $1 millon will get an average tax break of $40,000 apiece under this budget. At the same time, a single mom working for minimum wage will pay $300 more in state taxes.

The biggest cuts in this budget are painful but unavoidable. That includes the deep cuts in aid to schools and towns, and in property tax rebates. His single biggest move was to short the pension fund by $3 billion. Together, those moves account for the bulk of the governor’s spending reductions.

Did you get that? 16,000 of the wealthiest families -- not business, but FAMILIES -- in the state will have $40,000 more in their pockets, while a minimum wage worker gets a $300 tax INCREASE. I guess this is shared sacrifice because the wealthiest families aren't going to get $100,000 more in their pockets.

And note that Christie is shorting the pension fund again. The state pension fund is the single biggest source of the state's fiscal problems, largely because of policies instituted by that OTHER Christie, Christine Todd Whitman, former darling of the Republican Party.

Bob Herbert, New York Times, February 22, 1995:

Now many of the gains made over a quarter of a century are in danger of slipping away because the current Governor, Christine Todd Whitman, has chosen to finance her political ambitions with a popular buy-now, pay-later economic policy that will place a financial stranglehold on future generations of New Jerseyans.

This is best illustrated by Mrs. Whitman's decision to withhold billions of dollars that should be going into the public employee pension funds over the next few years, and using the bulk of that money to balance the state budget. Then, with an audacity that dazzles her supporters and even draws grudging admiration from opponents, Mrs. Whitman smiles and characterizes the withheld funds as savings.

Of course, they are not "savings" -- not in any sense of the word. The pension obligations at some point will come due and future generations will have to meet them.

Not only will the money have to be made up, but future taxpayers will be deprived of the income that the money -- if properly invested now -- would be expected to generate.

Mrs. Whitman's pension maneuvers have not gotten a lot of publicity -- in part because the eyes of reporters and readers alike tend to glaze over when confronted with complex budget details. The changes that she has made have been drastic. According to the New Jersey Education Association, which has filed suit against the state, the employer contributions to the pension system this year will be as much as 96 percent below the amounts contributed in the early 1990's.

By all accounts, the employer contributions have been reduced by nearly $1 billion a year. The Whitman administration insists that this is not a problem. Needless to say, others disagree.

"There is no question but that this is creating future debt," said Richard C. Leone, a former New Jersey State Treasurer who is now the president of the Twentieth Century Fund. "This is just another way of getting around the balanced-budget requirement, a kind of deficit spending. It is the sort of thing that comes back to haunt you."

Until the changes adopted by Mrs. Whitman, New Jersey had been very conservative in its approach to its pension obligations. For example, the state had started to pre-fund the health care benefits of its retirees, building up reserves against post-retirement liabilities. As one state official said: "That was prudent. Health-care costs are a big problem."

Prudent or not, Mrs. Whitman scrapped the pre-funding. She used the reserves that had already built up to help balance her budget. For Christine Todd Whitman, the pension funds have become a budget-balancing machine.

In other words, Chris Christie is doing exactly what Whitman suggested he do in a recent op-ed in the Hackensack, NJ Record: running the state exactly as she did.

Labels: And You Want To Give Power Back To These People?, Chris Christie, Greedy Republican Bastards