Tuesday, June 21, 2011

A Long Overdue Admission On Unsustainable Pensions In New Jersey

New Jersey Senate President Stephen M. Sweeney, a Democrat, has admitted what many have assumed for quite some time - pensions and health benefits were simply unsustainable at the levels promised by union officials and legislators who signed off on deal after deal. It comes as he's working on a deal with Gov. Chris Christie, a Republican to change union benefits and require workers to contribute a greater percentage towards their health and pension benefits:
To his mind, he’s exposed a family secret in Trenton: The pensions and health care plans are unsustainable, and union leaders have known it for years and said nothing.

“They lied to their members,” Mr. Sweeney said. “When I say lied, I mean it. They lied.”

That is only a slight overstatement. The labor movement has many laments and many wounds, more than a few self-inflicted. Some pension provisions were undoubtedly piled too high. And union leaders wheedled special deals and remained silent as governors, Republican and Democrat, declined to pay into the pension system.

Labor leaders and politicians, no less than arbitragers and Goldman Sachs partners, relied on magic bubbles to keep it all afloat. The line between illusion and lie grew indistinct.

But Monday offered a through-the-looking-glass moment of a sort, seen across the nation, as middle-class union members became improbable symbols of a recessionary era brought on by Wall Street financiers.
It's also quite troubling when no one who will actually be voting on these measures has any idea of what the costs are to the union members, or the taxpayers who have been bearing the ever higher costs.

The dealing on the pensions and benefits has revealed the shady side of politics in Trenton - it has kicked over a hornet's nest of conflicting interests within both parties, but particularly the Democrats who are closer to unions than the Republicans.

In the end, taxpayers - including these same union members who will be required to make higher contributions - will begin to see tax relief. For far too long, legislators in Trenton have made promises they couldn't afford, hoping that financial alchemy would solve the solvency issue. That all came crashing down when the economy faltered and the assumptions about growth simply didn't materialize.

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