Stephen Reader covers politics for It's a Free Country, WNYC's interactive politics site. He joined the station in 2010 and has also worked for Studio 360, WNYC's Peabody Award-winning show about art, culture, and creativity.
NJ's Pension Problem: 'A Bipartisan Adventure in Malfeasance.'
Tuesday, January 18, 2011
Welcome to Politics Bites, where every afternoon at It's a Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on The Brian Lehrer Show, WNYC reporter Bob Hennelly talked about New Jersey's debt crisis and the debate around public employee pensions.
In New Jersey, a state facing $54 billion in unfunded pension liabilities, Governor Chris Christie has said bluntly and repeatedly that if public sector unions don't compromise with him to restructure benefits, their pensions will become insolvent within the next decade. The public employee pension crisis has received a lot of attention in recent months as more and more states come to terms with their crippling debts. The issue's sudden prominence makes it feel like a new threat, but Bob Hennelly said that it's been a long time coming in New Jersey.
When Republicans were in charge in 2001, we had a situation where they raised the pension benefits substantially for public workers without having a funding piece. The state has been making promises and even during the [Christine] Whitman administration speculated on the pension, borrowed from it to play the market. Then during the Democratic period of time, they didn't make contributions into it. Even in the current administration, Christie balanced the budget by not putting in the $3 billion required by the pension in the current term.
Hennelly called it a "bipartisan adventure in malfeasance." But he also said the pension crisis reflects something deeper than simple mismanagement.
We are basically seeing that the very tough debate is being presaged in the public sector union that we're having nationally about the social contract that existed and was implied in Social Security. Those were drafted in another time when people didn't live so long, and all the actual presumptions were based on that. Now people are living longer and we have to renegotiate those contracts. That said, what the unions are concerned about is that Christie is leaving out the super wealthy who have been doing really well throughout this whole period.
Hennelly said that leaving it up to every state to handle their pension problem alone misses an opportunity for sweeping reform and improvement. Much as those social contracts need renegotiating, our public sector system as a whole is due for a change.
It's really time for a national evaluation of all of these in the aggregate, because it's happening on every balance sheet in every state, county and municipality. We need to bring these all together and look at them in a holistic way, because what's going to happen is, piecemeal, we're going to see local governments cut services even as there's more demand for them, unless there's some kind of comprehensive solution.