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Article IndexBY ROY NERSESIAN
STRAIGHT TALK
Financial deadbeats, of course, joining California, New York and Connecticut. According to the summary of NJ state finances conducted by the Pew Center on the States:
New Jersey has done an abysmal job of keeping up with annual funding requirements for its pension system. And when it comes to retiree health benefits, the state faces bills coming due of nearly $22 billion just for state employees, and another $36.5 billion for teachers... the system has suffered from a number of problems. The state recently passed several reforms designed to improve its performance and provide better and clearer public disclosure of the inner workings of the pension systems. On the non-pension side, retiree health benefit costs are substantial and growing far faster than the rest of the state budget. (The full report and 50 state fact sheets can be found at www.pewcenteronthestates.org.)
The financial mess in New Jersey is affecting the cost (interest rate) of raising funds. State officials prided themselves for selling transportations bonds at one-third of one percentage point less than analysts had predicted. What they neglected to mention was that the 5.47% interest rate was nearly a full percentage higher than the 4.56% paid on the same day for the same type bonds issued by more credit worthy states. Paying higher interest rates adds to the state’s financial woes.With ever larger numbers of retirees about to hit the system, Governor Christie has his work cut out for him in trying to enact reforms that does not cost him his political job. And that’s the crux of the matter. For decades we the people have been electing politicians on the promise of gutting the future for the present.
The fault is not past New Jersey administrations, the fault is us – we really ought to start looking into the mirror before we fix blame. It may well be true that democracy is a type of government that cannot last. Sooner or later, the electorate discovers that they can direct other people’s money into their own pockets by electing office seekers adept at keeping their hands in other people’s pockets.
We are the ones who have been financially and fiscally irresponsible. This pervades all aspects of our society. The housing boom was one way for people to take unearned money and consume it willy-nilly much to their eventual chagrin. Another way was to elect morally bankrupt politicians whose short-sighted single-minded goal of getting reelected is about to result in the financial collapse of the state.
Among the worst fiscally run states in the union, on a per capita basis, Connecticut leads the race by a furlong. If we throw in the$36 billion for teachers (in some states, teacher pensions are funded locally), our per capita obligation for unfunded liabilities of $6,667 places us in the winner’s circle.
The problem is not limited to states. Our national government wrestles with a $1.7 trillion deficit that will surely continue to grow. In previous articles I’ve pointed out the impossibility of balancing the national budget as entitlements, consuming 80 percent of our tax dollars, are sacrosanct from the budget cutter’s knife. The dream that we can pass these debts to future generations is the greatest myth being perpetrated on American voters since Barnum and Bailey. We, the now-generation always trying to get something for nothing, will bear the full blunt for our departure from First Principles and Sound Practices.
