As virtually all states face budget crises, issues of pensions have risen to the forefront. Although there is much that can be done by states to improve and expand pensions for public and private sector workers, current battles over state worker rights, budget crises, and pensions are muddying the issues and facts.
The Feb.28th New York Times Magazine has helpful information scattered throughout an admiring profile of New Jersey Governor Chris Christie. Christie has won a lot of national attention for his attacks on New Jersey's public unions, especially teachers, but the Times article brushes past several key issues, contributing to the one-sided and partial nature of the national debate on public pensions.
The article describes Christie's public use of sarcasm and mockery to paint teachers and other workers as over paid, greedy and self-centered. Christie gets an audience laughing at make-believe teacher complaints, and then pivots nastily to tell his audience "Now you're all laughing, right?...But this is the crap I have to hear."
But the article ignores or downplays several key issues about the roots of New Jersey's pension problems that need to be in a serious discussion on pension reform. First, the Great Recession, with collapsing stock market returns and diminished revenues to states--not pension benefits or governance malfeasance--is the main cause of the crash in public sector pension finances, Dean Baker and others have shown that much of public pension shortfalls are due to lower state revenues from the downturn.
Second, when the Times article moves to the structural reasons for New Jersey's problems it downplays two critical issues— the state's overall finances, now worsened by a severe property tax cap, and the fragmentation of government.
As economist Rick McGahey points out 40 percent of New Jersey's budget already goes to local governments, and a keystone of Christie's agenda was letting a surtax on incomes over $400,000 expire, and passing a cap on local property taxes of 2 percent annually. So Christie actively cut state and local revenues, and thus helped create the very budget gap he now invokes to attack public retirement benefits, as the state will have to send more tax money to local governments in order to make up for the capped property taxes.