The Wall Street Journal editorial page recently waxed rhapsodic about Utah, which has replaced a defined benefit pension plan for new state and municipal workers with a 401(k)-style plan.
In Utah, new state and municipal employees can choose to: receive an amount equal to 10%-12% from the state as a contribution to a private retirement account, and contribute an additional 8%; or receive up to 10% contribution to a private defined benefit plan with less generous benefits than the existing plan, with the employee bearing the responsibility for contributing anything above that. Under both plans, the employee decides how to invest the funds (and bears the entire risk if those decisions are poor ones).
The result is that Utah taxpayers no longer bear the responsibility of paying defined benefits to retirees for life, regardless of how the state pension fund fares in the marketplace. The reform was triggered when the 2008 market crash caused Utah's pension fund to lose 22% of its value.
According to the WSJ, "The reform has benefits for taxpayers and public employees. Workers own their own retirement account and can carry it to another job. They also benefit because politicians can no longer steal from the pension plan to pay for other government spending. As for taxpayers, the reform will eventually slash state pension liabilities in half and they no longer bear the risk of having to pay higher taxes if the stock market declines."
Shockingly, to the WSJ, union leaders resisted. Apparently, union leaders feared the dissolution of a public safety net for retirees. And the slashing of other social programs which had been financed by leveraging the state pension fund.
The WSJ editorial was widely quoted across the internet, giving legitimacy to the pension reform echo chamber. It won't be long before we hear Governor Christie start beating the same drum.
Sunday, January 23, 2011
Wednesday, January 19, 2011
Quote Of Note: The Ultimate Public Pension Reform
It seems Chris Christie sat down with the editorial board of the Wall Street Journal recently, which means that the Governor has been getting even more press from the WSJ than usual. For example, the Governor's plan to eliminate teacher tenure was prominently featured in an article by Lisa Fleischer.
And last Friday, assistant editorial page editor James Freeman published a love note to the Governor's public pension reform plans. The editorial included the following quote:
"The ultimate reform is to move to a 401(k)-style [public pension] plan that provides transparency to taxpayers while allowing government employees -- not politicians or union bosses -- to control their retirement savings with individual accounts. How to enact such reform in New Jersey? 'You get a Republican legislature, that's how you do it,' says Christie. 'I'm dealing in a context where the Democratic Party in my state has been ruled by the public-sector unions.'"
This line of reasoning brings back fond memories of George W. Bush's plan to privatize Social Security by diverting Social Security taxes into private accounts. At the time, critics viewed the plan as a giveaway to Wall Street, which would end up managing Social Security funds on a for-profit basis. Of course, this was before the Great Recession made it clear that there is real risk in relying on the marketplace for retirement funds.
So, in addition to his expansion of executive power by absorbing the Medicaid Inspector General and Inspector General into the executive branch of the State government, and his plan to absorb county prosecutors into the Attorney General's office, the Governor has now found another way to show his affinity for the Bush-Cheney-Rove faction of the Republican party -- handing government pensions to Wall Street.
And last Friday, assistant editorial page editor James Freeman published a love note to the Governor's public pension reform plans. The editorial included the following quote:
"The ultimate reform is to move to a 401(k)-style [public pension] plan that provides transparency to taxpayers while allowing government employees -- not politicians or union bosses -- to control their retirement savings with individual accounts. How to enact such reform in New Jersey? 'You get a Republican legislature, that's how you do it,' says Christie. 'I'm dealing in a context where the Democratic Party in my state has been ruled by the public-sector unions.'"
This line of reasoning brings back fond memories of George W. Bush's plan to privatize Social Security by diverting Social Security taxes into private accounts. At the time, critics viewed the plan as a giveaway to Wall Street, which would end up managing Social Security funds on a for-profit basis. Of course, this was before the Great Recession made it clear that there is real risk in relying on the marketplace for retirement funds.
So, in addition to his expansion of executive power by absorbing the Medicaid Inspector General and Inspector General into the executive branch of the State government, and his plan to absorb county prosecutors into the Attorney General's office, the Governor has now found another way to show his affinity for the Bush-Cheney-Rove faction of the Republican party -- handing government pensions to Wall Street.
Saturday, January 15, 2011
Chris Christie's Culture Of Half-Truth
I finally made my way through the Governor's State of the State address, and by and large I find what it fails to say to be more important than what it actually does say.
Although the Governor said he believes in a culture of truth, he began his speech with a number of half truths. He claims to have balanced the State budget; however, the budget isn't truly balanced. The Governor relied on FMAP money which only partially came in, failed to fully fund the transportation trust fund and refused to make Constitutionally mandated payments to the public employee pension plan. He claimed that taxes are lower, but did not clarify that they are only lower for the wealthy and that property taxes are certainly on their way up this year. And he claimed that New Jersey's taxes are causing the wealthy to flee the State, a claim which has already been debunked.
On the stay the course front, the Governor reiterated his three top priorities: fiscal discipline and lower taxes; reforming the public pension system by raising the retirement age, freezing COLAs in times of little or no inflation and requiring public employees to contribute to their own pensions; and reforming our education system by eliminating tenure, closing failing schools, instituting merit pay and creating more charter schools.
On the revisiting Reagan front, the Governor referenced the shining city on a hill, which Christian conservatives recognize as a reference to heaven. He also seemed to embrace trickle down economics by suggesting he would close popular programs to fund infrastructure investments and tax breaks.
