A couple of weeks ago, Governor Chris Christie of New Jersey announced his plan to use more than $2.43 billion that had been earmarked for public worker pension funding to balance his state’s ailing budget. Salvador Rizzo of The Star-Ledger said that Christie’s plan “threatens to derail one of Christie’s signature accomplishments in Trenton: a major revision to replenish New Jersey’s strained pension fund over the long term.” Rizzo added that Christie’s plan “would solve an immediate crisis for the governor, who has to find more than $2 billion somewhere to cover budget shortfalls for the current and incoming fiscal years.” The New Jersey governor has ruled out other alternatives—such as “raising the state income tax or cutting funds for schools and Medicaid.” Maggie Haberman of Politico said that it was “a striking move by the Republican governor, who had championed a public employees’ pension fund reform deal that he struck in 2011.”
Writing for Salon on May 22nd, David Sirota said that Governor Christie “depicted the maneuver as a matter of financial necessity, as if he had no other choice but to effectively use New Jersey retirees’ money to balance the state’s books.” Sirota noted, however, that what was lost in the “noise about whether the governor is a true fiscal conservative was any discussion of the two choices his administration has made — choices that are at the root of the budget crisis.”
The first choice was Christie’s decision to spend enormous amounts of New Jersey taxpayer money on lavish subsidies to corporations. As the New York Times reported two years ago, “Christie has approved a record $1.57 billion in state tax breaks for dozens of New Jersey’s largest companies.” As if that largess wasn’t enough, the Newark Star-Ledger reported that in 2013, Christie signed legislation that “lifts limits on how much the state can give out in economic incentives to corporations and developers.”
The second choice was the Christie administration’s decision to invest so much of New Jersey’s pension fund in high-risk, high-fee investments. As Pensions and Investments magazine just reported, New Jersey now ranks second in the nation for public pension investments in hedge funds.
In a Pando Daily article published on May 27th, Sirota reiterated that Christie claimed he had no choice because “the money simply isn’t there.” Sirota said that teachers in New Jersey might find that “hard to swallow” considering that education technology and publishing company Pearson “continues to receive a huge taxpayer subsidy from New Jersey.” New Jersey’s deal with Pearson—enacted in 2012—“sees Christie’s state giving Pearson a multi-year subsidy of up to $82 million.” As Sirota put it, “Christie is taking money from public school teachers to ensure that he can continue to support a giant education publisher. That’s particularly galling for teachers because Pearson just so happens to be one of the driving forces behind the push for more standardized testing and other so-called education ‘reforms’ that many public school teachers and teachers’ unions vehemently oppose.”
In addition to the state money being given to Pearson, Christie officials “approved a $225 million subsidy for JP Morgan.”
According to Sirota, the corporate handouts and the estimated “$1.2 billion in Wall Street fees from Christie’s high-fee, high-risk pension investment strategy” helped to blow a $2.7 billion hole through New Jersey’s finances.” He added that the huge financial hole in the state’s budget “just so happens to be almost exactly the amount Christie is now borrowing from the pension fund to balance the budget.”
One might ask why the Christie administration is so generous with corporate subsidies when his state is experiencing such serious financial troubles. Well, we know that the governor of New Jersey has presidential aspirations. And as David Sirota noted in a Salon article, many of the subsidies “are going to companies that just so happen to be big donors to the Republican Governors Association, which Christie now chairs. Likewise, the pension investment fees enrich the Wall Street firms that typically bankroll presidential campaigns.” Sirota added that the companies receiving corporate subsidies and investment fees “have far more political campaign cash at their disposal than the public workers whose retirements could be jeopardized by Christie’s pension maneuver.”
But…who cares about the pensions of public workers these days?????
Gov. Christie Retroactively Cuts State Pension Payment (NJ Spotlight)
Chris Christie slashes pay to pension funds (Politico)
CHRISTIE ADMINISTRATION ANNOUNCES SIGNIFICANT EXPANSION OF JPMORGAN CHASE (New Jersey Economic Development Authority)