By Marc Jampole
No one likes to play pension politics more than the Republicans. For example, over the past few years, Republican politicians and their fellow travelers have accusedpublic workers of receiving overly generous pensions as a means to drive a wedge between them and the rest of the middle class. Rather than cause the banks that manipulated Detroit into bankruptcy with bad credit swap deals to lose their truly onerous profit, the overseers of the Motor City—appointed by Republican Governor Rick Snyder—are taking money from retired Detroit workers.
Republicans use pension politics not only to hurt unions, but to harm government operations. Under Bush, the Republican Congress saddled the Post Office, a quasi-governmental organization, with onerous pension fund payments that have forced it to raise postage rates and cut operations. The Post Office’s private competitors—FedEx, UPS and DHL—don’t have to set aside anywhere as much money for their pension plans.
The latest Republican to play the pension politics game is New Jersey’s bully in residence, Governor Chris Christie, who intends to balance this year’s state budget by not paying $2.43 billion into New Jersey’sailing public pension system over the next two years.
In not making these payments, Christie reneges on a deal he made with public unions a few years back. Christie’s pension overhaul shifted more costs to public workers, raised their retirement age to 65, and froze yearly cost-of-living adjustments. In exchange, Christie and lawmakers agreed to make bigger payments each year to the pension fund to repair the financial damage of years of former administrations paying nothing into the system.
When announcing his dead-beating of New Jersey public workers, Christie tried to make himself into a hero of the day by declaring passionately that he refused to cut funds for Medicaid and schools. Of course, Medicaid and support of public schools are two other issues on which the Republicans and many Democrats also play games. After years of advocating cuts to social service programs, Christie came off looking like what he is—a a very big hypocrite!
What Christie didn’t say is that New Jersey, like most other states and the federal government, has purposely starved itself over the past three decades by lowering the tax burden, especially on the businesses and the wealthy. This fiscal anorexia is the true cause of the budget shortfall that New Jersey faces.
Instead of weakening the already damaged finances of state pensions, Christie could curtail tax breaks for corporations. He could call for the repeal of the massive tax breaks and other incentives to businesses he signed into law late last year, which will cost the state millions of dollars. One article two years ago computed the value of Christie’s corporate handouts at that point to be $1.57 billion. If New Jersey reneged on those corporate giveaways, it would leave New Jersey with a $1.03 billion shortfall on pensions, which a rise in taxes of about $382 a year for two years (but probably moving forward as well) on the approximately 1.35 million New Jerseyites making more than $75,000 a year.
But making businesses and the relatively well-off pay their fair share is not part of the Republican play book. At least since Ronald Reagan gained influence, Republicans have been dedicated to cutting taxes ever more on the wealthy and businesses while shrinking the services that government offers to everyone—from support of public schools and universities to funding for libraries, roads and the indigent. It’s now been more than 30 years since wealth and income started flowing from the poor and middle class to the wealthy and especially the ultra-wealthy. By refusing to fund pensions for public employees and ratcheting up giveaways to businesses, Christie is merely going with the flow, just floating along a rising tide which is lifting the oversized yachts of the rich while sinking everybody else.