But on what may well be Christie's most lasting legacy, nary a word. First, the Governor said nothing about his battle against the rule of law. Many of his cost-cutting moves are being challenged in court, including his education cuts and his attempt to cap superintendent pay. There is a good chance both plans may be found to be unconstitutional. The Governor actually said he would allow the State to make its Constitutionally mandated pension contributions if, and only if, he gets the pension plan reforms he seeks. So, despite the fact that Governor has sworn to uphold the State Constitution, he continues to ignore select Constitutional duties.
Second, the Governor said not a word about his expansion of the executive branch of New Jersey's government. He has merged the Inspector General and the Medicaid Inspector General into the executive branch, and seeks to do the same with the State Commission of Investigation. He is also exploring absorbing the county prosecutors into the Attorney General's office.
So, simply put, the Governor is mum about bringing all of the State's investigative and prosecutorial power under the control of an executive branch which feels free to ignore the rule of law, seriously undermining our State's checks and balances.
I know that telling people that he is expanding government does not play as well with his right wing besties as beating up on teachers and cops, but really, I do think it deserves some mention when discussing the State of the State.
Although the Governor said he believes in a culture of truth, he began his speech with a number of half truths. He claims to have balanced the State budget; however, the budget isn't truly balanced. The Governor relied on FMAP money which only partially came in, failed to fully fund the transportation trust fund and refused to make Constitutionally mandated payments to the public employee pension plan. He claimed that taxes are lower, but did not clarify that they are only lower for the wealthy and that property taxes are certainly on their way up this year. And he claimed that New Jersey's taxes are causing the wealthy to flee the State, a claim which has already been debunked.
On the stay the course front, the Governor reiterated his three top priorities: fiscal discipline and lower taxes; reforming the public pension system by raising the retirement age, freezing COLAs in times of little or no inflation and requiring public employees to contribute to their own pensions; and reforming our education system by eliminating tenure, closing failing schools, instituting merit pay and creating more charter schools.
On the revisiting Reagan front, the Governor referenced the shining city on a hill, which Christian conservatives recognize as a reference to heaven. He also seemed to embrace trickle down economics by suggesting he would close popular programs to fund infrastructure investments and tax breaks.
But on what may well be Christie's most lasting legacy, nary a word. First, the Governor said nothing about his battle against the rule of law. Many of his cost-cutting moves are being challenged in court, including his education cuts and his attempt to cap superintendent pay. There is a good chance both plans may be found to be unconstitutional. The Governor actually said he would allow the State to make its Constitutionally mandated pension contributions if, and only if, he gets the pension plan reforms he seeks. So, despite the fact that Governor has sworn to uphold the State Constitution, he continues to ignore select Constitutional duties.
Second, the Governor said not a word about his expansion of the executive branch of New Jersey's government. He has merged the Inspector General and the Medicaid Inspector General into the executive branch, and seeks to do the same with the State Commission of Investigation. He is also exploring absorbing the county prosecutors into the Attorney General's office.
So, simply put, the Governor is mum about bringing all of the State's investigative and prosecutorial power under the control of an executive branch which feels free to ignore the rule of law, seriously undermining our State's checks and balances.
I know that telling people that he is expanding government does not play as well with his right wing besties as beating up on teachers and cops, but really, I do think it deserves some mention when discussing the State of the State.
Thursday, January 6, 2011
Our Children As Profit Centers
Remember, in New Jersey, children are not just our future, they are our future profit centers.
This is the philosophy at the center of Chris Christie's education policy. According to the Governor, the best hope for public education is to replace it with for-profit education facilities such as charter schools; undermine the teachers' union so as to be able to force out senior, expensive teachers; and combine schools to promote efficiency at the expense of local control of curricula. In other words, treat education like a business.
So advertising on school buses is a no-brainer. Which is why the Governor just signed into law a bill that allows just that.
Oddly, only the 40% of municipalities that own their own school buses can advertise; the municipalities which lease their buses cannot sell advertising space. Ads for tobacco and alcohol are prohibited, as are any ads the Commissioner of Education deems inappropriate. In other words, this law is just a lawsuit waiting to happen. Some districts can sell ads, others can't; some businesses can advertise, others can't. It's an equal access/ First Amendment nightmare.
But it's also a sign of things to come. Get ready for corporate logos on football fields and basketball courts; brand logos on school uniforms; and any and all other means available to turn access to our school children into a thriving industry.
This is the philosophy at the center of Chris Christie's education policy. According to the Governor, the best hope for public education is to replace it with for-profit education facilities such as charter schools; undermine the teachers' union so as to be able to force out senior, expensive teachers; and combine schools to promote efficiency at the expense of local control of curricula. In other words, treat education like a business.
So advertising on school buses is a no-brainer. Which is why the Governor just signed into law a bill that allows just that.
Oddly, only the 40% of municipalities that own their own school buses can advertise; the municipalities which lease their buses cannot sell advertising space. Ads for tobacco and alcohol are prohibited, as are any ads the Commissioner of Education deems inappropriate. In other words, this law is just a lawsuit waiting to happen. Some districts can sell ads, others can't; some businesses can advertise, others can't. It's an equal access/ First Amendment nightmare.
But it's also a sign of things to come. Get ready for corporate logos on football fields and basketball courts; brand logos on school uniforms; and any and all other means available to turn access to our school children into a thriving industry.
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