According to Sunday’s Asbury Park Press story the New Jersey state pension system faces an unfunded liability of $46 billion to $174 billion depending on who you ask. Even the most optimistic figure would require a return on investment of 8.25%. The actual return over the past ten years has been 2.56%. Then there’s unfunded health care costs of $55 billion. Add to that our $40 billion debt and $10 billion deficit. Is it possible to do a worse job running our state than our legislature has? I think not.
When a person or a business acquires more debt than they can possibly pay off, they go bankrupt. The competing claims on any assets are ironed out in bankruptcy court. In a chapter 11 bankruptcy, new management is installed and a more realistic business plan implemented. This is what New Jersey ought to do.
Why should we hardworking taxpayers be forced to make good on these outrageous obligations our politicians have made us liable for? Do you want to sacrifice for a decade or more in order to protect the honor of that pack of weasels otherwise known as the New Jersey State Legislature? Not me. I’d rather disown all their promises to the unions and interest groups and keep the money for my own family.
If I were the judge in such a bankruptcy I would tell all current and retired state workers that they will receive what workers in the private sector receive in pay and benefits for similar work. That alone would probably reduce our obligations by about 50% since they are currently paid so much more than the rest of us. I would then liquidate at least half of all state agencies and commissions, fire their workers, and sell their assets to help pay off debt. I would also rescind all mandates that the state has placed on our cash strapped municipal governments. Lastly I would require that New Jersey have a balanced budget so they can never run up this kind of debt again. To prevent the balanced budget requirement being used as an excuse to raise taxes, I would have a hard cap on tax increases, tied only to inflation and population growth.
I understand these reforms will be hard if not impossible to do with or without bankruptcy. But there is one thing we can do next year to help move things along and that is to fire the entire state legislature so nobody there has an interest in defending policies that have brought New Jersey to it’s knees. I, for one, plan to vote against all incumbents this year and next, including “Republicans” Kean, Rible and Angelini, who have done nothing to help the situation.
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